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Exemption / Remission Scheme
Duty Exemption / Remission Scheme
7.1 Policy
The policy relating to the Duty Exemption/Remission Scheme is prescribed in chapter 7 of the Policy.
7.2 Application
An application for grant of a Advance Licence may be made by the Registered office or Head office or a branch office or manufacturing unit of the eligible exporter, to the licensing authority concerned.
7.3 Where the applicant is the branch office or manufacturing unit(s) of an exporter, it shall furnish (a) Self certified copy of valid RCMC where the name of the branch office or manufacturing unit is given and (b) an authority letter from the Registered Office of a Company or Head Office of a firm, clearly indicating that Registered/Head Office or its branches and manufacturing unit(s) have not been declared defaulter or otherwise made ineligible for import/ export under any of the provisions of the Policy. However, this shall not apply for those filing applications electronically.
7.4
- Where the SION have been published, an application in
Appendix-11B, alongwith documents prescribed therein, shall be
submitted to the licensing authority concerned.
In case of export of gold/silver/platinum jewellery and articles thereof, the application shall be made to the licensing authority concerned as given in Appendix 27 and the quantity, wastage and the value addition norms shall be as prescribed in chapter- 8 of the Policy and chapter 8 of this Hand Book.
- In case where norms have not been published, an application in
Appendix-11B, alongwith prescribed documents, shall be furnished to
ALC for fixation of Norms. In such cases, the original copy of the
application along with prescribed fee shall be filed with the
Regional Licensing Authority concerned and an attested copy of the
same shall be filed with ALC. The Licenses in such cases shall be
issued by the RLA on the basis of recommendation of ALC.
The Committee shall also function as a recommendatory authority for SION.
- Applications, where Acetic Anhydride, Ephedrine and
Pseudo-ephedrine is required as an input for import either in cases
where norms are fixed or in cases where norms are not fixed, shall
be filed only with the Zonal Joint Director General of Foreign
Trade.
Copies of such applications shall also be simultaneously endorsed to the Drug Controller of India, Nirman Bhawan, New Delhi, Narcotics Commissioner, Central Bureau of Narcotics, Gwalior. and the respective Zonal Director of the Narcotics Control Bureau, alongwith a declaration that the applicant will maintain the prescribed records and also submit the prescribed returns.
- The licensing authority, while issuing the advance licence for
the import of Acetic Anhydride, Ephedrine and Pseudo- ephedrine,
shall endorse a condition that before effecting imports, NOC shall
be obtained from the Narcotics Commissioner of India, Central Bureau
of Narcotics, Gwalior and shall also endorse a copy of the licence
to the Drug Controller, Nirman Bhawan, New Delhi and the concerned
Zonal Director of the Narcotics Control Bureau.
- Deleted
- Deleted
7.5 Self Declared Licences where SION do not exist
The licensing authority may also issue Advance licences, other than Advance Licence for annual requirement, where SION are not fixed, based on self declaration and an undertaking by the applicant for a final adjustment as per Adhoc/ SION fixed by ALC.
The CIF value of one or more such licences shall be Rs.50 lakhs or 100% of the FOB value of preceding year exports, whichever is more. The new comers shall also be entitled for licenses in this category for a CIF value not exceeding Rs.50 lakhs subject to furnishing of 100% Bank Guarantee to Customs authority to cover the exemption from Customs duties. A specific endorsement to this effect shall be made on the licence/DEEC Book.
The original application with prescribed documents shall be submitted to the concerned Regional Licensing Authority. The licensing authority shall forward a copy of the application within 7 days from the date of issue of such licences to ALC for fixation of norms within the prescribed time.
The applicant shall give an undertaking that he shall abide by the norms fixed by ALC and accordingly pay duty, together with 24% interest, on the unutilised inputs as per norms fixed by ALC. He shall also surrender SIL as per paragraph 7.28A(i)(b).
In such cases, where the norms are not finalised by ALC within six months, the norms as applied for shall be treated as final and no adjustment will be made. However, where the application for fixation of adhoc/SION is rejected on account of non furnishing of required documents/ information, the licence holder shall be liable for penalty as stated in the above paragraph. In such cases where the export obligation is completed pending fixation of norms by ALC, the entitlement for the licence as given in second paragraph may be recredited upon production of documentary evidence showing fulfillment of export obligation and realisation of foreign exchange in respect of the previous licenses. However, bond waiver /redemption shall not be allowed pending fixation of norms in such cases.
7.6 Newcomers
(i) In the case of newcomers who have not availed any licence under the Policy, first Advance Licence upto Rs. 25 lakhs may be granted by the licensing authority in accordance with the Policy.
