FOREIGN TRADE POLICY
[1st April, 2015 – 31st March, 2020]
Government of India
Ministry of Commerce and Industry
Department of Commerce
Table of Contents
CHAPTER 1 ...............................................................................................
13
LEGAL FRAMEWORK AND TRADE FACILITATION .........
13
A. LEGAL FRAMEWORK ...............................................................
13
1.00
Legal Basis of Foreign Trade Policy (FTP) ..............
13
1.01
Duration of FTP ...................................................................
13
1.02
Amendment to FTP ............................................................
13
1.03
Hand Book of Procedures (HBP) and
Appendices & Aayat Niryat Forms (AANF): ...........
13
1.04
Specific provision to prevail over the general .......
14
1.05
Transitional Arrangements .............................................
14
B. TRADE FACILITATION &
EASE OF DOING BUSINESS .....................................................
15
1.06
Objective .................................................................................
15
1.07
DGFT as a facilitator of exports/imports .................
15
1.08
Niryat Bandhu - Hand Holding Scheme
for new export / import entrepreneurs .................
15
1.09
Citizen’s Charter ..................................................................
16
1.10
Online Complaint Registration and
Monitoring System .............................................................
16
1.11
Issue of e-IEC
(Electronic-Importer Exporter Code) .......................
16
1.12
e-BRC ........................................................................................
17
1.13
MoU with State Governments for sharing of
e-BRC data ..............................................................................
17
1.14
Exporter Importer Profile ...............................................
18
1.15
Reduction in mandatory documents
required for Export and Import ...................................
18
1.16
Facility of online filing of applications ......................
18
1.17
Online Inter-ministerial consultation .......................
19
1
1.18 Facility to upload documents by
Chartered Accountant / Company Secretary /
Cost Accountant 19
1.19 Electronic Data Interchange (EDI) 20
1.20 Message Exchange with Community partners 20
(a) Message Exchange with Customs 20
(b) Message Exchange with
eBiz (https://www.ebiz.gov.in) 20
(c) Message Exchange with Banks 21
(d) Message Exchange with EPCs 21
1.21 Encouraging development of Third Party API 21
1.22 Forthcoming e-Governance Initiatives 21
1.23 Free passage of Export consignment 22
1.24 No seizure of export related Stock 22
1.25 24 X 7 Customs clearance 22
1.26 Single Window in Customs 23
1.27 Self-Assessment of Customs Duty 23
1.28 Authorised Economic Operator (AEO)
Programme 23
1.29 Prior filing facility for Shipping Bills 24
1.30 Cutting down delay in filing of Export General Manifest (EGM) for
duty drawback 25
1.31 Facility of Common Bond /
LUT against authorizations issued under
different EP Schemes ........................................................
25
1.32
Exemption from Service Tax on Services
received abroad ...................................................................
25
1.33
Export of perishable agricultural Products ............
25
1.34
Time Release Study (TRS) ..............................................
26
1.35
Towns of Export Excellence (TEE) .............................
26
1.36
Director General of Commercial Intelligence
2
and Statistics (DGCI&S), Kolkata as the
provider of trade data 27
CHAPTER 2 28
GENERAL PROVISIONS REGARDING IMPORTS AND
EXPORTS 28
2.00 Objective 28
2.01 Exports and Imports – ‘Free’, unless regulated 28
2.02 Indian Trade Classification (Harmonised System) [ITC (HS)] of
Exports and Imports 28
2.03 Compliance of Imports with Domestic Laws 29
2.04 Authority to specify Procedures 29
Importer-Exporter Code / e-IEC 30
2.05 Importer-Exporter Code (IEC) 30
2.06 Mandatory documents for export/
import of goods from/into India 32
2.07 Principles of Restrictions 33
2.08 Export/Import of Restricted goods/Services 34
2.09 Export of SCOMET Items 34
2.10 Actual User Condition 34
2.11 Terms and Conditions of an Authorisation 35
2.12 Application Fee 35
2.13 Clearance of Goods from Customs
against Authorization 35
2.14 Authorisation - not a Right 35
2.15 Penal action and placing of an entity in
Denied Entity List (DEL) 36
Prohibitions (Country and Product Specific): 37
2.16 Prohibition on Import and Export of
‘Arms and related material’ from / to Iraq 37
2.17 Prohibition on Direct or Indirect Import and Export from / to Democratic People’s
3
Republic of Korea ...............................................................
