IMPORTANT COMMON PROVISIONS FOR IMPORT, EXPORT & DUTY CREDIT SCRIP

FREE MOVEMENT OF EXPORT GOODS

Consignments of items meant for exports shall not be withheld / delayed for any reason by any agency of Central / State Government. In case of any doubt, authorities concerned may ask for an undertaking from exporter.

NO SEIZURE OF STOCK FOR EXPORT

No seizure of stock shall be made by any agency so as to disrupt manufacturing activity and delivery schedule of exports. In exceptional cases, concerned agency may seize the stock on basis of prima facie evidence. However, such seizure should be lifted within 7 days.

Clearance of Goods from Customs against IMPORT LICENSE

Good already imported / shipped / arrived, in advance, but not cleared from Customs may also be cleared against an Authorisation issued subsequently.

Private/Public Bonded Warehouses for Imports

(a) Private / Public bonded warehouses may be set up in DTA as per terms and conditions of notification issued by DoR. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such bonded warehouses.

(b) Such goods may be cleared for home consumption in accordance with provisions of FTP and against Authorisation, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods.

(c) If such goods are not cleared for home consumption within a period of one year or such extended period as the custom authorities may permit, importer of such goods shall re-export the goods.

Common Provisions of Duty Credit Scrip, except where specifically provided for :-

(a) Government reserves the right in public interest, to specify export products or services or exports to such countries, which shall not be eligible for computation of entitlement.
(b) Further Government reserves the right to impose / change the rate / ceiling on Duty Credit Scrip under this chapter.
(c) Similarly, Government may also notify goods (in Appendix 37B of HBPv1), which shall not be allowed for import under Duty Credit Scrip.

Widening the Scope of Utilization of Duty Credit Scrip

(a) Duty  Credit  Scrips  issued  under  Focus  Market  Scheme,  Focus Product  Scheme  and  Vishesh  Krishi  Gramin  Udyog  Yojana (VKGUY)  can be used for payment of service tax on  procurement of  services  within  the  legal  framework  of  service  tax  exemption notifications under the Finance Act, 1994. Holder of the scrip shall be entitled to avail  drawback or  CENVAT credit of  the  service taxdebited in the scrips as per Department of Revenue rules.

(B) All  duty  credit  scrips  issued  under  Chapter  3  can  be  utilized  for payment  of  application  fee  to  DGFT  for  obtaining  any authorization  under  Foreign  Trade  Policy.  This  benefit  shall  be available only to  the original duty credit scrip holders.  Duty credit scrip  can  also  be  paid  for  payment  of  composition  fee  and  for payment  of  value  shortfalls  in  EO  under  para  4.28  (b)  of  Hand Book of Procedure Vol. 1.

Free Transferability

(a) Duty Credit Scrip (FPS including MLFPS, FMS and VKGUY) and items imported against it would be freely transferable.

(b) Duty Credit Scrip under SFIS (Para 3.12) shall not be freely transferable.

(c) Status Holder Incentive Scrip shall not be transferable except as permitted under Para 3.16.3 above.

Imports Allowed/Domestic Procurement

(a) Duty Credit Scrip may be used for import of inputs or goods including capital goods, provided same is freely importable and / or restricted under ITC (HS). However, import of items listed in Appendix 37B of HBPv1 shall not be permitted to be debited.

(b) Duty Credit Scrip under Chapter 3 of FTP can also be utilized for payment of duty against imports under EPCG scheme, provided the item is importable against the Scrip.

(c)  Duty Credit Scrip can also be utilised for payment of Excise Duty on domestic procurement of such items as permitted to be imported under respective scheme.

Facility to close cases of default in Export Obligation

Requests  have  been  received  for  grant  of  relief  to  close  cases where there is default in export obligations pertaining to advance authorizations  and  EPCG  authorizations.  It  has  been  decided  to allow a facility to close such cases after payment of required duty, along with  applicable  interest.  The duty + interest  have  to be paid within a limited period of six months from the date of notification of this  scheme.  The  total  payment  shall  not  exceed  two  times  the duty saved amount on default in Export Obligation.

