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Export Promotion Schemes

Customs - CBEC s Customs Manual 2015 - 23 - Chapter 23 1 Introduction: 1.1 The implemented by CBEC relate to respective Foreign Trade Policies. However, presently the predominant ones are the following broad categories pertaining to FTP 2009- 14 (effective till 31.3.2015) and FTP 2015-20 - (a) Incentive or Reward schemes under which exporters are granted duty credit in a scrip which is permitted to be utilized in an exemption framework, for debiting certain duties/tax, subject to conditions. (b) .....

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jana (VKGUY), Agri. Infrastructure Incentive Scrip (AIIS), Focus Market Scheme (FMS), Focus Product Scheme (FPS) and Status Holders Incentive Scrip (SHIS) Schemes of the FTP 2009-14 (effective for exports till 31.3.2015) may be referred at paras 2.1 to 6.3 of the Customs Manual 2014. 2.2 Under the FTP 2015-20, the - (a) Merchandise Exports from India Scheme (MEIS) rewards export of notified goods to specified markets listed in Appendix 3B of Appendices & ANF @ 2% or 3% or 5% of certain FOB v .....

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r located in India who have a specified minimum net free foreign exchange earnings. Only services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of the Foreign Trade Policy (FTP) 2015-20 may be eligible. The entitlement is either 3% or 5% of net foreign exchange earned (c) Both, MEIS and SEIS scrips are freely transferable and can be used for import of any items except those listed in appendix 3A of Appendices and ANF, or for domestic procurement (without exception for appendix 3A .....

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ty credit scrips: (a) Board s Circular No. 8/2009-Customs and Instruction No. 603/13/2013-DBK dated 27.05.2014 highlighted the difference between freely transferable scrips meant for all types of goods with certain exceptions and scrips with limited transferability/actual user condition and meant for specified goods. These differences in the nature of scrips issued under the various FTPs and the type of duties or tax that may be debited in a particular scrip are aspects to be kept in view by fie .....

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als, cannot also be used for debiting of duty on raw material in cases of EO default. This was brought to notice of field formations vide Board s letter F.No. 605/32/2013-DBK dated 19.12.2013 in connection with use of duty credit scrip for debiting towards customs duties in case of EO defaults under chapter 4 and 5 of the FTP. Similarly, if a scrip can be used in relation to a capital goods CG1 but not CG2 , then it cannot be used to debit duty related to import of CG2 in relation to which there .....

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per the same procedure as is prescribed for DEPB scrips. [Refer Circular No. 50/2011-Cus., dated 9-11-2011 read with No.72/2003-Cus and No.68/2000-Cus]. This would also apply to MEIS and SEIS scrips. 4. Verification related to reward duty credit scrips: 4.1 Verification of genuineness of reward scrips is provided for before allowing registration. Further, random verification of the shipping bills or bills of export of goods based on which the reward scrip was issued is prescribed to ascertain th .....

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ns, in writing in file. [Refer Circulars No. 5/2010-Cus.dated 16-3-2010, No.17/2012-Cus., dated 5-7-2012, No. 14/2015-Cus., dated 20-4-2015 and Instruction No.609/119/2010-DBK., dated 18-1-2011] 5. Advance Authorization Scheme: 5.1 Advance Authorisations (AA) are issued to allow duty free import of inputs that are physically incorporated in the export product (after making normal allowance for wastage) as well as certain items like fuel, oil, catalysts which are consumed in the course of their u .....

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ave a minimum of 15% value addition. However, as per para 4A2.1 and Appendix 11B of HBP 2009-14 (para 4.61 and Appendix 4D of HBP 2015-20) the value addition for gems and jewellery and for specified goods is less than 15%. In case of Tea, the minimum value addition is 50%. As per Appendix 11 in HBP 2009-14 (4C in HBP 2015-20), higher value addition is prescribed for export for which payment are not received in freely convertible currency. 5.4 All Industry Rate (AIR) of Duty Drawback is not admis .....

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on a longer term basis. However, self declared norms are not permitted under annual requirement under FTP 2015-20. Advance Authorisation for Annual Requirement is also not available in respect of SION where any item of input appears in Appendix 4-J of FTP 2015-20. 5.6 AA are issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) or to sub-contractors in respect of supplies of goods to specified projects provided the name of such sub-contractor appears i .....

