7.01 Deemed Exports
“Deemed Exports” refer to those transactions in
which goods supplied do not leave country, and payment for such supplies is
received either in Indian rupees or in free foreign exchange. Supply of goods
as specified in Paragraph 7.02 below shall be regarded as “Deemed Exports”
provided goods are manufactured in India.
7.02 Categories of Supply
Supply of goods under following categories (a) to
(d) by a manufacturer and under categories (e) to (h) by main / sub-contractors
shall be regarded as “Deemed Exports”:
A.
Supply by manufacturer:
(a)
Supply of goods
against Advance Authorisation / Advance Authorisation for annual requirement /
DFIA;
(b)
Supply of goods to
EOU / STP / EHTP / BTP;
(c)
Supply of capital
goods against EPCG Authorisation;
(d)
Supply of marine
freight containers by 100% EOU (Domestic freight containers-manufacturers)
provided said containers are exported out of India within 6 months or such
further period as permitted by customs;
131
(e)
(i) Supply of goods
to projects financed by multilateral or bilateral Agencies / Funds as notified
by Department of Economic Affairs (DEA), MoF, where legal agreements provide
for tender evaluation without including customs duty.
(ii)
Supply and
installation of goods and equipment (single responsibility of turnkey
contracts) to projects financed by multilateral or bilateral Agencies/Funds as
notified by Department of Economic Affairs (DEA), MoF, for which bids have been
invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for
goods manufactured abroad.
(iii) Supplies covered in this paragraph shall be under
International Competitive Bidding (ICB) in accordance with procedures of those
Agencies / Funds.
(iv)
A list of agencies,
covered under this paragraph, for deemed export benefits, is given in Appendix
7A.
(f)
(i) Supply of goods
to any project or for any purpose in respect of which the Ministry of Finance,
by Notification No. 12/2012 –Customs dated 17.3.2012, as amended from time to
time, permits import of such goods at zero customs duty subject to conditions
specified in the above said Notification. Benefits of deemed exports shall be
available only if the supply is made under procedure of ICB.
(ii)
Supply of goods
required for setting up of any mega power project, as specified in the list
32A, at Sl. No. 507 of Department of Revenue Notification No. 12/2012- Customs
dated 17.03.2012, as amended from time to time, shall be eligible for deemed
export
132
benefits provided
such mega power project conforms to the threshold generation capacity specified
in the above said Notification.
(iii) For mega power projects, ICB condition would not
be mandatory if the requisite quantum of power has been tied up through tariff
based competitive bidding or if the project has been awarded through tariff
based competitive bidding.
(g)
Supply of goods to
United Nations or International Organisations for their official use or
supplied to the projects financed by the said United Nations or an
International organisation approved by Government of India. List of such
organisation and conditions applicable to such supplies is given in the Excise
Notification No 108/95-CE, dated 28.08.1995, as amended from time to time. A
list of Agencies, covered under this paragraph, is given in Appendix-7B.
(h)
Supply of goods to nuclear power projects
provided:
(i)
Such goods are
required for setting up of any Nuclear Power Project as specified in the list
33 at Sl. No. 511 of Notification No. 12/2012 – Customs dated 17.3.2012, as
amended from time to time.
(ii)
The project should
have a capacity of 440 MW or more.
(iii) A certificate to the effect is required to be
issued by an officer not below the rank of Joint Secretary to Government of
India, in Department of Atomic Energy.
(iv)
Tender is invited
through National competitive bidding (NCB) or through ICB.
133
Deemed exports
shall be eligible for any / all of following benefits in respect of manufacture
and supply of goods, qualifying as deemed exports, subject to terms and conditions
as given in HBP and ANF-7A:
(a)
Advance
Authorisation / Advance Authorisation for annual requirement / DFIA.
(b)
Deemed Export
Drawback.
(c)
Refund of terminal
excise duty, if exemption is not available.
