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DUTY EXEMPTION /REMISSION SCHEMES

Chapter 4 - Policy - Foreign Trade Policy - Foreign Trade Policy 2015-2020 (From 5-12-2017 to 31-3-2020) Revised - Chapter 4 - CHAPTER 4 4.00 Objective Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of inputs or duty remission. 4.01 Schemes (a) Duty Exemption Schemes. The Duty Exemption schemes consist of the following: • Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement). • Duty Free .....

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e). In addition, fuel, oil, catalyst which is consumed / utilized in 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. OR (iii) Applicant specific prior fixation of norm by the Norms Committee. .....

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uty free import of fabric under Special Advance Authorisation Scheme for export of Articles of Apparel and Clothing Accessories shall be allowed, as per Customs Notification issued for this scheme, for export of items covered under 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 sha .....

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laimed shall be equal to 22% of the FOB value of export realised. Minimum value addition shall be as per Para 4.09 of FTP. (iv) Where the exporter desires to claim drawback determined and fixed by Jurisdictional Customs Authority (brand 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 Pa .....

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vi) The fabric imported shall be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only Physical exports shall fulfil the export obligation. (vii) Provisions of paragraphs 4.02, 4.05(a), 4.13(i), 4.13(ii), 4.14, 4.15, 4.17, 4.19, 4.21(i), 4.21(ii), 4.21 (iii), 4.21(v), 4.22(i), and 4.24 of Foreign Trade Policy shall be applicable in so far as they are not inconsistent with this scheme. 4.05 Eligible Applicant / Ex .....

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to the categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of this FTP. (iv) Supply of stores on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied. 4.06 Advance Authorisation for Annual Requirement (i) Advance 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 para .....

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physical export and / or FOR value of deemed export in preceding financial year or ₹ 1 crore, whichever is higher. 4.07A Self Ratification Scheme i. Where there is no SION/valid Adhoc Norms for an export product and where SION has been notified but exporter intends to use additional inputs in the manufacturing process, eligible exporter can apply for an Advance Authorisation under this scheme on self declaration and self ratification basis. RA may issue Advance Authorisations and such cas .....

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dure for administering the scheme shall be prescribed in the Handbook of Procedures. iv. An exporter (manufacturer or merchant) who holds AEO Certificate under Common Accreditation Programme of CBEC is eligible to opt for this scheme. v. The scheme shall not be available for the following export products. a) All items covered under Chapter-1 to 24 and Chapter-71 of ITC(HS) Classification; b) Biotechnology items and related products; and c) SCOMET items. vi. The scheme shall not be available for .....

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nder heading 2515, 2516, 3301, 3302, 3303 6801 and 6802 of ITC(HS) Classification; i) Items covered under Chapter 50 to 63 of ITC(HS) classification. j) Acetic Anhydride, Ephedrine and Pseudoephedrine; k) Vitamins; l) Biotechnology items and related products; m) Insecticides, Rodenticides, Fungicides, herbicides, Anti sprouting products, and plant growth regulators, disinfectants and similar products of all forms, types and grades; n) Waste/Scrap of all types; and o) Second hand goods. vii. Inpu .....

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shall be reduced from the entitlement to the extent that value of disallowed quantity is equal to the value of by-products and recoverable wastage generated during manufacturing process. ix. DGFT or any person authorised by him may conduct audit of the manufacturer. The frequency and manner of audit shall be prescribed by DGFT in Handbook of Procedures. The manufacturer shall be required to provide the necessary facility to verify the books of account/other documents as required, give informatio .....

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norms have not been claimed correctly or the excess benefit has been availed. Special audit can be conducted even if the manufacturer has already been audited before. xi. If the audit results in detection of misdeclaration and/or instances of claiming of inputs which are not used in manufacturing process or excess quantity of inputs than consumed, demand and recovery actions will be initiated in addition to initiation of action against the authorisation holder, manufacturer and Chartered Enginee .....

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he institute. xiii. All the provisions applicable for Advance Authorisation Scheme shall be applicable to this scheme also in so far they are not inconsistent with this scheme. 4.08 Value Addition Value Addition for the purpose of this Chapter (except for Gems and Jewellery sector for which value addition is prescribed in paragraph 4.38 of FTP) shall be:- VA = A-B x100, where B A =FOB value of export realized/FOR value of supply received. B =CIF value of inputs covered by Authorisation, plus val .....

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tory Spares Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation. 4.11 Ineligible categories of import on Self Declaration basis (a) Import of following products shall not be permissible on selfdeclaration 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 cla .....

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aceutical industry. (b) For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no Authorisation shall be issued by Regional Authority under paragraph 4.07 of Handbook of Procedures and applicants shall be required 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 .....

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try, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill. (ii) In addition, if in any SION, a single quantity has been indicated against 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, withi .....

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er Deemed exports. Details as given above will have to be indicated in the relevant Bill of Export, ARE-3, Central Excise certified Invoice / import document / Tax Invoice for export prescribed under the GST rules 4.13 Pre-import condition in certain cases (i) DGFT may, by Notification, impose pre-import condition for inputs under this 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 .....

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ng Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any. However, imports under Advance Authorisation are also exempt from whole of the Integrated Tax and Compensation Cess leviable under sub-section (7) and sub-section (9) respectively, of section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be provided in the notification issued by Department of Revenue, for making physical exports or domestic supplies notified at Sr Nos. 1, 2 and 3 of the table contained in No .....

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uty 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. Howeve .....

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older shall produce a certificate from either the 10[******] 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 and its Extension Validity period for import under Advance Authorisation s .....

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nce 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 Advance Authorisation / DFIA holder. Authorisation Holder would be required to file Quarterly Returns of imports effected against such NOC to concerned STE and STE would submit half-yearly import figures .....