Status Holder Incentive Scheme (SHIS)

Status Holder Incentive Scheme (SHIS) was extended for the year 2012-13. The scheme will not be available for the year  2013-14. Regional Authority shall allow limited transferability of SHIS scrip within  group  company  of  the  status  holder  provided  the  group company is a manufacturer.

Recredit of 4% SAD

Utilization  of  recredited  4%  SAD  scrips  shall  be  allowed  upto 30.09.13  as  a  trade  facilitation  measure.  However,  no  further extension shall be considered by Government and this would be the last such opportunity. The importers are advised to make the initial payment of 4% SAD in cash in future if they want a refund.

CENVAT / Drawback

Additional customs duty/excise duty paid in cash or through debit under Duty Credit Scrip shall be adjusted as CENVAT Credit or Duty Drawback as per DoR rules, except under SFIS.

TRA Facility

Utilization of Duty Credit Scrip for imports from a port other than port of registration shall be allowed under Telegraphic Release Advice (TRA) facility as per DoR notification.

Exclusivity of Entitlement

Only one benefit under Chapter 3 schemes can be claimed by an exporter for a particular shipment.

Import under Lease financing

Duty Credit Scrip can be utilised for payment of duty in case of import of capital goods under lease financing in terms of provision in Para 2.25 of FTP.

Transfer of Export Performance

(a)  Transfer of export performance from one to another shall not be permitted. Thus, a shipping bill containing name of applicant shall be counted in export performance / turnover of applicant only if export proceeds from overseas are realized in applicant’s bank account and this shall be evidenced from BRC / FIRC.

(b)   However, for VKGUY, FMS and FPS (including MLFPS), benefits can be claimed either by the supporting manufacturer (along with disclaimer from the company /firm who has realized the foreign exchange directly from overseas) or by the company / firm who has realized the foreign exchange directly from overseas.

Validity of Export Authorisation and Import Licence / Certificate / Authorisation / Permissions / CCPs

a. Validity of Import / Export Authorizations from the date of issue shall be as follows, unless specified otherwise:

Sr. No.

Type of Authorisation

Validity Period

(i)

Zero duty EPCG Authorisation

9 months

(ii)

3% Duty EPCG Authorisation

36 months

(iii)

Advance Authorisations (AA) for Deemed Export

Coterminus with contracted duration of project execution or 12 months  whichever is more.

(iv)

AA  (except (iv) above), DFIA, Replenishment Authorisation for Gems & Jewellery as per Chapter 4 of FTP.

Minimum 12 months, or Upto 31.3.2014 from issue date, whichever is more.

(v)

All other Import Authorisations (includingfor Restricted items and CCP)

18 months.

(vi)

Export Authorisation

12 months (However, EFC may decide to issue Export Authorisation for a longer duration in case of R&D studies based on recommendation of technical authority)

b. Where an Authorisation expires during the month, such Authorisation shall be deemed to be valid until last day of concerned month. This proviso would be applicable even for a revalidated Authorisation.

c. Validity of an import Authorisation is decided with reference to date of shipment / dispatch of goods from supplying country as given in Paragraph 9.11 A of HBP v1 and not the date of arrival of goods at an Indian port.

d. Provisions of paragraph ( b ) above shall not be applicable to DEPB, Service Providers under SFIS, VKGUY and duty credit scrips issued under FMS and FPS, which are duty credit entitlements and must be valid on date on which actual debit of duty is made.

Revalidation of Import / Export Licence / Certificate / Authorisation / Permissions

a. RA concerned may revalidate import Authorisation on merits, for six months from date of expiry of validity.

b. However, Export Licence may only be revalidated by RA concerned on approval of DGFT for six months at a time and maximum upto 12 months from date of expiry of validity.

c. However, revalidation of freely transferable Authorization / duty credit scrips and stock and sale Authorization shall not be permitted unless validity has expired while in custody of Customs authority / RA.