37
2.18
Prohibition on Direct or Indirect Import
and Export from/ to Iran ................................................
38
2.19
Prohibition on Import of Charcoal from Somalia 38
Import / Export Through State Trading Enterprises: 39
2.20
State Trading Enterprises (STEs) ...............................
39
Trade with Specific Countries: ..................................................
39
2.21
Trade with neighbouring Countries ........................
39
2.22
Transit Facility .....................................................................
40
2.23
Trade with Russia under
Debt-Repayment Agreement .......................................
40
Import of Specific Categories of Goods: ...............................
40
2.24
Import of Samples ..............................................................
40
2.25
Import of Gifts ......................................................................
40
2.26
Passenger Baggage .............................................................
40
2.27
Re – import of goods repaired abroad ......................
41
2.28
Import of goods used in projects abroad ................
41
2.29
Import of Prototypes .........................................................
41
2.30
Import through courier service ...................................
42
Import Policy for Second Hand Goods : ...............................
42
2.31
Second Hand Goods ..........................................................
42
Import Policy for Metallic Waste and Scraps : ................
43
2. 32
Import of Metallic waste and Scrap ..........................
43
2.33
Removal of Scrap/waste from SEZ .............................
44
Other Provisions Related to Imports:...................................
44
2.34
Import under Lease Financing ...................................
44
2.35
Execution of Legal Undertaking (LUT) /
Bank Guarantee (BG) ........................................................
44
2.36
Private/Public Bonded Warehouses for
Imports ...................................................................................
44
2.37
Special provision for Hides Skins and
semi-finished goods ...........................................................
45
4
2.38
Sale on High Seas ................................................................
45
Exports: ...................................................................................................
45
2.39
Free Exports ..........................................................................
45
2.40
Exemption / Remission of Service Tax
in DTA on goods & services exported .......................
46
2.41
Benefits for Supporting Manufacturers....................
46
2.42
Third Party Exports ..........................................................
46
Exports of Specific Categories ...................................................
46
2.43
Export of Samples ..............................................................
46
2.44
Export of Gifts .......................................................................
47
2.45
Export of Passenger Baggage ......................................
47
2.46
Import for export ................................................................
47
2.47
Export through Courier Service ...................................
49
2.48
Export of Replacement Goods ....................................
49
2.49
Export of Repaired Goods ...............................................
49
2.50
Export of Spares .................................................................
49
2.51
Private Bonded Warehouses for Exports ..............
50
Payments and Receipts on Imports / Exports .................
50
2.52
Denomination of Export Contracts .............................
50
2.53
Export to Iran – Realisations in
Indian Rupees to be eligible for FTP
benefits / incentives ..........................................................
51
2.54
Non-Realisation of Export Proceeds .........................
51
Export Promotion Councils .........................................................
52
2.55
Recognition of Export Promotion Councils
(EPCs) to function as Registering Authority
for issue of RCMC. ...............................................................
52
2.56
Registration-cum-Membership Certificate
(RCMC) ....................................................................................
52
Policy Interpretation and Relaxations: ...............................
53
2.57
Interpretation of Policy ...................................................
53
2.58
Exemption from Policy/ Procedures .......................
53
5
2.59 Personal Hearing by DGFT for
Grievance Redressal 54
2.60 Regularization of EO default and settlement of Customs duty and interest
through Settlement Commission .............................
55
Self Certification of Originating Goods ................................
55
2.61
Approved Exporter Scheme for
Self Certification of Certificate of Origin. ................
55
CHAPTER 3 ...............................................................................................
57
EXPORTS FROM INDIA SCHEMES .............................................
57
3.00
Objective .................................................................................
57
3.01
Exports from India Schemes ..........................................
57
3.02
Nature of Rewards .............................................................