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required, under Schedule 2 of ITC (HS). 4.19 Free of Cost Supply by Foreign Buyer Advance Authorisation shall also be available where some or all inputs are supplied free of cost 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 Domes .....

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l Authority shall issue Invalidation Letter. (iii) Regional Authority shall issue Advance Release Order if the domestic supplier intends to seek refund of duties exempted 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 / SEZ units without obtaining Advance .....

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nt 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 procedures given in SEZ Rules, 2006. 4.22 Export Obligation Period and its Extension Period for fulfi .....

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y 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, 4.18, 4.20, 4.21 and 4.24 of FTP shall be applicable to DFIA also. 1[(c) Export of white sugar under DFIA .....

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wback 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 Authorisation, 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 Free Import Authorisation. 4.27 Eligibility (i) Duty Free Import Authorisation shall be issued on post export basis for products for w .....

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ted to pre-import condition or where SION prescribes 'Actual User' condition or Appendix-4J prescribes pre import condition for such an input.] 4.28 Minimum Value Addition Minimum value addition of 20% shall be required to be achieved. 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 months from the date of online filing of application and gene .....

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of Export / Tax invoice for supply prescribed under GST rules . Only such inputs may be permitted for import in the authorisation in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such generic input/alternative input. (v) In addition, if in any SION, a single quantity has been indicated against a number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantit .....

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m any port listed in Para 4.37 of Handbook of Procedures. However, separate application shall be made for EDI and non-EDI ports. In case export is made from a non-EDI port, separate application shall be made for each non-EDI port.] (viii) 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 following inputs, e .....

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ed Mat, Roving Woven Surfacing Mat), Relevant Synthetic Resin (unsaturated Polyester 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 GEMSAND JEWELLERY 4.31 Import of Input Exporters of gems and Jewellery can import / procure duty free (excluding Integrate .....

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upto 24 carats) subject to the following conditions: i) Exports would be subject to 100% examination by the Approved Government Valuer. ii) Foreign remittance has to be realised within a period of 3 months from the date of export. iii) Exporters must submit confirmed export order before effecting export. iv) Distinction must be made between a religious idol and simply moulded gold article/ idol. v) Exports may be allowed only by actual manufacturers of such idols. The Findings like posts, push b .....

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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 Precious Metals from Nominated Agencies (i) Exporter of gold / silver / platinum jewellery and articles thereof .....

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rebate is availed under Notification No 19/2004-CE (NT) dated 06.09.2004. c. Input stage rebate is availed in respect of duty of excise paid on the precious metal bar or articles of precious metal under Notification No 21/2004-CE(NT) dated 06.09.2004. d. Precious metal or articles of precious metal are procured by the manufacturer under rule 19(2) of the Central Excise Rules, 2002. e. Input Tax Credit is availed on inputs or services or both by the exporter under Chapter V of CGST Act; or refund .....

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orisation for Gems shall be freely transferable. (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 the case of studded gold/silver/platinum jewellery and articles thereof, the value of Gem Replenishment Authorisation shall be on the remaining FOB value of exports after deducting the value of gold/ silver/ platinum including admi .....

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n 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. This Authorisation shall be non-transferable and subject to actual user condition. (ii) Application for impo .....

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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 Authorisation 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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lude 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 the respective .....

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ondition and are permitted to import gold as input only for the purpose of manufacture and export by themselves during the remaining validity period of the Nominated Agency certificate. (iv) Reserve Bank of India can authorize any bank as Nominated 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 .....

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rtification/grading reports, as per the procedure laid down in Hand Book of Procedures: (1) Gemological Institute of America (GIA), Mumbai, Maharashtra. (2) Indian Diamond Institute, Surat, Gujarat, India. (3) International Institute of Diamond Grading & Research India Pvt. Ltd., Surat, Gujarat, India. (4) HRD Diamond Institute Private Limited, Mumbai, Maharashtra, India (5) International Gemological Institute (India) Pvt. Ltd, Bandra Kurla Complex, Mumbai 4.43 Export of Cut & Polished D .....

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xport 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 3months from the date of export. Such facility of re-import 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 / expor .....

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under paragraph 4.61 of Handbook of Procedures. In such cases of export, wastage norms as per paragraph 4.60 of Handbook of Procedures shall apply. (iii) Exports may be made by nominated agencies directly 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 & Je .....

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by an Indian importer/foreign national may be permitted as per the Handbook of Procedures. 4.48 Export by Post Export of jewellery through Foreign Post Office including via Speed Post is allowed. 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, su .....

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d & Jewellery Dollar Accounts (a) Firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / 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 year .....

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to Rupee Account of exporter. Details of this DDA Scheme are given in Handbook of Procedures. (c) A non DDA holder is also permitted to supply cut and polished diamonds to 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 .....

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port and import on consignment basis Gems & Jewellery exporters shall be allowed to export and import diamond, gemstones & jewellery on consignment basis as per Handbook of Procedures and Customs Rules and Regulations. ******************** Notes:- 1. Substituted vide Notification No. 57/2015-2020 - Dated 28-03-2018, before it was read as, "(c) Duty Free Import Authorisation Scheme shall not be available for import of raw sugar." 2. Substituted vide Notification No. 57/2015-2020 .....

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06-2018 before it was read as, "Exports under DFIA shall be made from a single port as mentioned in paragraph 4.37 of Handbook of Procedures." 5. Substituted vide Notification No. 54/2015-2020 dated 22-03-2018 before it was read as "31.03.2018" 6. Substituted vide Notification No. 35/2015-2020 dated 26-09-2018 before it was read as "5[01.10.2018]" 7. Substituted vide Notification No 43/2015-2020 dated 05-11-2018 before it was read as "Gold jewellery, including .....

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