Thereafter, Advance Licence may be granted only after verifying the bonafides and antecedents of the applicant to ensure the genuineness and existence of the firm. For this purpose, the applicant shall be asked to produce a copy of any one of the documents, namely, Income Tax Return/ Sales Tax Return/ Central Excise Certificate/Registration Certificate from the concerned authority/Administrative Ministry/ Photocopy of the passport of the Director/ Partner/ Proprietor/ Trustee or any other documentary evidence to the satisfaction of the licensing authority.
Wherever the initial application has been filed for a CIF value of more than Rs. 25 lakhs and the licence has been restricted to Rs. 25 lakhs, such licence, after verification, may be enhanced for a value originally applied for or as approved by the competent authority.
In respect of exporters who have not availed any licence under the EXIM policy but have exported in the preceding three licensing years, advance license may be issued for a CIF value not exceeding average FOB value in preceding three licensing years. Such exporters shall be issued advanced license subject to furnishing 100% Bank Guarantee to customs authority to cover exemption from Customs duties. Specific endorsement to this effect shall be made in the license/DEEC.
ii) Such exporters shall be issued second and subsequent licences only after fulfilling 50% of the export obligation on previous licences.
7.7 Financial Powers
The financial powers of the licensing authorities and ALC are given in the table below:
| Category of Application | On published norms and under paragraph 7.5 of this Handbook | |
| CIF value upto Rs. 50 Crore. | CIF value above Rs.50 crores | |
| Issuing Authority for Advance License/ Advance License for Annual Requirement | Regional Licensing Authority | Regional Licensing Authorities on the recommendation of ALC. |
7.8 Standardisation of Adhoc Norms
For standardisation of norms, an application may be made by the manufacturer exporter or merchant-exporter, tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to the Advance Licensing Committee (ALC) in the form given in Appendix-11A. The Director General of Foreign Trade may notify such norms as recommended by the ALC.
7.9 Deleted
7.10 Modification of SION
An application for modification of existing SION may be filed by manufacturer exporter or merchant-exporter, tied to supporting manufacturer, in the form given in Appendix-11A to the ALC.
7.11 Advance Licence for Intermediate Supplies
The application for grant of Advance License for Intermediate supply may be made on the basis of a tie-up agreement with the exporter holding an Advance license for physical exports or for deemed exports. Such requests shall be considered by the licensing authority concerned. The Advance License for Intermediate supply shall be issued after making the licence invalid for direct import of items to be supplied by the intermediate manufacturer. In such cases, a copy of the invalidation letter will be given to the licence holder and copy thereof will be sent to the intermediate supplier as well as the licensing authority of the intermediate supplier. The licensee in such case has an option either to supply the intermediate product to holder of Advance Licence for physical exports/deemed exports or to export directly.
7.12 Advance Release Order against Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement/DFRC
An application may be made to the Regional Licensing Authority concerned for grant of Advance Release Order (ARO) to procure the inputs from indigenous sources/ canalising agencies/ EOUs/ EPZ/ EHTP/ STP units. The application shall specify (i) the name, description and quantity of the items and (ii) the individual value of items to be procured. An ARO shall be issued without indicating the name of the indigenous supplier after making the Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement, invalid for direct import of items mentioned thereon. An ARO may be issued along with the Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement or subsequently, and its validity shall be co-terminus with the validity of the Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement. An ARO issued for the procurement of an individual item shall be automatically valid for procurement from one or more indigenous sources.
For the purpose of claiming deemed export benefits, if any, the indigenous supplier shall produce a copy of ARO and documentary evidence substantiating the realisation of proceeds from the holder of Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement, through normal banking channels. ARO issued against DFRC shall, however, be entitled only to benefit given in paragraph 10.2(b) of Policy, whereas ARO for other categories shall be entitled to benefits given in paragraph 10.2 (b) and (c) of the Policy.
7.1 Back to Back Inland Letter of Credit (LC)3
The exporter may alternatively avail the facility of a back to back inland letter of credit from the banks. An Advance Licence holder, except for an intermediate supply, may approach a bank for opening an inland letter of credit (LC) in favour of an indigenous supplier.
Before opening the LC, the bank will ensure that the necessary BG/LUT has been executed by the Advance Licence holder and an endorsement to that effect has been made on the licence. However, execution of BG/LUT shall not be required in case endorsement of transferability has been made on the licence or the conditions of BG/LUT is waived by the licensing authority. After opening the inland LC, the bank shall make the following endorsement on:
- The Exchange Control copy of the Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement;
- The Customs copy of the Advance Licence for Physical Exports/ Deemed Exports/ Annual Requirement; and
- On the DEEC book (Part-i)
This facility will be available for the purpose of opening the LC in one bank and one branch in respect of any one item of import under the licence but the whole quantity and value of the item shall be operated from the same branch of the bank. However, for any other item in the same licence, the licence holder may open a separate LC in any other branch or bank subject to the condition that each of the item shall be operated to the full quantity and value in that branch of the bank. A licence holder may also open LC in installments as per his convenience subject to the condition that the licence holder shall source the full quantity and value of an item in one branch of the bank. The licence shall be invalidated by the bank for direct import only in respect of the full quantity and value of the item being sourced indigenously.
