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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. 16[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, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, where .....

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51 of 1975), as may be provided in the notification issued by Department of Revenue, and such imports shall be subject to pre-import condition.] 4.15 Admissibility of Drawback Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid imported or indigenous inputs (not specified in the norms) used in the export product. For this purpose, applicant shall indicate clearly details of duty paid input in the application for Advance Authorisation. As per det .....

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ured out of duty free input once export obligation is completed. (ii) In case where CENVAT credit facility on input has been availed for the exported goods, even after completion of export obligation, the goods imported against such Advance Authorisation shall be utilized only in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer). For this, the Authorisation holder shall produce a certificate from either the jurisdictional Central Excise A .....

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ce Authorisation for Deemed Export shall be co-terminus with contracted duration of project execution or 12 months from the date of issue of Authorisation, whichever is more. 4.18 Importability / Exportability of items that are Prohibited/Restricted/ STE (i) No export or import of an item shall be allowed under Advance Authorisation / DFIA if the item is prohibited for exports or imports respectively. Export of a prohibited item may be allowed under Advance Authorisation provided it is separatel .....

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o file Quarterly Returns of imports effected against such NOC to concerned STE and STE would submit half-yearly import figures of such imports to concerned administrative Department for monitoring with a copy endorsed to DGFT. (iii) Items reserved for export by STE can be exported under Advance Authorisation / DFIA only after obtaining a No Objection Certificate from the concerned STE. (iv) Import of restricted items shall be allowed under Advance Authorisation/ DFIA. (v) Export of restricted / .....

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ost to exporter by foreign buyer. In such cases, notional value of free of cost input shall be added in the CIF value of import and FOB value of export for the purpose of computation of value addition. However, realization of export proceeds will be equivalent to an amount excluding notional value of such input. 4.20 Domestic Sourcing of Inputs (i) Holder of an Advance Authorisation / Duty Free Import Authorisation can procure inputs from indigenous supplier/ State Trading Enterprise in lieu of .....

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y through Deemed Exports mechanism as per provisions under Chapter-7 of FTP. (iv) Regional Authority may issue Advance Release Order or Invalidation Letter at the time of issue of Authorisation simultaneously or subsequently. (v) Advance Authorisation holder under DTA can procure inputs from EOU / EHTP / BTP / STP / SEZ units without obtaining Advance Release Order or Invalidation Letter. (vi) Duty Free Import Authorisation holder shall also be eligible for Advance Release Order / Invalidation L .....

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um value addition as specified in Appendix-4C. (iii) Export to SEZ Units shall be taken into account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ unit. (iv) Export to SEZ Developers / Co-developers can also be taken into account for discharge of export obligation even if payment is realised in Indian Rupees. (v) Authorisation holder needs to file Bill of Export for export to SEZ unit / developer / co-developer in accordance with the pro .....

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ories of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co-terminus with contracted duration of the export order whichever is more. (iv) Export Obligation Period for inputs, as specified in Appendix 4-J, shall be as mentioned in the relevant column of the said Appendix.] 4.23 Export Obligation Period (EOP) Extension for units under BIFR/ Rehabilitation. A company holding Advance Authorisation and registered with BIFR / Rehabili .....

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two years from the date of expiry of EOP (including extended period) or the date of BIFR order, whichever is later, shall be granted without payment of composition fee. 4.24 Re-import of exported goods under Duty Exemption / Remission Scheme Goods exported under Advance Authorisation / Duty Free Import Authorisation may be re-imported in same or substantially same form subject to such conditions as may be specified by Department of Revenue. Authorisation holder shall also inform about such re-im .....

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) Duty Free Import Authorisation Scheme shall not be available for import of raw sugar.] 3[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. (iii) Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid inputs, whether imported or ind .....

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isation shall be issued on post export basis for products for which Standard Input Output Norms have been notified. (ii) Merchant Exporter shall be required to mention name and address of supporting manufacturer of the export product on the export document viz. Shipping Bill / Airway Bill / Bill of Export / ARE-1 / ARE-3. (iii) Application is to be filed with concerned Regional Authority before effecting export under Duty Free Import Authorisation. 4.28 Minimum Value Addition Minimum value addit .....

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ile number. (iii) While doing export/supply, applicant shall indicate file number on the export documents viz. Shipping Bill / Airway Bill/ Bill of Export / ARE-1 / ARE-3, Central Excise certified Invoice. (iv) After completion of exports and realization of proceeds, request for issuance of transferable Duty Free Import Authorisation may be made to concerned Regional Authority within a period of twelve months from the date of export or six months (or additional time allowed by RBI for realizatio .....

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e SION prescribes 'Actual User' condition and/or Appendix-4J prescribes pre import condition for such an input. ] (ix) Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authority. 4.30 Sensitive Items under Duty Free Import Authorisation (a) In respect of resultant products requiring following inputs, exporter shall be required to provide declaration with regard to technical character .....

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r resin, Epoxy Resin, Vinyl Ester Resin, Hydroxy Ethyl Cellulose), Lining Material . (b) While issuing Duty Free Import Authorisation, Regional Authority shall mention technical characteristics, quality and specification in respect of above inputs in the Authorisation. SCHEMES FOR EXPORTERS OF GEMS AND JEWELLERY 4.31 Import of Input Exporters of gems and Jewellery can import / procure duty free input for manufacture of export product. 4.32 Items of Export Following items, if exported, would be e .....

