GOVERNMENT NOTIFIED GUIDELINES TO MUCH AWAITED SCHEME FOR REMISSION OF DUTIES AND TAXES ON EXPORT PRODUCTS (‘RoDTEP’)

[CA Sumit Aggarwal]

The Government vide Notification No. 19/2015-2020 dated 17 August 2021 has notified the guidelines relating to much awaited RoDTEP scheme (‘the Scheme’) . This is to be noted that the necessary Rules, Procedures, Priority Sectors etc. yet to be notified.

1. BACKGROUND OF RoDTEP SCHEME:

• The existing Merchandise Exports From India Scheme (‘MEIS’) is substituted by RoDTEP Scheme with the objective to reimburse the taxes and duties incurred by the exporters such as Local Taxes, Coal Cess, Mandi Tax, Electricity Duties, tax on petroleum products for transportation of goods, etc. which are not getting exempted or refunded under any other existing scheme so that benefit of zero rate can be achieved. Various timelines are tabulated below:

14 September 2019	31 December 2020	17 August 2021
Announce the rollout of RoDTEP Scheme	Issued Press Release extending the benefits of RoDTEP to all exports made w.e.f. 01 January 2021	Notified the RoDTEP Scheme

2. KEY FEATURES OF THE SCHEME:

• The Scheme will take effect for exports from 1st January, 2021.
• Exporter exporting items specified under Appendix 4R will be eligible to avail the benefit of RoDTEP Scheme subject to specified conditions.
• The rebate under the Scheme shall not be available in respect of duties and taxes already exempted or remitted or credited.
• Under the Scheme, a rebate would be granted to eligible exporters at a notified rate as a percentage of FOB value with a value cap per unit of the exported product, wherever required, on export of items which are categorized under the notified 8 digit HS Code.
• Scheme would be implemented through end to end digitization of issuance of rebate amount in the form of a transferable duty credit/electronic scrip (e-scrip).
• The e-scrips would be used only for payment of duty of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 i.e. Basic Customs Duty.
• The rebate allowed  under the Scheme is subject to the receipt of sale proceeds within time allowed under the Foreign Exchange Management Act, 1999. However, the rebate would not be dependent on the realization of export proceeds at the time of issue of rebate.
• Provisions for recovery of rebate amount where foreign exchange is not realised, suspension/withholding of RoDTEP in case of frauds and misuse, as well as imposition of penalty will also be built suitably by CBIC.
• Residual issues related to the Scheme arising subsequently shall be considered by an Inter-Ministerial Committee, named as "RODTEP Policy Committee (RPC)" chaired by DGFT (comprising members of Department of Commerce and Department of Revenue), whose decisions would be binding.

3. Ineligible Supplies/ Items/Categories under the Scheme:

The following categories of exports/ exporters shall not be eligible for rebate under RoDTEP Scheme:

• Export of imported goods
• Exports through trans-shipment
• Export products which are subject to Minimum export price or export duty
• Products which are prohibited or restricted under the Exports Policy
• Deemed exports
• Supplies of products manufactured by DTA units to SEZ/FTWZ units
• Products manufactured in EHTP and BTP
• Products partly or wholly manufactured under Bonded Warehouse
• Exports made through non-EDI ports
• Goods which have been taken into use after manufacture
• Products manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit (EOU) or by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones
• Products manufactured or exported in discharge of export obligation against an Advance Authorization or Duty Free Import Authorization or Special Advance Authorization issued under a duty exemption scheme of relevant Foreign Trade Policy

Author's Comments:

• The rates notified under the Scheme ranges from 0.01% to 4.3%, which are much lesser than the rates notified under MEIS scheme. Therefore, representations from the industries can be seen in near future where such rates do not adequately cover the incidence of unrefunded taxes and duties borne on the export of product.
• The Scheme does not provide any clarity on the cases where an exporter has not indicated the intent of claim on the exports made in the past.
• The Scheme is also silent whether duty drawback would also be available in addition to the rebate provide under the Scheme.
• In the case of Oriental Carbon and Chemicals Limited Versus Union Of India, the Hon’ble Gujarat High Court has held that it would be extremely unfair and unjust not to extend the benefits of the MEIS to the writ-applicant on the ground that it had exported goods from a non- EDI port. In view of this one of conditions to eligible for RoDTEP Scheme that the export of goods should be made through EDI port only would become matter to be decided by the Court.