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DUTY EXEMPTION / REMISSION SCHEMES

Chapter 4 - Policy - Foreign Trade Policy - DGFT - Chapter 4 - CHAPTER 4 4.00 Objective Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of input or duty remission. 4.01 Schemes (a) Duty Exemption Schemes. The Duty Exemption schemes consist of the following: (i) Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement). (ii) Duty Free Import Authorisation (DFIA). (b) Duty Remission Scheme. Duty Drawback .....

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the process of production of export product, may also be allowed. (b) Advance Authorisation is issued for inputs in relation to resultant product, on the following basis: (i) As per Standard Input Output Norms (SION) notified (available in Hand Book of Procedures); OR (ii) On the basis of self declaration as per paragraph 4.07 of Handbook of Procedures. 4.04 Advance Authorisation for Spices Duty free import of spices covered under Chapter-9 of ITC (HS) shall be permitted only for activities like .....

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nder Chapter 61 and 62 of ITC(HS) Classification of Export and Import, subject to the following terms and conditions: (i) The authorisation shall be issued based on Standard Input output Norms (SION) or prior fixation of norms by Norms Committee. (ii) The authorisation shall be issued for the import of relevant fabrics including inter lining only as input. No other input, packing material, fuel, oil and catalyst shall be allowed for import under this authorisation. (iii) Exporters shall be eligi .....

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d rate), he shall follow para 4.15 of FTP regarding declarations to be made in application for the authorisation and make export under claim for brand rate. In such cases the value addition shall be as per para 4.08 of FTP. Minimum value addition shall be as per para 4.09 of FTP. (v) Authorisation, and the fabric imported, shall be subject actual user condition. The same shall be non transferable even after completion of export obligation. However fabric imported may be transferred for job work .....

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(i), 4.21(ii), 4.21(iii), 4.21(v), 4.22(i), and 4.24 of Foreign Trade Policy shall be applicable insofar as they are not inconsistent with this scheme.] 4.05 Eligible Applicant / Export / Supply (a) Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer. (b) Advance Authorisation for pharmaceutical products manufactured through Non-Infringing (NI) process (as indicated in paragraph 4.18 of Handbook of Procedures) shall be issued .....

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e Authorisation for Annual Requirement shall only be issued for items notified in Standard Input Output Norms (SION), and it shall not be available in case of adhoc norms under paragraph 4.03 (b)(ii) of FTP. (ii) Advance Authorisation for Annual Requirement shall also not be available in respect of SION where any item of input appears in Appendix 4-J. 4.07 Eligibility Condition to obtain Advance Authorisation for Annual Requirement (i) Exporters having past export performance (in at least preced .....

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, where B A = FOB value of export realized / FOR value of supply received. B = CIF value of inputs covered by Authorisation, plus value of any other input used on which benefit of DBK is claimed or intended to be claimed. 4.09 Minimum Value Addition (i) Minimum value addition required to be achieved under Advance Authorisation is 15%. (ii) Export Products where value addition could be less than 15% are given in Appendix 4D. (iii) For physical exports for which payments are not received in freely .....

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elf Declaration basis (a) Import of following products shall not be permissible on self-declaration basis: (i) All vegetable / edible oils classified under Chapter-15 and all types of oilseeds classified under Chapter-12 of ITC (HS) book; (ii) All types of cereals classified under Chapter-10 of ITC (HS) book; (iii) All Spices other than light black pepper (light berries) having a basic customs duty of more than 30%, classified under Chapter-9 and 12 of ITC (HS) book; (iv) All types of fruits/ ve .....

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quired to apply under paragraph 4.06 of Hand Book of Procedures to the Norms Committee. (c) Where export and/or import of biotechnology items and related products are involved, Authorisation under paragraph 4.07 of Handbook of Procedures shall be issued by Regional Authority only on submission of a No Objection Certificate from Department of Biotechnology. 4.12 Accounting of Input (i) Wherever SION permits use of either (a) a generic input or (b) alternative input, unless the name of the specifi .....

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st a number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in shipping bills. (iii) At the time of discharge of export obligation (issue of EODC) or at the time of redemption, Regional Authority shall .....

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is Chapter. (ii) Import items subject to pre-import condition are listed in Appendix 4-J or will be as indicated in Standard Input Output Norms (SION). (iii) Import of drugs from unregistered sources shall have pre-import condition. 4.14 Details of Duties exempted Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, wherever applicable. Howeve .....