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including partly processed jewellery and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% platinum by weight. 4.33 Schemes The schemes are as follows: (i) Advance Procurement / Replenishment of Precious Metals from Nominated Agencies; (ii) Replenishment Authorisation for Gems; (iii) Replenishment Authorisation for Consumables; (iv) Advance Authorisation for Precious Metals. 4.34 Advance Procurement/ Replenishment of Precio .....

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ailing rebate, then replenishment of Precious metal shall be allowed provided that such inputs procured duty free are used in the manufacture of dutiable goods in the factory/unit, where exported Gems and Jewellery products were manufactured. Sale/transfer of such duty free Precious metal inputs shall not be allowed. ] (ii) The export would be subject to wastage norms and minimum value addition as prescribed in paragraph 4.60 and 4.61 respectively in the Handbook of Procedures. 4.35 Replenishmen .....

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all be determined with reference to realisation in excess of prescribed minimum value addition. Replenishment Authorisation for Gems shall be freely transferable. (iv) Replenishment Rate and item of import will be as prescribed in Appendix 4G. 4.36 Replenishment Authorisation for Consumables (i) Replenishment authorization for duty free import of Consumables, Tools and other items namely, Tags and labels, Security censor on card, Staple wire, Poly bag (as notified by Customs) for Jewellery made .....

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dition. (ii) Application for import of consumables as given above shall be filed online to the concerned Regional Authority in ANF 4H. 4.37 Advance Authorisation for Precious Metals. (a) Advance Authorisation shall be granted on pre-import basis with Actual User condition for duty free import of: (i) Gold of fineness not less than 0.995 and mountings, sockets, frames and findings of 8 carats and above; (ii) Silver of fineness not less than 0.995 and mountings, sockets, frames and findings contai .....

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given in paragraph 4.61 of Handbook of Procedures. It would be calculated as under: VA = A - B x 100, where B A = FOB value of the export realised / FOR value of supply received. B = Value of inputs (including domestically procured) such as gold / silver / platinum content in export product plus admissible wastage along with value of other items such as gemstone etc. Wherever gold has been obtained on loan basis, value shall also include interest paid in free foreign exchange to foreign supplier .....

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ii) Nominated Agencies are MMTC Ltd, The Handicraft and Handlooms Exports Corporation of India Ltd, The State Trading Corporation of India Ltd, PEC Ltd, STCL Ltd, MSTC Ltd, and Diamond India Limited (iii) 17[Notwithstanding any provision relating to import of gold by Nominated Agencies under Foreign Trade Policy (2015-2020), the import of gold by Four Star and Five Star Houses with Nominated Agency Certificate is subjected to actual user condition and are permitted to import gold as input only f .....

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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 Certification / Grading & Re- export Following agencies are permitted to import diamonds to their laboratories without any import duty, for the purpose of certification / grading reports, with a condition that the same should be re-exported with the certification/grading reports, as per the procedure laid d .....

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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 & 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) or the authorised offices/agencies in India of laboratories mentioned under paragraph 4.74 of Handbook of Procedures may export cut & polished diamonds (e .....

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f 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 / platinum, alloys, findings and mountings of gold / silver / platinum for manufacture and export. (ii) Such supplies can also be in advance and may involve semi-finished jewellery including findings / mountings / components for repairs / re-make and export subject to minimum value addition as prescribed under .....

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ry Export Promotion Council (GJEPC), may export gold / silver / platinum jewellery and articles thereof for exhibitions abroad. (ii) Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads and articles and export of branded jewellery is also permitted, subject to conditions as in Handbook of Procedures. 4.47 Personal Carriage of Export / Import Parcels Personal carriage of gems and jewellery export parcels by foreign bound passengers and import parcels by a .....

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t 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 Notification 116 of 1st April, 2014, as amended from time to time, on consignment or outright basis, will be permitted in Special Notified Zone (SNZ) administered by the operator of SNZ, under supervision of Customs. The procedure of import, auction/ sale and re-export of rough diamonds (unsold) would be as specified .....

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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 shall be used only for: (i) Import / purchase of rough diamonds from overseas/ local sources; (ii) Purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources; (iii) Import / purchase of gold from overseas / nominated agencies and repayment of dollar loans from the ban .....

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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 treatment and re-import as per customs rules and regulations. In case of re-export, the exporter shall be entitled for duty drawback as per rules. 4.52 Re-import of rejected Jewellery Gems & Jewellery exporters shall be allowed to re-import rejected precious metal jewellery as per paragraph 4.91 of Handbook o .....

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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 Export Obligation period shall be co-terminus with contracted duration of the project execution or 18 months whichever is more. (iii) Export Obligation for items falling in categories of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co-termin .....

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all 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 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 Reg .....

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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 diamonds (each of 0.25 carat or above) to any of the agencies/laboratories mentioned under paragraph 4.74 of Handbook of Procedures with re-import facility at zero duty within 3 months from the date of export. Such facility of re-import at zero duty will be subject to guidelines issued by Central Board of Cus .....

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017, before it was read as, 'availed and Gems' 11. Substituted vide Not. 42/2015-2020 - Dated 21-3-2017, before it was read as, "(ii) In cases of supplies to turnkey projects in India under deemed export category or turnkey projects abroad, the Export Obligation period shall be co-terminus with contracted duration of the project execution or 18 months whichever is more." 12. Substituted vide Not. 42/2015-2020 - Dated 21-3-2017, before it was read as, "(v) Applicant shall b .....

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