The original Letter of credit (LC) may be retained by the bank for negotiation and only the non-negotiable copy of the LC may be given to the indigenous supplier.
The responsibility of the bank shall be confined to making the endorsement. The bank shall not be liable for any misrepresentation or false statement made by the licensee while requesting the bank to make the endorsement. The inland LC opened by the bank in favour of the indigenous supplier shall not be cancelled for any reason whatsoever.
The non negotiable copy of inland LC together with the photocopy of the Advance Licence along with DEEC duly carrying endorsements made by the bank shall be sufficient for the indigenous supplier to claim deemed export benefits. LC issued against DFRC shall, however, be entitled only to benefit given in paragraph 10.2(b) of Policy, whereas LC for other categories shall be entitled to benefits given in paragraph 10.2 (b) and (c) of the Policy.
7.14Where the import of gold/silver is permitted as an input under this scheme, such gold/silver can be sourced through the nominated agencies as given in chapter 8 of the Policy for supply against the Advance Licences issued in this behalf. Before supply of the material, the nominated agencies should follow the same procedure as given in paragraph 7.13 above.
7.15 Acceptance of BG/LUT
(a) At the time of issue of the licence, the acceptance of the undertaking given by the applicant to the licensing authority concerned in the form given in Appendix-11B will be endorsed on the reverse of the Advance Licence .
(b) Deleted
Note :-
(a) No BG/LUT will be required where the specified export obligation has been fulfilled before making any import. In case of partial fulfillment of export obligation before effecting any imports, the BG/ LUT may be reduced proportionately. The licence holder shall also produce DEEC (Part II) and Bank Certificate of Export and Realisation, substantiating the completion or the partial fulfillment of the export obligation to the licensing authority concerned.
(b) In respect of an advance licence on which "No BG/LUT" facility has been provided, the licensing authority shall forward the relevant DEEC (Exports) to the customs authorities with whom the licence is registered for their record and further appropriate action. An endorsement to this effect shall also be made by the licensing authority on the DEEC (Imports) with a further stipulation that the same may be retained by the customs authority immediately after the imports are completed.
7.16 Deleted
7.17 Facility Of Supporting Manufacturers
The licence holder has the option to have the material processed through any other manufacturer including a jobber. However, the licence holder shall be solely responsible for the imported items and fulfillment of export obligation.
7.18 Facility Of Co-Licensee
If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. Such endorsement shall be mandatory where prior import before export is a condition for Advance Licence for physical and the licence holder desires to have the material processed through any other manufacturer or jobber.
Upon such endorsement made by the licensing authority, the licence holder and co-licensees shall jointly and severally be liable for completion of export obligation. Any one of the co-licensees may import the goods in his name or in the joint names. The BG/LUT shall also be furnished in their joint names.
7.19 Port Of Registration
IThe licence and the DEEC book for the Advance Licence shall be issued for the purpose of import and export through one of the sea ports or airports or ICDs specified below. The licence holder shall register the licence/ DEEC at the port specified in the licence/DEEC and thereafter all imports against the said licence/ DEEC shall be made only through that port, unless he obtains permission from the customs authority concerned to import through any other specified port. However, exports may be made through any of the specified ports.
Sea Ports: Mumbai, Calcutta, Cochin, Kandla, Mangalore, Marmagoa, Chennai, Nhavasheva, Paradeep, Tuticorin Vishakhapatnam, Kakinnada, Surat(Magdalla), Sikka and Pipavav
Air-ports: Ahmedabad, Bangalore, Mumbai, Calcutta, Delhi, Jaipur, Varanasi, Srinagar, Trivandrum, Hyderabad, Chennai, Coimbatore Air Cargo Complex, and Bhubaneshwar
ICDs: Bangalore, Coimbatore, Delhi, New Gauhati Goods Shed, Moradabad, Ludhiana, Hyderabad, Pimpri (Pune), Kanpur Pitampur (Indore), Agra, Faridabad, Jaipur, Guntur, Nagpur Varanasi, and Surat, Jodhpur, Salem, Tirupur, Singanalur, Waluj, Mallanpur.
The Commissioner of Customs may, either by a public notice or on the written request of the licence holder, by a special order and subject to such conditions as may be specified by him, also permit imports and exports from any seaport/airport/ICD or land custom station other than those mentioned above.
In such cases, where the licence and DEEC Book have not been registered at the port specified in the licence/DEEC and no import has taken place, the request for change in the Port of Registration may be considered by the licensing authority concerned provided the licence has not been redeemed and/or made transferable.