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validation for six months from expiry date. For fulfillment of EO, normally a period of 18 months from the date of issue is specified, with certain exceptions of shorter or longer periods. 5.9 Under the FTP 2015-20, the import of gold for jewellery sector is only under Advance Authorization on pre import basis with actual user condition. 5.10 There are provisions relating to accounting of inputs in the AA schemes. The AA holder is also required to maintain a true and proper account of consumptio .....

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is not fulfilled. The Regional Authority informs details of payments to Customs at the port of registration or Commissioner of Central Excise having jurisdiction over the factory of AA holder, as the case may be. The EODC or redemption letter is taken into account by Customs authority at port of registration for purposes of redemption of bond/Bank Guarantee, subject to prescribed checks including intelligence based checks. 5.11 Keeping in view nuances of individual variants of Advance Authorizat .....

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cter than otherwise imposed including the export being allowed only from specified EDI enabled ports subject to pre-import condition under notified SION/prior fixation of norms by Norms Committee, export obligation period being 90 days from import clearance without extensions and import being subject to non-transfer, including for job work, and actual user condition, and the inapplicability of provisions for regularisation of default, etc. [Refer Notification Nos. 1/2014-Cus., dated 17-1-2014 an .....

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y sourced only on payment of additional duty of customs/ central excise duty. The DFIA is issued only where SION are notified. After the annual supplement 2013 to the FTP 2009-14, the exemption from anti- dumping duty and safeguard duty is not available when materials are imported against a DFIA made transferable. In case imported materials are transferred the importer is to pay an amount equal to the anti-dumping and safeguard duty leviable on the material, with interest. These aspects apply su .....

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d 11-09-2009 and No.19/2015-Customs dated 1-4-2015] 8. EPCG Scheme: 8.1 Under FTP 2015-20, - (a) A Zero duty EPCG scheme applicable to all sectors is available with optional exemption from the additional duty of customs. The EO is equivalent to 6 times of the duty saved amount on the capital goods imported with EO period 6 years (extendable by 2 years) from the date of issue of Authorization. A more favorable dispensation for EO is provided for export of specified green technology products as we .....

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t to specified conditions. In the case of manufacturer/merchant/service exporters, the EO is required to be fulfilled by exporting goods manufactured or capable of being manufactured or services rendered by the use of capital goods imported under the scheme. The EO is to be over and above the average level of exports achieved in the preceding three licensing years for the same and similar products. Certain sectors are not required to maintain average level of exports. (d) The Authorizations are .....

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of the Circular No. 58/2004-Cus dated 21-10-2004 as amended last by 15/2014-Customs dated 18.12.2014. Normally, the CG imported are subject to actual user condition and the goods imported cannot be transferred or sold, etc till the fulfillment of EO. (f) Third party exports are permitted with respect to exported goods manufactured by the authorisation holder and conditions (para 5.04 of FTP 2015-20 read with 5.10 of HBP 2015-20) have been specified to better ensure this aspect. (g) Installation .....

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toms where authorisation is registered in terms of para 5.02 of FTP 2015-20. (h) The EPCG Authorization holder is required to indicate the EPCG Authorization No./date on the shipping bill/invoice (in case of deemed exports). After fulfillment of specified EO, relevant documents are to be submitted to Regional Authority for obtaining EODC. This is taken into account by Customs authority at port of registration for purposes of redemption of bond/Bank Guarantee, subject to prescribed checks includi .....

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as commercially registered tourist vehicles is not permitted under Zero duty EPCG scheme. (k) The EPCG authorisation for annual requirement, the provisions for technological up- gradation and for transfer of EPCG capital goods to group companies in certain cases/sectors are discontinued in FTP 2015-20. [Refer Notification No.16/2015- Cus., dated 1-4-2015] 9. Post Export EPCG Duty Credit Scrip Scheme: 9.1 Under the FTP 2015-20, there is one Post Export EPCG Duty Credit Scrip Scheme. The duty cred .....