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duty paid input in the application for Advance Authorisation. As per details mentioned in the application, Regional Authority shall also clearly endorse details of such duty paid inputs in the condition sheet of the Advance Authorisation. 4.16 Actual User Condition for Advance Authorisation (i) Advance Authorisation and / or material imported under Advance Authorisation shall be subject to Actual User condition. The same shall not be transferable even after completion of export obligation. Howe .....

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all produce a certificate from either the jurisdictional Central Excise Authority or Chartered Accountant, at the option of the exporter, at the time of filing application for Export Obligation Discharge Certificate to Regional Authority concerned. (iii) Waste / scrap arising out of manufacturing process, as allowed, can be disposed off on payment of applicable duty even before fulfillment of export obligation. 4.17 Validity Period for Import (i) Validity period for import of Advance Authorisati .....

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item may be allowed under Advance Authorisation provided it is separately so notified, subject to the conditions given therein. (ii) Items reserved for imports by STEs cannot be imported against Advance Authorisation / DFIA. However those items can be procured from STEs against ARO or Invalidation letter. STEs are also allowed to sell goods on High Sea Sale basis to holders of Advance Authorisation / DFIA holder. STEs are also permitted to issue No Objection Certificate (NOC) for import by Adva .....

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be allowed under Advance Authorisation/ DFIA. (v) Export of restricted / SCOMET items however, shall be subject to all conditionalities or requirements of export authorisation or permission, as may be required, under Schedule 2 of ITC (HS). 6[(vi) Import of Natural Rubber will not be allowed during the period 21st January 2016 to 31st March 2016 under Advance Authorisations to be issued or revalidated on or after 21st January, 2016.] 4.19 Free of Cost Supply by Foreign Buyer Advance Authorisatio .....

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ure inputs from indigenous supplier/ State Trading Enterprise in lieu of direct import. Such procurement can be against Advance Release Order (ARO), Invalidation Letter, Back-to-Back Inland Letter of Credit. (ii) When domestic supplier intends to obtain duty free material for inputs through Advance Authorisation for supplying resultant product to another Advance Authorisation / DFIA / EPCG Authorisation, Regional Authority shall issue Invalidation Letter. (iii) Regional Authority shall issue Adv .....

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holder shall also be eligible for Advance Release Order / Invalidation Letter facility. (vii) Validity of Advance Release Order / Invalidation Letter shall be co-terminous with validity of Authorisation. 4.21 Currency for Realisation of Export Proceeds (i) Export proceeds shall be realized in freely convertible currency except otherwise specified. Provisions regarding realization of export proceeds are given in paragraph 2.43 of FTP. (ii) Export to Rupee Payment Area (RPA) (for which payments a .....

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export to SEZ unit / developer / co-developer in accordance with the procedures given in SEZ Rules, 2006. 2[4.22 Export Obligation (i) Period for fulfilment of export obligation under Advance Authorisation shall be 18 months from the date of issue of Authorisation or as notified by DGFT. 11[(ii) In cases of supplies to projects in India under deemed export category or projects abroad, the Export Obligation period shall be co-terminus with contracted duration of the project execution or 18 month .....

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company holding Advance Authorisation and registered with BIFR / Rehabilitation Department of State Government or any firm / company acquiring a unit holding Advance Authorisation which is under BIFR / Rehabilitation, may be permitted export obligation extension for the Advance Authorisation(s) held by the acquired unit, as per rehabilitation package prepared by operating agency and approved by BIFR / Rehabilitation Department of State Government. If time-period upto which EO extension is to be .....

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tment of Revenue. Authorisation holder shall also inform about such re-importation to the Regional Authority which had issued the Authorisation within one month from date of re-import. DUTY FREE IMPORT AUTHORISATION SCHEME (DFIA) 4.25 DFIA Scheme (a) Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed. (b) Provisions of paragraphs 4.12 .....

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uthority shall be available for duty paid inputs, whether imported or indigenous, used in the export product. However, in case such drawback is claimed for inputs not specified in SION, the applicant should have indicated clearly details of such duty paid inputs also in the application for Duty Free Import Authorization, and as per the details mentioned in the application, the Regional Authority should also have clearly endorsed details of such duty paid inputs in the condition sheet of the Duty .....