For imports from the Airport/ Seaport/ ICD other than the port of registration, a Telegraphic Release Advice(TRA) shall also be issued by the customs authority at the port of registration to the customs authority at the port of import.
7.20 Imports And Exports
The accountability of imports and exports shall be restricted in relation to the individual categories of advance licences issued under this scheme. The export obligation may also be fulfilled by exporting to the party other than the party which has initially placed the order on the basis of which licence has been issued.
The regional licensing authority, under whose jurisdiction the licence is issued or ALC in other cases, may also consider a request for clubbing all imports and exports of more than one Advance Licence (clubbing of all Advance Licence for physical exports or clubbing of all Advance Licence for Intermediate Supplies or clubbing of all Advance Licence for Deemed Exports) provided the imported inputs are properly accounted for as per norms. The value addition of the licences so clubbed shall be the average of the value addition imposed on individual licences. Upon clubbing, the licences shall, for all purposes, be deemed to be one licence.
The facility of clubbing shall be available only for redemption/regularisation of the cases and no further import or export shall be allowed. For this facility, licences are required to have been issued under similar Customs notification.
In case an Advance Licence(s), where export obligation has already expired, is to be clubbed with an Advance Licence(s) where export obligation period is valid, the applicant shall pay the composition fee of 1% or 5%, as the case may be, prescribed for extension of export obligation in respect of Advance Licence(s) where export obligation period has expired.
7.21 Enhancement/ Reduction In the Value of Licence
(i) In respect of an Advance Licence, the licensing authority concerned (as per their financial powers) may consider a request for enhancement/ reduction in the CIF value of the licence, provided the value addition after such enhancement does not fall below the stipulated minimum value addition and provided there is no change in the input- output norms and the Policy under which the licence was issued.
(ii) The licensing authority concerned (as per their financial powers) may also consider the request for enhancement/ reduction in CIF value, quantity of inputs, FOB value of export obligation and quantity of exports of an advance licence provided there is no change in the input output norms and value addition after such enhancement does not fall below the stipulated minimum value addition.
The request for prorata enhancement in value and quantity may be made either before or after exports. The prorata enhancement shall be limited to 100% of the value and quantity of the export obligation. In such cases where there is a change in the SION prior to the export of the said product, the prorata enhancement shall be given after calculating the entitlement on the revised SION.
(iii) Deleted
7.22 Export Obligation Period and its Extension The period of fulfillment export obligation under an Advance Licence shall commence from the date of issuance of licence. The export obligation shall be fulfilled within a period of 18 months except in the case of supplies under Advance Licence for Deemed Exports/ Advance Licence to the projects/turnkey projects in India/abroad where the export obligation must be fulfilled during the contracted duration of execution of the project/turnkey project.
The request for extension in export obligation period may be made in the form given in Appendix-12. The regional licensing authority shall grant one extension for a period of six months from the date of expiry of the original export obligation period to the licensee subject to payment of composition fee of 1% on the unfulfilled FOB value of export obligation with reference to CIF value of imports made for which extension is being sought. Request for further extension may be considered by the regional licensing authorities subject to payment of composition fee 5% on the unfulfilled FOB value of export obligation with reference to the CIF value of imports made for which extension is being sought. Such extension shall however not exceed a period of six months from the date of expiry of earlier extension.
7.23 Revalidation Of Licence
The regional licensing authority may consider a request of the original licence holder and grant one revalidation for a period of six months from the date of expiry of the original licence. Request for further revalidation may be considered by the regional licensing authorities. However, such revalidation shall not exceed a period of six months from the date of expiry of earlier period of revalidation. The request(s) for revalidation of licence shall be made in the form given in Appendix-12.
7.24 Monitoring Of Obligation
The licensing authority, with whom the Undertaking is executed by the Advance Licence holder, shall maintain a proper record in a master register indicating the starting and closing dates of obligation period and other particulars to monitor the export obligation. Within two months from the date of expiry of the period of obligation, the licence holder shall submit requisite evidence in discharge of the export obligation in accordance with paragraph 7.25 of the Handbook. In case the licence holder fails to complete the export obligation or fails to submit the relevant information/documents,the licensing authority shall take action by refusing further licences, shall enforce the condition of the licence and Undertaking and shall also initiate penal action as per law.
7.25 Fulfillment Of Export Obligation
The licence holder shall furnish the following documents in support of having fulfilled the export obligation:
(i) Bank Certificate of Exports and Realisation in the form given at Appendix-25 or payment certificate from the project authority in the form given in Appendix-14B. In the case of Advance Licence for Intermediate Supplies and Advance Licence for Deemed Exports for supplies to the EPZs/EOUs/SEZs/ EHTPs/STPs, documentary evidence from the bank substantiating the realisation of proceeds from the Licence holder or EOUs/SEZs/EPZs/EHTPs/STPs, as the case may be, through the normal banking channel, shall be required.