Irrevocable Letter of Credit

In case where applicant applies for duty credit scrip / DEPB / DFIA / discharge of EO against confirmed irrevocable letter of credit (or bill of exchange which is unconditionally Avalised / Co-Accepted / Guaranteed by a bank) and this is confirmed and certified by exporter’s bank in relevant Bank Certificate of Export and Realization, payment of export proceeds shall be deemed to be realized. For Status Holders, irrevocable letter of credit would suffice.

Free of Cost Exports for Export Promotion

Status holders shall be entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rs.10 lakh or 2% of average annual export realisation during preceding three licensing years whichever is higher.

Import of Cars

Import of cars/vehicles is permitted through designated ports only. Now import of  cars/vehicles  would  also  be  allowed  at  ICD Faridabad and Ennore Port (TN).

Facility of Payment of Customs Duties in case of E.O. defaults

Duty Credit Scrip can also be utilised / debited for payment of Custom Duties in case of EO defaults for  Authorizations issued under Chapters 4 and 5 of this Policy. However, penalty / interest shall be required to be paid in cash.

Minimum Value Addition under  Advance Authorisation Scheme and  DFIA scheme

(a) Advance Authorisation Scheme – Advance Authorisation necessitates exports with a minimum value addition of 15%, except for items specified in Appendix 11B of HBP v1 and for items in Gems & Jewellery Sector, for which value addition would be as per paragraph 4A.2.1 of HBP v1. Exports to SEZ Units / supplies to Developers / Codevelopers, irrespective of currency of realization, would also be covered.

(b) DFIA Scheme - A minimum 20% value addition shall be required for issuance of DFIA. However, for items in gems and jewellery sector value addition as prescribed under paragraph 4A.2.1 of HBP v1. shall apply. Similarly, for items where a higher value addition has been  prescribed under Advance Authorisation Scheme, the same value addition for DFIA shall be applied.

Counting of Commission in FOB value of Exports (in free foreign exchange)

FOB Value of Exports (in free foreign exchange) shall include up to 12.5% Foreign Agency Commission for computation of Duty Credit Scrip Benefit.

Ineligible Exports Categories/Sectors

For VKGUY, FMS, FPS (including MLFPS) and Status Holders Incentive Scrip, the following exports / categories/sectors shall be ineligible for Duty Credit Scrip entitlement:

(i)  EOUs / EHTPs / BTPs who are availing direct tax benefits / exemption;

(ii)  Export of imported goods covered under Para 2 .35 of FTP;

(iii)  Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India;

(iv)  Deemed Exports;

(v)  Exports made by SEZ units or SEZ products exported through DTA units; and

(vi)  Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).

Relevant text of New Notification / Circular / Public Notice / Trade Notice regarding amendments in the scheme is as under :-

Public Notice No.55 (RE-2013/2009-2014)

New Delhi, Dated the 14th  March, 2014

Sub :   Introduction of Online Export Obligation Discharge Certificate (EODC) / Redemption for Advance Authorization (AA) and Duty Free Import Authorization (DFIA).

1.      In exercise of powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-2014, the Director General of Foreign Trade hereby notifies amendment in procedure to be followed in respect of Export Obligation Discharge Certificate / Redemption of Advance Authorization (AAs) and Duty Free Import Authorization (DFIA) with effect from 01.06.2014

2.         Guidelines for Exporters / RAs:

Filing of applications for grant of EODC / Redemption
I. Physical Exports[EDI Shipping Bills only] For all Shipping Bills on or after 01.04.2009 Online application/filing for EODC is mandatory.
For Shipping Bills prior to 01.04.2009 Online application/filing for EODC is not mandatory(because the shipping bills may not have been transmitted to DGFT electronically)
II. Physical Exports [ Non-EDI Shipping Bills] For all Non-EDI Shipping Bills manual filing will continue as these Shipping Bills have not been transmitted electronically to DGFT
III. Deemed Exports Details of Deemed Export Supplies to be fed in EODC System on-line on DGFT website.