7.04 Benefits to the Supplier /Recipient
|
Categories
of
Supplies as per Para
7.02
|
Benefits on supplies, as given in Para 7.03 above,
Whichever is applicable.
|
||
|
Para 7.03 (a)
Advance
Authorization
|
Para
7.03(b)
Duty
Drawback
|
Para 7.03 (c)
Terminal Excise Duty
|
|
|
(a)
|
Yes (for
intermediate
supplies against
an invalidation
letter)
|
Yes
(against ARO
or Back
to
Back letter of
credit)
|
(i) Exemption, in case of
Invalidation Letter
(ii) Refund, in case of ARO
or back to back letter of
credit
(iii)No exemption/ refund against supply to DFIA as
CVD is not exempted
|
|
(b)
|
Yes
|
Yes
|
Exemption
|
|
(c)
|
Yes
|
Yes
|
Refund
|
|
(d)
|
No
|
Yes
|
Refund
|
|
(e)
|
Yes
|
Yes
|
Exemption
|
|
(f)
|
Yes
|
Yes
|
Exemption, if supplies Under ICB.
Refund, if supplies under
Tariff based competitive
bidding.
|
|
(g)
|
Yes
|
Yes
|
Exemption
|
|
(h)
|
Yes
|
Yes
|
Refund
|
134
(i)
Supply of goods
will be eligible for refund of terminal excise duty as per Para 7.03 (c) of
FTP, provided recipient of goods does not avail CENVAT credit/rebate on such
goods.
(ii)
However, supply of
goods which are exempted ab-initio from payment of Terminal Excise Duty would
be ineligible to get refund of TED. Exemption from TED is available to the
following:
(a)
Supplies under ICB;
(b)
Supplies of
intermediate goods, against
invalidation
letter, made by an Advance Authorisation holder to another Advance
Authorisation holder;
(c)
Goods Procured by
EOU / EHTP / STP / BTP unit from a unit in DTA; and
(d)
Supply of goods to
UN/International Organisation or project funded by it.
7.6
Conditions for refund of deemed
export drawback
Supplies will be eligible for
deemed export drawback as per para 7.03 (b) of FTP, as under:
(a)
In case CENVAT credit
/ rebate has not been availed on the inputs / input services, by the supplier
of goods, then, benefit as per Column ‘A’ of All Industry Rate of
Duty Drawback
Schedule shall be admissible.
(b)
If CENVAT credit /
rebate has been availed by the supplier of goods, on inputs / input services,
then, no
Drawback shall be
admissible as per Column ‘B’ of All
Industry Rate of
Duty Drawback Schedule. However, in such cases, Basic Customs Duty paid can be
claimed as
135
Brand Rate of Duty Drawback based upon submission
of documents evidencing actual payment of duties.
7.07 Common conditions for deemed export benefits
(i)
Supplies shall be
made directly to entities listed in the Para 7.02. Third party supply shall not
be eligible for benefits/exemption.
(ii)
In all cases,
supplies shall be made directly to the designated Projects/Agencies/Units/
Advance Authorisation/ EPCG Authorisation holder. Sub-contractors may, however,
make supplies to main contractor instead of supplying directly to designated
Projects/ Agencies. Payments in such cases shall be made to sub-contractor by
main-contractor and not by project Authority.
(iii) Supply of domestically manufactured goods by an
Indian Sub-contractor to any Indian or foreign main contractor, directly at the
designated project’s/ Agency’s site, shall also be eligible for deemed export
benefit provided name of sub-contractor is indicated either originally or
subsequently (but before the date of supply of such goods) in the main
contract. In such cases payment shall be made directly to sub-contractor by the
Project Authority.
7.08 Benefits on specified supplies
(i)
Deemed export
benefits shall be available for supplies of ‘Cement” under Para 7.02 (e) only.
(ii)
Deemed export benefit shall be available on
supply of
“Steel”:
136
(a)
As an inputs to
Advance Authorization/ Annual Advance Authorization/DFIA holder/ an EOU.
(b)
To multilateral/
bilateral funded Agencies as per sub-Para 7.02(e).
(iii)
Deemed export benefit shall be available on
supply of
“Fuel” provided
supplies are made to:
(a)
Project listed for
petroleum operations in the Customs Notification No. 12/2012–Cus. dated
17.03.2012 under Sr. No. 356, 358 to 360 and covered in Para 7.02 (f) of FTP;
(b)
EOUs;
(c)
Advance
Authorization holder / Annual Advance Authorization holder.
7.09 Liability of Interest
Incomplete/deficient application is liable to be
rejected. However, simple interest @ 6% per annum will be payable on delay in
refund of duty drawback and terminal excise duty under the scheme, provided the
claim is not settled within 30 days from the date of issue of final Approval
Letter by RA.