However, realisation of export proceeds shall not be insisted if the shipments are made against confirmed irrevocable letter of credit and the same is certified by the bank in column 14/15 of Appendix 25.
(ii) DEEC, containing details of imports and exports duly endorsed and signed by the customs authority, self-declaration statement by the licence holder and a self certified statement showing details of actual imports and exports.
(iii) Deleted
(iv) However, in case of supply to EOU/EPZ/SEZ under Advance Licence for Deemed Exports, DEEC exports shall be endorsed by Customs/Central Excise Authority located within the zone/ unit. Alternatively, the License holder shall furnish original copy of AR3A duly signed by 100% EOU/EPZ/SEZ unit and their jurisdictional excise authorities certifying the item of supply , its quantity, value and date of such supply.
7.26 Redemption
In case the export obligation has been fulfilled, the licensing authority shall redeem the case. After redemption, the DEEC (both for imports and exports) along with a copy of the redemption/ discharge certificate shall be sent to the concerned customs authorities for their record and further action. In case some imports are yet to be completed, the DEEC (Import) may be returned to the licence holder with a specific endorsement that the same may be retained by the customs authority concerned, immediately after the imports are completed.
Ordinarily, redemption of LUT shall not preclude the customs authority from taking action against the licence holder for any misrepresentation, mis-declaration and default detected subsequently.
7.27 Transitional Arrangement for Transferability
The licences issued upto 31.3.2000 and/or the material imported against such licences, which are otherwise eligible for transferability, shall be governed by the provisions contained in paragraph 7.27 of the Handbook (Vol.1) (RE-99).
7.28 Regularisation Of Bonafide Default
The cases of a bonafide default in fulfillment of export obligation may be regularised by the licensing authority in the manner indicated below:
A. Advance Licence and Advance Licence for Annual Requirement
(i) If the export obligation is fulfilled in terms of value but there is a shortfall in terms of quantity, the licence holder shall, for the regularisation, pay:-
- To the customs authority, customs duty on the unutilised value of the imported material alongwith interest at the rate of 24% per annum thereon; and
- To the licensing authority, SIL of a value equivalent to five times of the CIF value of the unutilised imported material expressed in free foreign exchange. However, the provision of this sub-paragraph (b) shall not be applicable if the unutilised imported material was freely importable on the date of import.
(iii) If the export obligation is not fulfilled both in terms of quantity and value, the licence holder shall, for the regularisation, pay as per (i) and (ii) above.
(iv) Deleted
(v) In case an exporter is unable to complete the export obligation undertaken in full and he has not made any import under the licence, the licence holder will also have an option to get the licence cancelled and apply for drawback after obtaining permission from the Customs authorities for conversion of white/green shipping bills to Drawback Shipping Bills.
B. Quantity based/ Value based licences issued as per Export and Import Policy 1992-97, shall be governed, for the purpose of regularisation, in accordance with the provisions of that Policy/ Procedures, 1992-97 (RE.96). However, in such cases also, the license holder shall be required to furnish Bank certificate of Exports and realisation showing realisation of export proceeds. However, for value wise shortfall in export obligation, the licence holder shall, for the regularisation, have the option as given in 7.28A(ii) above.
7.29 Time Period For Depositing Fines, Customs Duty,Etc.
The customs duty with interest to be recovered from the licencee on account of regularisation or enforcement of BG/ LUT, as the case may be, shall be deposited by the licence holder in relevant Head of Account of Customs Revenue i.e. "0.37 - Customs - I Import Duties (i) Revenue duties" in prescribed T.R. Challan within 30 days of the demand raised by the licensing/customs authority and documentary evidence shall be produced to this effect to the licencing/customs authority immediately. The details of payments made shall be reflected in Part-G of DEEC (Part-I). On receipt of such documentary evidence from the licence holder, the licensing authority shall intimate the details of the recovery/ deposits made to the customs authority concerned where the DEEC is registered, under intimation to Commissioner (Drawback), Department of Revenue, Ministry of Finance, Jeevan Deep Building, New Delhi.
Further, the Special Import Licence required towards regularisation shall also be deposited/ surrendered within 30 days of the demand raised by the licensing authority concerned.
The payment of amount of duty, interest and any dues or surrender of Special Import Licence for regularisation shall, however, be without prejudice to any other action that may be taken by the customs authorities at any stage under the Customs Act, 1962.
7.30 Maintenance of Proper Accounts
Every licence holder shall maintain a true and proper account of licence-wise consumption and utilisation of imported goods in Appendix-21. Such records should be preserved for a period of at least three years from the date of redemption.
Note: Advance Licence, unless otherwise stated , means Advance Licence for Physical Exports/ Intermediate Supply/ Deemed Exports.