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ree Import Authorisation. 4.28 Minimum Value Addition Minimum value addition of 20% shall be required to be achieved. For items where higher value addition has been prescribed under Advance Authorisation in Appendix 4C, the same value addition shall be applicable for Duty Free Import Authorisation also. 4.29 Validity & Transferability of DFIA (i) Applicant shall file online application to Regional Authority concerned before starting export under DFIA. (ii) Export shall be completed within 12 .....

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of export or six months (or additional time allowed by RBI for realization) from the date of realization of export proceeds, whichever is later. 12[(v) Applicant shall be allowed to file application beyond 24 months from the date of generation of file number as per paragraph 9.02 of Hand Book of Procedures. ] (vi) Separate DFIA shall be issued for each SION and each port. (vii) Exports under DFIA shall be made from from a single port as mentioned in paragraph 4.37 of Handbook of Procedures. 13[( .....

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all be required to provide declaration with regard to technical characteristics, quality and specification in Shipping Bill: Alloy steel including Stainless Steel, Copper Alloy, Synthetic Rubber, Bearings, Solvent, Perfumes / Essential Oil/ Aromatic Chemicals, Surfactants, Relevant Fabrics, marble, Articles made of polypropylene, Articles made of Paper and Paper Board, Insecticides, Lead Ingots, Zinc Ingots, Citric Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped / Stranded Mat, Ro .....

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rt product. 4.32 Items of Export Following items, if exported, would be eligible: 15[(i) Gold jewellery, including partly processed jewellery and articles including medallions and coins (excluding legal tender coins), whether plain or studded, containing gold of 8 carats and above up to a maximum limit of 22 carats;] (ii) Silver jewellery including partly processed jewellery, silverware, silver strips and articles including medallions and coins (excluding legal tender coins and any engineering g .....

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on for Precious Metals. 4.34 Advance Procurement/ Replenishment of Precious Metals from Nominated Agencies 9[ (i) Exporter of gold / silver / platinum jewellery and articles thereof including mountings and findings may obtain gold / silver / platinum as an input for export product from Nominated Agency, in advance or as replenishment after export in accordance with the procedure specified in this behalf. In case where CENVAT credit facility on Precious metal (Gold, Silver and Platinum) as input .....

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60 and 4.61 respectively in the Handbook of Procedures. 4.35 Replenishment Authorisation for Gems (i) Exporter may obtain Replenishment Authorisation for Gems from Regional Authority in accordance with procedure specified in Handbook of Procedures. (ii) Replenishment Authorisation for Gems may be issued against export including that made against supply by Nominated Agency (paragraph 4.41 of FTP) and against supply by foreign buyer (paragraph 4.45 of FTP). (iii) In case of plain or studded gold / .....

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card, Staple wire, Poly bag (as notified by Customs) for Jewellery made out of precious metals (other than Gold & Platinum) equal to 2% and for Cut and Polished Diamonds and Jewellery made out of Gold and Platinum equal to 1% of FOB value of exports of the preceding year, may be issued on production of Chartered Accountant Certificate indicating the export performance. However, in case of Rhodium finished Silver jewellery, entitlement will be 3% of FOB value of exports of such jewellery. Th .....

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ss not less than 0.995 and mountings, sockets, frames and findings containing more than 50% silver by weight; (iii) Platinum of fineness not less than 0.900 and mountings, sockets, frames and findings containing more than 50% platinum by weight. (b) Advance Authorization shall carry an export obligation which shall be fulfilled as per procedure indicated in Chapter 4 of Handbook of Procedures. (c) Value Addition shall be as per paragraph 4.38 of FTP and 4.61 of Handbook of Procedures. 4.38 Value .....

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l also include interest paid in free foreign exchange to foreign supplier. 4.39 Wastage Norms Wastage or manufacturing loss for gold / silver / platinum jewellery shall be admissible as per paragraph 4.60 of Handbook of Procedures. 4.40 DFIA not available Duty Free Import Authorisation scheme shall not be available for Gems and Jewellery sector. 4.41 Nominated Agencies (i) Exporters may obtain gold / silver / platinum from Nominated Agency. Exporter in EOU and units in SEZ would be governed by t .....

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Agency. (iv) Procedure for import of precious metal by Nominated Agency (other than those authorized by Reserve Bank of India and the Gems & Jewellery units operating under EOU and SEZ schemes) and the monitoring mechanism thereof shall be as per the provisions laid down in Hand Book of Procedures. (v) A bank authorised by Reserve Bank of India is allowed export of gold scrap for refining and import standard gold bars as per Reserve Bank of India guidelines. 4.42 Import of Diamonds for Cert .....

