| 7.1 |
The Duty Exemption Scheme enables import of
inputs required for export production. The Duty Remission Scheme
enables post export replenishment/ remission of duty on inputs used
in the export product.
|
| 7.2 |
An Advance Licence is issued under Duty
Exemption Scheme to allow import of inputs, 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. Advance Licence can be issued
for:-
- Physical exports
- Intermediate supplies
- Deemed exports.
Advance Licences can also be issued on the basis of annual
requirement for exports/supplies as mentioned at (a) to (c) above in
accordance with the conditions given in Handbook (Vol.1).
Duty Remission Scheme consists of (a) Duty Free Replenishment
Certificate and (b) Duty Entitlement Passbook Scheme. The scheme
allows drawback of import charges on inputs used in the export
product (making normal allowance for the wastage).
|
| Advance Licence |
| 7.3 |
| (a) |
Advance Licence is issued for duty free
import of inputs, as defined in paragraph 7.2, 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. Such licences are issued to:-
(i) Manufacturer exporter or Main contractor in case of deemed
exports.
(ii) Merchant exporter where the merchant exporter agrees to
the endorsement of the name(s) of the supporting manufacturer(s)
on the relevant DEEC Book and in the case of deemed exports, sub
contractor(s) whose name(s) appear in the main contract.
Such licences and/or materials imported thereunder shall not be
transferable even after completion of export obligation.
Such licences 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- 39 of Handbook (Vol.1) ,
1997-2002
Advance Licence shall be issued in accordance with the Policy
and 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.
The facility of Advance Licence shall also be available where
some 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. |
| (b) |
Advance Licence for Intermediate
Supply
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) |
Advance Licence for Deemed Export
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
10.2(b), (c), (d), (e), (f) and (g) of the Policy. In addition,
in respect of supply of goods to specified projects mentioned in
paragraph 10.2 (d), (e), (f) & (g) of the Policy, an Advance
Licence for deemed export can also be availed by the
sub-contractor of the main contractor to such project. 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. |
|
| Duty Free Replenishment
Certificate (DFRC) |
| 7.4 |
Duty Free Replenishment Certificate is issued
to a merchant-exporter or manufacturer-exporter 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.
Duty Free Replenishment Certificate shall be issued only in respect
of export products covered 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).
Duty Free Replenishment Certificate shall be issued for import of
inputs, as per SION, having same quality, technical characteristics
and specifications as those used in the end product and as indicated
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.
The Duty Free Replenishment Certificate shall be subject to a
minimum value addition of 33%.
The export products, which are eligible for modified VAT, shall be
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.
The exporter shall be entitled for drawback benefits in respect of
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.
Duty Free Replenishment Certificate may be issued in respect of
exports for which payments are received in non-convertible currency.
Such exports shall, however, be subject to value addition as
specified in Appendix-39 of Handbook (Vol.1).
|
| Jobbing, Repairing etc. For
Re-Export |
| 7.5 |
Import of goods, including those mentioned as
restricted in ITC(HS) but excluding prohibited items, in terms of
paragraph 7.2 supplied free of cost, may be permitted for the
purpose of jobbing without a licence as per the terms of
notification issued by Department of Revenue from time to time. |
| Export Obligation |
| 7.6 |
The period for fulfillment of the export
obligation under Advance Licence shall be as prescribed in the
Handbook (Vol.1).
|
| Advance Release Orders |
| 7.7 |
An Advance Licence holder (except Advance
Licence for 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. In such a case the licence shall be
invalidated for direct import and a permission in the form of ARO
shall be issued which will entitle the supplier to the benefits of
deemed export. The transferee of a Duty Free Replenishment
Certificate shall also be eligible for ARO facility.
|
| Back-to-Back Inland Letter of
Credit |
| 7.8 |
An Advance Licence holder, (except Advance
Licence for 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).
|
| Prohibited Items |
| 7.9 |
Prohibited items of imports mentioned in
ITC(HS) shall not be imported under the licences issued under the
scheme.
|
| Compliance with Export Policy |
| 7.10 |
Goods mentioned as restricted for exports in
ITC(HS) may be exported without specific export licence under
Advance Licence for physical exports issued with prior import
condition. In such cases, the licence 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
Advance Licence |
| 7.11 |
Goods exported under Advance Licence/DFRC/
DEPB may be re-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.
|
| Admissibility of Drawback |
| 7.12 |
In the case of an Advance Licence, the
drawback shall be available 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 indicated in the DEEC.
|
| Value Addition |
| 7.13 |
The value addition for the purposes of this
chapter shall be:-
VA : A - B = ------ x 100,
where
| VA |
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. |
|
| Duty Entitlement Passbook Scheme
(DEPB) |
| 7.14 |
For exporters not desirous of going through
the licensing route, an optional facility is given under DEPB. The
objective of Duty Entitlement Passbook Scheme is to neutralise the
incidence of Customs duty on the import content of the export
product. The neutralisation shall be provided by way of grant of
duty credit against the export product.
Under the Duty Entitlement Passbook Scheme (DEPB), an exporter may
apply for credit, as a specified percentage of FOB value of exports,
made in freely convertible currency. The credit shall be available
against such export products and at such rates as may be specified
by the Director General of Foreign Trade by way of public notice
issued in this behalf, for import of raw materials, intermediates,
components, parts, packaging material etc.
The holder of Duty Entitlement Passbook Scheme (DEPB) shall have
the option to pay additional customs duty, if any, in cash as well.
|
| Validity |
| 7.15 |
The DEPB shall be valid for a period of 12
months from the date of issue.
|
| Transferability |
| 7.16 |
The DEPB and/or the items imported against it
are freely transferable. The transfer of DEPB shall however be for
import at the port specified in the DEPB which shall be the port
from where exports have been made. Imports from a port other than
the port of export shall be allowed under TRA facility as per the
terms and conditions of the notification issued by Department of
Revenue.
|
| Applicability of Drawback |
| 7.17 |
The exports made under the DEPB Scheme shall
not be entitled for drawback. However, the additional customs duty
paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit
or Duty Drawback as per rules framed by the Deptt. of Revenue. In
cases, where the Additional Customs Duty is adjusted from DEPB, no
benefit of CENVAT/Drawback shall be admissible.
|
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Exim Policy 2001-2002 » Duty
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