7.31 Deleted
7.32 Duty Entitlement Passbook Scheme
The Policy relating to Duty Entitlement Passbook Scheme (DEPB) Scheme is given in chapter 7 of the Policy. The duty credit under the scheme shall be calculated by taking into account the deemed import content of the said export product as per SION and the basic custom duty and surcharge thereof payable on such deemed imports. The value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the scheme.
7.33 Deleted
7.34 Revalidation
No revalidation shall be granted beyond the original period of validity of DEPB.
7.35 Duplicate copy of DEPB
Duplicate copy of DEPB shall be issued in terms of paragraph 4.19.
7.36 Port of Registration
The exports/imports made from the ports given in paragraph 7.19 shall be entitled for DEPB.
7.36 Credit under DEPB and Present Market Value
A. In respect of products where the rate of credit entitlement under DEPB Scheme comes to 10% or more, the amount of credit against each such export product shall not exceed 50% of the Present Market Value (PMV) of the export product. At the time of export, the exporter shall declare on the shipping bill that the benefit under DEPB Scheme against the export product would not exceed 50% of the PMV of the export product. Such declaration shall be required only in cases where rate of credit under DEPB is 10% or more. However PMV declaration shall not be applicable for products for which value cap exist irrespective of the DEPB rate of the product.
B. The credit under DEPB may also be utilised for payment of customs duty on any item imported under freely transferable SIL.
7.37 Maintenance of Record
Each Custom House shall maintain a separate record of the details of the exports made under the blue colour DEPB shipping bill.
7.38 DEPB
An application for grant of credit under DEPB may be made to the licensing authority concerned in the form given in Appendix-11C alongwith the documents prescribed therein. The provisions of paragraph 7.2 shall be applicable for DEPB also. The FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer’s T/T buying/on demand buying rate, as the case may be, prevalent on the date of negotiation/ purchase/ collection of document. The DEPB rate of credit shall be applied on the fob value so arrived.
The DEPB shall be initially issued with non transferable endorsement in such cases where realisation has not taken place to enable the exporter to effect import for his own use. However, upon receipt of realisation, the DEPB shall be endorsed transferable. In such cases where the applicant applies for DEPB after realisation, the DEPB shall be issued with transferable endorsement.
If the export proceeds is not realised within six months or such extended period as may be allowed by RBI, the DEPB holder shall pay in cash an amount equivalent to the duty free credit utilised on imports, including SAD , against such exports with 24% interest from the date of import till the date of deposit. In such cases, where the amount realised in foreign exchange is less than the amount on which DEPB credit has been obtained, the holder of DEPB shall pay, in cash, an amount equivalent to the value not realised with 24% interest from the date of import till the date of deposit.
However, the facility of transferability may be allowed against DEPB without insisting on realisation of export proceeds if the shipments are made against irrevocable letter of credit and the same is certified by the bank in column 14/15 of Appendix 25.
The Regional Licensing Authorities shall monitor the cases where the DEPB has been granted prior to realisation of export proceeds so as to ensure that realisation takes place within the prescribed time failing which they shall initiate action for recovery of an amount equivalent to DEPB credit with 24% interest. The recovered amount in such cases shall be deposited in the Head of Account of Customs as stated in paragraph 7.29.
In such cases where the application for grant of DEPB credit is filed after realisation of export proceeds, the FOB value in free foreign exchange shall be converted into Indian rupees as per authorised dealers T/T buying/on demand buying rate, as the case may be, prevalent on the date of realisation of proceeds. The DEPB rate of credit shall be applied on the FOB value so arrived. The CIF value of imports effected under the DEPB shall not exceed the FOB value against which the DEPB has been issued. The licensing authorities shall incorporate an endorsement to this effect on the DEPB and shall also mention the FOB value in (Indian rupees) on the DEPB.
7.39 Time Period
The application for obtaining credit shall be filed within a period of 180 days from the date of exports or within 90 days from the date of realisation, whichever is later, reckoned from the last date of realisation / exports ,in respect of shipments for which the claim have been filed.
7.40 Frequency of Application
The applicant may file one or more applications subject to the condition that each application shall contain not more than 25 shipping bills. All the shipping bills in any one application must relate to exports made from one Custom House only. This limit shall not apply to the applications filed through EDI mode.
7.41 The DEPB shall be issued with single port of registration, which will be the port from where the exports have been effected.
7.42 Wherever provisional shipment has been allowed by the customs authorities, DEPB against such exports shall be issued only after the release of the shipping bill by the Customs. In such cases, application for DEPB shall be filed within 180 days from the date of release of such shipping bill.
7.43 Verification by Customs
The licensing authority shall ensure that while issuing the DEPB, the Shipping Bill no(s). and date(s), FOB value in Indian rupees as per Shipping Bill(s) and description of export product are endorsed on the DEPB. Before allowing the imports against DEPB, the Customs shall verify that the details of the exports, as given on the DEPB, are as per their records.
