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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 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 Import Authorisation (DFIA). (b) Duty Remission Scheme. Duty Dr .....

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d 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. OR (iv) On the basis of Self Ratification Scheme in terms of Par .....

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heme 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 shall be issued for the import of relevant fabrics including inter .....

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. 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 Para 4.09 of FTP. (v) Authorisation, and the fabric imported, shal .....

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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 / Export / Supply (a) Advance Authorisation can be issued either to .....

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, (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 paragraph 4.03 (b)(ii) of FTP. (ii) Advance Authorisation for Annual .....

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g 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 cases need not be referred to Norms Committees for ratification of .....

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dbook 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 the following inputs. a) All vegetable / edible oils classified .....

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S) 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. Inputs imported shall be subject to pre import condition and they sh .....

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f 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 information and assistance for timely completion of the audit. Non-availab .....

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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 Engineer in terms of Foreign Trade Development and Regulation Act 1992 .....

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thorisation 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 value of any other input used on which benefit of DBK is claimed or .....

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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 classified under Chapter-10 of ITC (HS) book; (iii) All Spices othe .....

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nds 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 by Regional Authority only on submission of a No Objection Certi .....

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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, within overall quantity against such group of inputs. Proportion of t .....

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ted 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 of drugs from unregistered sources shall have pre-import conditi .....

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uard Duty, if any. However, imports under Advance Authorisation for physical exports 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, and such imports shall be subject to pre-import condition. Imports against Advance Authorisations for physical exports are exempted from Integrated .....

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etails 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. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed. (ii) In case wher .....

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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 shall be as prescribed in Handbook of Procedures. 4.18 Importability/Export ability of items that are Prohibited/Restricted/ STE (i) .....

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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 of such imports to concerned administrative Department for monitoring with a copy endorsed to DGFT. (iii) Items reserved for export .....

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ere 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 Domestic Sourcing of Inputs (i) Holder of an Advance Authorisation / Duty Free Import Authorisation can procure inputs from indigenous s .....

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tends 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 Release Order or Invalidation Letter. (vi) Deleted (vii) Validity of Advance Release Order / Invalidation Letter shall be cotermino .....

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Z 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 fulfilment of export obligation and its extension under Advance Authorisation shall be as prescribed in Handbook of Procedures. 4.23 Del .....

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A 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. (c) Duty Free Import Authorisation Scheme shall not be available for import of raw sugar. 4.26 Duties Exempted (i) Duty Free Import Authorisation shall be exempted only .....

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nal 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 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/ Bill of Export / Tax Invoice for exp .....

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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 generation of file number. (iii) While doing export/supply, applicant shall indicate file number on the export /supply documents viz. Shipping Bill / / Bill of Export / Tax invoice for supply prescribed under GST rules. (iv) In terms of Para 4.12 of FTP, Wherever SIO .....

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ut/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 quantity of these inputs actually used/consumed in production and declared in Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in pr .....

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ensitive Items under Duty Free Import Authorisation (a) In respect of following inputs, exporter shall 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, Zi .....

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Input Exporters of gems and Jewellery can import / procure duty free (excluding Integrated Tax and Compensation Cess leviable under Section 3(7) and 3(9) of customs Tariff Act) input for manufacture of export product. 4.32 Items of Export Following items, if exported, would be eligible: (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 .....

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(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 including mountings and findings may obtain gold / silver / platinum as an input for export product from Nominated Agen .....

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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 of ITC or refund of IGST is availed under section 54 of the CGST Act. (ii) The export would be subject to wastage norms .....

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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 admissible wastage. The scale of replenishment and the item of import will be as prescribed in Appendix 4G. 4.36 Replenishme .....

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o 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 import of consumables as given above shall be filed online to the concerned Regional Authority in ANF 4H. 4.37 Advance Autho .....

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inum 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 Addition Minimum Value Addition norms for gems and jewellery sector are given in paragraph 4.61 of Handbook of Procedur .....

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ld/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 provisions of Chapter-6 of FTP / SEZ Rules, respectively. (ii) Nominated Agencies are MMTC Ltd, The Handicraft and Handl .....

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he 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 the provisions laid down in Hand Book of Procedures. (v) A bank authorised by Reserve Bank of India is allowed export of .....

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rica (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 Diamonds for Certification/ Grading & Re-import List of authorized laboratories for certification / grading of diamon .....

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graph 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 / exporters of three years standing having an annual average turnover of Rupees five crores during preceding three financial ye .....

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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 & Jewellery Export Promotion Council (GJEPC), may export gold / silver / platinum jewellery and articles thereof for exhibit .....

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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, subject to achievement of minimum value addition of 5% by DTA units. 4.49(A) Import, auction/sale and re-export of rough d .....

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ds / 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 years may also carry out their business through designated Diamond Dollar Accounts (DDA). (b) Dollars in such accounts avail .....

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