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Duty
Exemption / Remission Scheme
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4.1
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The
Duty Exemption Scheme enables duty free import
of inputs |
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required
for export production. An Advance Licence is issued
under Duty Exemption Scheme. The Duty Remission
Scheme enables post export replenishment/ remission
of duty on inputs used in the export product.
Duty Remission scheme consist of (a) DFRC and
(b) DEPB. DFRC permits duty free replenishment
used in the export product. The DEPB scheme allows
drawback of import charges on inputs used in the
export product. |
Advance Licence
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4.1.1
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An
Advance Licence is issued to allow duty free import
of inputs, |
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which
are physically incorporated in the export product
(making normal allowance for wastage). In addition,
fuel, oil, energy, catalysts etc. which are
consumed in the course of their use to obtain
the export product, may also be allowed under
the scheme. Duty free import of mandatory spares
upto 10% of the CIF value of the licence which
are required to be exported/ supplied with the
resultant product may also be allowed under
Advance Licence. Advance Licence can be issued
for:-
a)
Physical exports:-
Advance
Licence may be issued for physical exports to
a manufacturer exporter or merchant exporter
tied to supporting manufacturer(s) for import
of inputs required for the export product.
b) Intermediate supplies:-
Advance
Licence may be issued for intermediate supply
to a manufacturer-exporter for the import of
inputs required in the manufacture of goods
to be supplied to the ultimate exporter/ deemed
exporter holding another Advance Licence.
c) Deemed exports:-
Advance
Licence can be issued for deemed export to the
main contractor for import of inputs required
in the manufacture of goods to be supplied to
the categories mentioned in paragraph 8.2 (b),
(c), (d) (e) (f),(g) (i) and (j) of the Policy.
In addition, in respect of supply of goods to
specified projects mentioned in paragraph 8.2
(d) (e) (f),(g) and (j) of the Policy, an Advance
Licence for deemed export can also be availed
by the sub-contractor of the main contractor
to such project provided the name of the sub
contractor(s) appears in the main contract.
Such licence for deemed export can also be issued
for supplies made to United Nations Organisations
or under the Aid Programme of the United Nations
or other multilateral agencies and paid for
in foreign exchange.
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4.1.2
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Advance
Licence is issued for duty free import of inputs,
as |
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defined
in paragraph 4.1.1 subject to actual user condition.
Such licences (other than Advance Licence for
deemed exports) are exempted from payment of
basic customs duty, additional customs duty,
anti dumping duty and safeguard duty, if any.
However, Advance Licence for deemed export shall
be exempted from basic customs duty and additional
customs duty only.
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4.1.3
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Advance
Licence and/or materials imported thereunder shall
not |
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be
transferable even after completion of export
obligation.
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4.1.4
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Advance
Licences (including Advance Licence for deemed
exports |
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and
intermediate supply) shall be issued with a
positive value addition. However, for exports
for which payments are not received in freely
convertible currency, the same shall be subject
to value addition as specified in Appendix-32
of Handbook (Vol.1), 2002-07.
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4.1.5
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Advance
Licence shall be issued in accordance with the
Policy and |
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procedure
in force on the date of issue of licence and
shall be subject to the fulfillment of a time
bound export obligation as may be specified.
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4.1.6
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The
facility of Advance Licence shall also be available
where some |
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of
the inputs are supplied free of cost to the
exporter. In such cases, for calculation of
value addition, the notional value of free of
cost inputs alongwith value of other duty-free
inputs shall be taken into consideration.
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Export Obligation
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4.1.7
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The
period for fulfillment of the export obligation
under Advance |
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Licence
shall be as prescribed in the Handbook (Vol.1).
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Advance Release Orders
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4.1.8
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An
Advance Licence holder (except Advance Licence
for |
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intermediate
supply) and holder of DFRC intending to source
the inputs from indigenous sources/state trading
enterprises/ EOU/ EPZ/SEZ/ EHTP/STP units in lieu
of direct import has the option to source them
against Advance Release Orders denominated in
foreign exchange/Indian rupees. The transferee
of a DFRC shall also be eligible for ARO facility.