7.44 Deleted
7.45 Deleted
7.46 Deleted
7.47 Deleted
7.48 Deleted
7.49 Deleted
7.49 A Transitional Arrangement
The offsetting of DEPB issued on pre-export basis shall be as per the provisions contained in Paragraph 7.44 to 7.49 of Handbook (Vol.1) (RE-99).
7.50 Exports in Anticipation Of Credit Rate
No exports shall be allowed under DEPB scheme unless the DEPB rate of the concerned export product is notified.
7.51 Issuance Of DEPB/DFRC against Lost EP Copy Of The Shipping Bills
In case where EP copy of the Shipping Bill has been lost, the DEPB/DFRC claim can be considered subject to submission of the following documents.
1. A duplicate/Certified copy of the Shipping Bill issued by the Customs authority in lieu of original
2. An application fee equivalent to 10% of the DEPB/DFRC entitlement in respect of lost Shipping Bills. However, no fee shall be charged when the Shipping Bill is lost by the Customs and a documentary proof to this effect is submitted.
3. All the other prescribed documents, in original.
4. An affidavit by the exporter about the loss of Shipping Bills and an undertaking to surrender it immediately to the concerned licencing authorities, in case the same is found subsequently.
5. An indemnity bond is to be executed by the exporter to the effect that he would indemnify the Government for the financial loss if any on account of DEPB/DFRC issued against lost Shipping Bills.
6. The Customs authority, before allowing clearance , shall ensure that no DEPB/DFRC benefit has been availed against the same shipping bill.
The claim against the lost Shipping Bill shall be preferred within a period of six months from the date of export and application received thereafter will be rejected.
7.52 Loss Of Original Bank Certificate
In such cases where original bank certificate has been lost, the DEPB/DFRC claim can be considered subject to submission of following documents.
1. A duplicate copy of the Bank Certificate issued by the bank authority in lieu of original loss.
2. An application fee equivalent to 10% of the DEPB/DFRC entitlement in respect of lost bank certificate.
3. All the prescribed documents in original.
4. An affidavit by the exporter about the loss of Bank Certificate and an undertaking to surrender it immediately to the concerned licencing authorities, in case the same is found subsequently.
5. An indemnity bond is to be executed by the exporter to the effect that he would indemnify the Government for the financial loss if any on account of DEPB/DFRC issued against lost Bank Certificate
The claim against the lost Bank Certificate shall be preferred within a period of six months from the date of export and application received thereafter will be rejected.
In such cases, where both the documents have been lost, the exporter shall follow the procedure laid down in paragraph 7.51 and 7.52.
7.53 Fixation of DEPB Rate
Appendix 52 prescribes the form regarding fixation of DEPB rates. All applications for fixation of DEPB rates shall be routed through the concerned Export Promotion Council which shall verify the FOB value of exports as well as the international price of inputs covered under SION.
7.54 Advance Licence for Annual Requirement
Manufacturer exporter with export performance of Rs.1 cr in the preceding year and registered with excise authorities, except for products which are not excisable for which no such registration is required, shall be entitled for such licences. Export House, Trading House, Star Trading Houses and Super Star Trading Houses holding the certificate as merchant exporter where they agree to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant licence shall also be entitled for the advance licence for annual requirement.
The entitlement under this scheme shall be upto 125% of the average FOB value of export in the preceeding licensing year.
The exporters eligible for such Licences shall file an application in Appendix-57 to the licensing authority under whose jurisdiction the manufacturing unit of the applicant is located.
The Head office/ Registered office of the company can also file an application on behalf of the manufacturing unit. In such cases, the Head office/Registered office shall furnish full address of the factory where the inputs shall be used in the resultant product for exports. In case of merchant exporters, the application shall be made by the Head office/Registered office mentioning the name and address of the supporting manufacturer which shall be endorsed in the book.
The applicant shall have the flexibility to import any input covered under the SION in respect of items falling under the product group mentioned in the licence. However, the licence holder shall have to account for the inputs as per SION within the time period prescribed in this regard.
In such cases where there is a change in SION during the validity period of the licence, the licence holder shall account for raw material in respect of the exports made prior to the date of amendment, as per pre-revised norms and for exports made on or after the date of amendment as per revised norms. At the time of imports, the licence holder shall furnish the details of inputs, including its specification and technical characteristics, to the Customs authorities for making entries in the imports column.
The licence holder shall maintain the nexus in the imported inputs and the resultant product.
The applicant shall furnish details of the export product group, CIF value of licence and FOB value of the export obligation. However, the licence holder shall have the flexibility to export any product covered under SION for the export product group using the exempt material.
The licence shall be valid for 12 months for imports and 18 months for exports from the date of its issuance.