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is purpose, the export obligation is fixed (over and above average export obligation) at 85% of applicable specific export obligation, computed as if the duty paid imports had taken benefit of duty exemption (i.e. like the EPCG duty exemption scheme). As in the EPCG duty exemption scheme, if it is opted to not take the Cenvat credit of additional duty of customs paid, a lower export obligation would be fixed. There is no provision for extension of export obligation period in this scheme. 9.2 The .....

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of export obligation would apply individually to each duty credit scrip. Further, scrip issuance is akin to a discharge (or partial discharge) of the export obligation and is a remission by the DGFT of duty collected by the CBEC. Therefore, it is necessary that the Deputy/Assistant Commissioner of Customs satisfies himself of the compliance of the conditions of the notification (including fulfilment of export obligation, the quantum of duty remission in the duty credit scrip, the cumulative dut .....

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entry at time of import, ensuring registration or installation/use of all imports under authorization before any scrip issues, registration of scrip at the same port, keeping cumulative record of duty credit scrips issued against an authorization, and making the indicated endorsements on documents at the time of registration. Moreover, the assessment Group which handles the authorization to import capital goods on payment of duty under this variant of the EPCG scheme would need to allow the regi .....

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ssued expeditiously and normally within two weeks but not later than four weeks under all circumstances. Where the goods imported against an authorization are found defective or unfit for use and are re- exported back to the foreign supplier, if claim of duty drawback is made, no duty remission for the duty paid at the time of import on the re-exported goods is to be allowed. Further, after any duty remission in the form of duty credit scrip has been claimed in respect of the duty paid on the go .....

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mmissioners of Customs are also to exercise special checks so as to ensure that there is no misuse of the scheme and a proper record of all such checks is maintained. These shall include random verifications of the address shown on the authorizations (for import of capital goods) during their validity period in at least 10% of authorizations, random verifications of the certificates produced (not issued by central excise authorities) and of the declarations submitted with respect to Condition No .....

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ted 6-3-2013] 9.7 The notification No.17/2015-Customs dated 1-4-2015 permits imports through debit of the customs duties in the Post Export EPCG Duty Credit Scrip. The Notification No.18/2015-Central Excise dated 1-4-2015 permits domestic procurement through debit of central excise duties. Apart from Drawback or CENVAT Credit of Additional Duty leviable under Section 3 of the CTA, 1975 or excise duty, the importer shall be entitled to avail of the drawback of the duty of Customs leviable under t .....

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making suitable arrangements at such places. In addition, certain Foreign Post Offices or Courier Terminals are included as port of export for rewards on exports of goods. 10.2 Facility to execute a common bond for specified like Advance Authorization/Duty Free Import Authorization and EPCG is permitted to authorization holders, subject to certain conditions. [Refer Circular No.11(A)/ 2011-Cus., dated 25-2-2011] 10.3 Facility for suo moto payment of customs duty in case of bona fide default in .....

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etails which would assist in identifying actionable cases under Advance Authorization and EPCG scheme. Commissioners are to put in place an institutional mechanism for periodical meetings with Regional Authorities to exchange intelligence, check misuse and pursue issues such as EO fulfillment status in cases where EO period has expired in that quarter/ previous quarter so that concerted action can be taken against the defaulters. Further, timely action in all cases of default is required to be i .....

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entral Excise divisions. Similarly, the correctness of installation certificates issued by the Chartered Engineers is required to be verified on a random basis through Central Excise divisions. When address verifications or Installation Certificate verifications are requested by the Customs authorities in respect of EPCG authorizations, the Central Excise authorities should include, in their verification, a check of the periodical utility bills (containing the address) as one of the means enabli .....

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us., dated 6-9-2012, Instruction No.609/119/2010-DBK, dated 18-1-2011 and Circular No.14/2015-Cus., dated 20-4-2015] 12. Older valid : 12.1 Duty Free Credit Entitlement (DFCE) Scheme was for status holders having incremental growth of more than 25% in FOB value of exports subject to a minimum export turnover of ₹ 25 Cr, which provided entitlement to duty credit @10% of the incremental growth in exports. The scrip and goods imported were subject to actual user condition. The scheme was impl .....

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