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Back-to-Back Inland Letter of Cerdit
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4.1.9
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An
Advance Licence holder, (except Advance Licence
for |
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intermediate
supply) and holder of DFRC may, instead of applying
for an Advance Release Order, avail of the facility
of Back-to-Back Inland Letter of Credit in accordance
with the procedure specified in Handbook (Vol.1).
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Prohibited Items
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4.1.10
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Prohibited
items of imports mentioned in ITC(HS) shall not
be |
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imported under the licence issued under the scheme.
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Compliance with Export Policy
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4.1.11
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Goods
mentioned as restricted for exports in ITC(HS)
may be |
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exported without specific export licence/ certificate/
permission under Advance Licence for physical
exports issued with prior import condition. In
such cases, the licence/certificate/permission
holder shall not be allowed to use indigenous
inputs and the export product shall be manufactured
only out of imported inputs under Advance Licence
for physical exports. |
Re-import of Exported Goods under Duty Neutralisation
Scheme
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4.1.12
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Goods
exported under Advance Licence/ DFRC/ DEPB may
be re- |
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imported in the same or substantially the same
form subject to such conditions as may be specified
by the Department of Revenue from time to time.
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Admissibility of Drawback
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4.1.13
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In
the case of an Advance Licence, the drawback shall
be available |
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in respect of any of the duty paid materials,
whether imported or indigenous, used in the goods
exported, as per the drawback rate fixed by Ministry
of Finance (Directorate of Drawback). The Drawback
shall however be restricted to the duty paid materials
as mentioned in the licence. |
Value Addition
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4.1.14
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The
value addition for the purposes of this chapter
shall be:- |
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V.A
= A - B
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x 100, where
B
V.A
is Value Addition
A
is the FOB value of the export realised /FOR
value of supply received.
B
is the CIF value of the imported inputs covered
by the licence,
plus
any other imported materials used on which the
benefit of duty drawback is being claimed.
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Duty Replenishment Certificate
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4.2
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DFRC
is issued to a merchant-exporter or manufacturer-exporter |
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for
the import of inputs used in the manufacture
of goods without payment of basic customs duty,
and special additional duty. However, such inputs
shall be subject to the payment of additional
customs duty equal to the excise duty at the
time of import.
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4.2.1
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DFRC
shall be issued on minimum value addition of 33%.
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4.2.2
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DFRC
may be issued in respect of exports for which
payments are |
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received
in non-convertible currency. Such exports shall,
however, be subject to value addition and conditions
as specified in Appendix-32 of Handbook (Vol.1).
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4.2.3
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DFRC
shall be issued only in respect of export products
covered |
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under
the SIONs as notified by DGFT. However, DFRC
shall not be issued in respect of SIONs which
are subject to "actual user" condition or where
the input is allowed with prior import condition
or where the norms allow import of Acetic Anhydride,
Ephedrine and Pseudo Ephedrine in the Handbook
(Vol-II).
However
DFRC may be issued for SIONs allowing import
of Acetic Anhydride, Ephedrine and Pseudo Ephedrine
provided these items are specifically deleted
from the list of import items.
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4.2.4
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DFRC
shall be issued for import of inputs as per SION
as indicated |
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in
the shipping bills. The validity of such licences
shall be 18 months. DFRC and or the material(s)
imported against it shall be freely transferable.
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4.2.5
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The
export products, which are eligible for modified
VAT, shall be |
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eligible
for CENVAT credit. However, non excisable, non
dutiable or non centrally vatable products,
shall be eligible for drawback at the time of
exports in lieu of additional customs duty to
be paid at the time of imports under the scheme.
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4.2.6
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The
exporter shall be entitled for drawback benefits
in respect of |
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any
of the duty paid materials, whether imported or
indigenous, used in the export product as per
the drawback rate fixed by Directorate of Drawback
(Ministry of Finance). The drawback shall however
be restricted to the duty paid materials not covered
under SION. |
Jobbing Repairing etc. for re-export
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4.2.7
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Import
of goods, including those mentioned as restricted
in |
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ITC(HS) but excluding prohibited items, in terms
of paragraph 4.1.1 supplied free of cost, may
be permitted for the purpose of jobbing without
a licence/ certificate/ permission as per the
terms of notification issued by Department of
Revenue from time to time. |
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