Within the eligibility, the licence holder can apply for one Advance Licence for Annual Requirement. Each Advance Licence shall have one port of registration for imports. Exports can take place from any port mentioned in paragraph 7.19. However, within the eligibility, he can apply for second licence with a different port of registration.
The eligible applicant can apply for licence in the second year as per his eligibility. However, in the third year, licence shall be issued only after settling of accounts in terms of SION in respect of licence issued in the first year.
After expiry of 18 months, the licence holder shall furnish proof of having fulfilled export obligation by submitting the documents prescribed in paragraph 7.25. In case of bonafide default in fulfillment of export obligation, the license holder can apply for regularisation in terms of paragraph 7.28. The exporter shall be entitled for further licenses in the same licensing year after fulfilling the export obligation in respect of the licenses obtained earlier provided the earlier licence was obtained for the full eligibility.
7.55 Duty Free Replenishment Certificate
The Policy of Duty Free Replenishment Certificate is given in paragraph 7.4 of the Policy. The exporter exporting under DFRC shall be required to give a declaration in the EP copy of the Shipping Bill indicating the serial number and product group of SION of the export product. In addition, he shall also give a declaration regarding the quality, technical characteristics and specifications of inputs used in the export product.
7.56 Transferability of DFRC/ Materials Imported Against It
Export shipments under DFRC can be effected from any port mentioned in paragraph 7.19 of the Handbook. The DFRC and the material imported against it shall be freely transferable. The transfer of DFRC shall however be for import at the port specified in the DFRC which shall be the port from where exports have been made. However for import from a port other then the port of export, TRA shall be issued by the Customs authority at the port of export to the Customs authority to the port of import.
7.57 Filing of Application
An application for grant of DFRC may be made to the licensing authority concerned in the form given in Appendix-11-H alongwith the documents prescribed therein. The provisions of paragraph 7.2 shall be applicable for DFRC also. An application for DFRC shall be filed only after realisation of export proceeds. However, in case of exports against irrevocable Letter of Credit, application may be filed after exports. The CIF value of DFRC shall be arrived at on the basis of the international price of the inputs given under SION. The FOB value shall be calculated on the basis of the Bank Realisation Certificate. In case the value addition on the basis of the FOB/CIF value comes to less than 33%, the CIF value shall be prorata reduced so as to adhere to the minimum prescribed value addition of 33%.
7.58 Time Period
The application for DFRC shall be filed within 90 days from the date of realisation reckoned from the last date of realisation in respect of shipments for which DFRC is being claimed. However, in case of exports against irrevocable Letter of Credit, the DFRC shall be filed within 180 days from the date of exports reckoned from the last date of realisation in respect of shipments for which DFRC is being claimed.
7.59 Frequency of Application
The applicant shall file one application relating to one export product from one port of export.. Where the same export product has been exported from different port of registration, the exporter shall file more than one application for the same export product.
7.60 The DFRC shall be issued with single port of registration, which will be the port from where the exports have been effected.
7.61 Wherever provisional shipment has been allowed by the customs authorities, DFRC against such exports shall be issued only after the release of the shipping bill by the Customs.
7.62 Verification by Customs
The licensing authority shall ensure that while issuing the DFRC, the Shipping Bill no(s) and date(s), FOB value in Indian rupees as per Shipping Bill(s) and description of export product are endorsed on the reverse of DFRC. Before allowing the imports against DFRC, the Customs shall verify that the details of the exports as given on the DFRC are as per their records.
7.63 Description of an Advance Licence
An Advance Licence and the relevant DEEC Book shall specify:
(a) the names and description of items to be imported and exported/supplied;
(b) the quantity of each item to be imported or wherever the quantity cannot be indicated, the value of the item shall be indicated. However, if in Standard input output norms, the quantity and value of individual inputs is a limiting factor, the same shall be applicable.
(c) the aggregate CIF value of imports; and
(d) the FOB/ FOR value and quantity of exports/ supplies.
7.64 Exports in Anticipation of Licence
(a) Exports/supplies made from the date of receipt of an application for an Advance Licence and Advance Licence for annual requirement by the licensing authority, may be accepted towards discharge of export obligation. If the application is approved, the licence shall be issued based on the input/output norms in force on the date of receipt of the application by the licensing authority in proportion to the provisional exports/ supplies already made till any amendment in the norms is notified. For the remainder of the exports, the Policy/ Procedures in force on the date of issue of the licence shall be applicable.
(b) The exports/supplies made in anticipation of the grant of an Advance Licence and Advance Licence for annual requirement shall be entirely on the risk and responsibility of the exporter.
(c) The conversion of duty free shipping bills to drawback shipping bills may also be permitted by the customs authorities in case the application for an Advance Licence is rejected or modified by the licensing authority.