3. Applications for EODC for cases at entry II and III in the table at para 2  above cannot be made online as shipping bills are manual and records evidencing deemed exports supplies are not transmitted online to DGFT.   In respect of these cases applications will continue to be in manual mode.   Only after electronic transmission of these supporting documents to DGFT is made possible, they will be brought within the ambit of on line EODC.

4.  EODC / Redemption letter containing details of EDI / Non-EDI Shipping Bills will be transmitted electronically to Customs / Authorization holder.

Effect of this Public Notice :- 

Online system for EODC / Redemption for AA / DFIA is being introduced with effect from 01.06.2014.  This will reduce processing time and transaction cost.

Public Notice No. 46 /2009-2014 (RE- 2013)

Dated:      8th  January, 2014

 Subject  :  EDI Procedure for claiming benefits in respect of Third Party exports

1.  In exercise of the powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-14, the Director General of Foreign Trade hereby introduces two new Paragraphs 9.14 & 9.15 in the Handbook of Procedures (Vol. I) 2009-14 for claiming benefit of Third Party exports under EDI system and for conversion of currencies into US$ with immediate effect as under:

2.   These two new Paras 9.14 & 9.15 would read as under :

“9.14    For claiming benefits under EDI system in respect of Third Party exports the process will be initiated by the First party who will link shipping bills and BRCs to repository. If the First Party chooses not to claim benefit for a particular shipping bill item/s, it may authorize Third Party to claim benefit for such shipping bill item/s. After such authorization by First party, Third Party will be able to utilize the shipping bill item/s in its application”.

“9.15   (a) Currencies, where Exchange rates are notified by CBEC

The foreign exchange realized (as mentioned by bank in the eBRC) is converted to Indian Rupee (INR) using the monthly exchange rates published by CBEC.

               (b) Currencies, where Exchange rates are not notified by CBEC

In such cases, total realized value in INR (as mentioned by bank in the eBRC), will be converted into US$ by using the US$ /INR exchange rate prevailing on the date of realization as published by CBEC.”

Effect of the Public Notice :- 

A procedure for claiming of benefits in respect of Third Party exports under EDI system and a guideline for conversion of currencies are being published.

 Notification No: 64 (RE-2013)/2009-2014

New Delhi, the   06  January, 2014

Duty Credit Scrip can be utilised / debited for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapters 4 and 5 of this Policy. However, penalty / interest shall be required to be paid in cash.  Scrips issued  under SHIS, SFIS and AIIS cannot be  utilised / debited for payment of Custom Duties in case of EO defaults for Authorizations issued under Chapters 4 of this Policy. Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under para 4.28 (b) of HBP v1 2009-14.”

Notification No. 58 (RE-2013)/2009-2014

New Delhi, Dated the   18   December, 2013

The definition of “Group Company” in Para 9.28 of Foreign Trade Policy, 2009-2014 is amended to read as under:

“Group Company” means two or more enterprises which, directly or indirectly, are in a position to:-

(a)  exercise twenty-six per cent or more of voting rights in other enterprise; or

(b) appoint more than fifty percent of members of board of directors in the other enterprise.

The term ‘Enterprise’ used above would include (i) Public Limited Company, (ii) Private Limited Company and (iii) Limited Liability Partnership (LLP), but not a partnership firm or a proprietorship firm.

For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of group, the group company should have been in existence at least 2 years prior to date of application under any of export promotion schemes notified in FTP.

Effect of this Notification:

Para 9.28 of FTP has been amended to include Limited Liability Partnerships (LLPs) in the definition of “Group Company”. Neither partnership nor proprietorship firm would come within the ambit of definition of a “Group Company”.