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ding & Research India Pvt Ltd., Surat, Gujarat, India. 5[(4) HRD Diamond Institute Private Limited, Mumbai, Maharashtra, India.] 14[ (5) M/s International Gemological Institute (India) Pvt Ltd, Bandra Kurla Complex, Mumbai ] 4.43 Export of Cut & Polished Diamonds for Certification/ Grading & Re-import List of authorized laboratories for certification / grading of diamonds of 0.25 carat and above are given in paragraph 4.74 of Handbook of Procedures. 8[ 4.44 Export of Cut & Polish .....

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ate of export. Such facility of export and subsequent reimport at zero duty will be subject to guidelines issued by Central Board of Customs & Excise, Department of Revenue] 4.45 Export against Supply by Foreign Buyer (i) Where export orders are placed on nominated agencies / status holder / exporters of three years standing having an annual average turnover of Rupees five crores during preceding three financial years, foreign buyer may supply in advance and free of charge, gold / silver / p .....

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irectly or through their associates or by status holder / exporter. Import and Export of findings shall be on net to net basis. 4.46 Export Promotion Tours/ Export of Branded Jewellery (i) Nominated Agencies and their associates, with approval of Department of Commerce and with approval of Gem & Jewellery Export Promotion Council (GJEPC), may export gold / silver / platinum jewellery and articles thereof for exhibitions abroad. (ii) Personal carriage of gold / silver / platinum jewellery, pr .....

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The jewellery parcel shall not exceed 20 kgs by weight. 4.49 Private / Public Bonded Warehouse Private / Public Bonded Warehouses may be set up in SEZ/DTA for import and re-export of cut and polished diamonds, cut and polished coloured gemstones, uncut & unset precious & semi-precious stones, subject to achievement of minimum value addition of 5% by DTA units. 4[4.49 A Special Notified Zone Import, auction/sale and re-export of rough diamonds by entities, as notified vide RBI Notificatio .....

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or studded with / without diamond and / or other stones with a track record of at least two years in import or export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 crore or above during preceding three licensing years may also carry out their business through designated Diamond Dollar Accounts (DDA). (b) Dollars in such accounts available from bank finance and / or export proceeds sha .....

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DDA holder, receive payment in dollars and convert the same into Rupees within 7 days. Cut and polished diamonds and coloured gemstones so supplied by non-DDA holder will also be counted towards discharge of his export obligation and/ or entitle him to replenishment Authorisation. 4.51 Export of cut & polished precious and semi-precious stones for treatment and re-import Gems and Jewellery exporters shall be allowed to export cut and polished precious and semi-precious stones for the treatm .....

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ndbook of Procedures and Customs Rules and Regulations. - Notes:- 1. Inserted vide Not. 05/2015-20 - Dated 1-5-2015 2. Substituted vide Not. 08/2015-2020 - Dated 4-6-2015 w.e.f. 1st April 2015 "4.22 Export Obligation (i) Period for fulfilment of export obligation under Advance Authorisation shall be 18 months from the date of issue of Authorisation or as notified by DGFT. (ii) In cases of supplies to turnkey projects in India under deemed export category or turnkey projects abroad, the Expo .....

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" 3. Substituted vide Not. 08/2015-2020 - Dated 4-6-2015 w.e.f. 1st April 2015 "4.26 Duties Exempted and Admissibility of Cenvat and Drawback (i) Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty. (ii) Additional customs duty/excise duty, being not exempt, shall be adjusted as CENVAT credit as per DoR rules. (ii) Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid inputs, whether imported or indig .....

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ed 15-6-2015 5. Inserted vide Not. 28/2015-20 - Dated 16-12-2015 6. Inserted vide Not. 33/2015-2020 - Dated 21-1-2016 7. Inserted vide Not. 21/2015-2020 - Dated 11-8-2016 with effect from 1st September 2016 8. Substituted vide Not. 39/2015-2020 - Dated 22-2-2017, before it was read as, "4.44 Export of Cut & Polished Diamonds with Re-import Facility at Zero Duty An exporter (with annual export turnover of ₹ 5 crores for each of the last three years) may export cut & polished di .....

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