57
Merchandise Exports from India Scheme (MEIS) ..........
58
3.03
Objective .................................................................................
58
3.04
Entitlement under MEIS ..................................................
58
3.05
Export of goods through courier or
foreign post offices using e-Commerce ....................
58
3.06
Ineligible categories under MEIS ..............................
59
Service Exports from India Scheme (SEIS) ........................
60
3.07
Objective .................................................................................
60
3.08
Eligibility.................................................................................
60
3.09
Ineligible categories under SEIS ..................................
61
3.10
Entitlement under SEIS ....................................................
63
3.11
Remittances through Credit Card and
other instruments for MEIS and SEIS ........................
63
3.12
Effective date of schemes (MEIS and SEIS) .............
63
3.13
Special Provisions...............................................................
63
Common Provisions for Exports from India Schemes
(MEIS and SEIS) ..................................................................................
64
3.14
Transitional Arrangement ..............................................
64
3.15
CENVAT/ Drawback ..........................................................
64
6
3.16 Import under lease financing 64
3.17 Transfer of export performance 65
3.18 Facility of payment of custom duties in case of E.O. defaults and fee through
duty credit scrips 65
3.19 Risk Management System 65
3.20 Status Holder 66
3.21 Status Category 67
3.22 Grant of double weightage 67
3.23 Other conditions for grant of status 68
3.24 Privileges of Status Holders 68
CHAPTER 4 71
DUTY EXEMPTION / REMISSION SCHEMES 71
4.00 Objective 71
4.01 Schemes 71
4.02 Applicability of Policy & Procedures 71
4.03 Advance Authorisation 72
4.04 Advance Authorisation for Spices 72
4.05 Eligible Applicant / Export / Supply 72
4.06 Advance Authorisation for
Annual Requirement 73
4.07 Eligibility Condition to obtain Advance Authorisation for
Annual Requirement .........................................................
73
4.08
Value Addition ......................................................................
74
4.09
Minimum Value Addition ................................................
74
4.10
Import of Mandatory Spares .........................................
75
4.11
Ineligible categories of import on
Self Declaration basis ........................................................
75
4.12
Accounting of Input ...........................................................
76
4.13
Pre-import condition in certain cases .......................
77
4.14
Details of Duties exempted ............................................
77
7
4.15
AdmissibilityofDrawback .............................................
78
4.16
ActualUserConditionfor
AdvanceAuthorisation ....................................................
78
4.17
ValidityPeriodforImport ..............................................
79
4.18
Importability/Exportabilityofitems
thatareProhibited/Restricted/STE .........................
79
4.19
FreeofCostSupplybyForeignBuyer .......................
80
4.20
DomesticSourcingofInputs .........................................
80
4.21
CurrencyforRealisationofExportProceeds .........
81
4.22
ExportObligation ...............................................................
82
4.23
ExportObligationPeriod(EOP)Extension
forunitsunderBIFR/Rehabilitation. .......................
83
4.24
Re-importofexportedgoodsunder
DutyExemption/RemissionScheme .......................
83
DUTY FREE IMPORT AUTHORISATION SCHEME
(DFIA)
.......................................................................................................
83
4.25 .........................................................................
DFIAScheme
83
4.26
DutiesExemptedandAdmissibilityof
.......................................................
CenvatandDrawback
84
4.27 ................................................................................
Eligibility
84
4.28 ................................................
MinimumValueAddition
85
4.29 ..............................
Validity&TransferabilityofDFIA
85
4.30
SensitiveItemsunder
..................................
DutyFreeImportAuthorisation
86
SCHEMES FOR EXPORTERS OF
GEMS AND ..................................................................JEWELLERY
87
4.31 ....................................................................
ImportofInput
87
4.32 ....................................................................
ItemsofExport
87
4.33 ..................................................................................
Schemes
88
4.34
AdvanceProcurement/Replenishmentof
............
PreciousMetalsfromNominatedAgencies
88
4.35 ...................
ReplenishmentAuthorisationforGems
88
8
4.36
Replenishment Authorisation for Consumables
.. 89
4.37
Advance Authorisation for Precious Metals. ..........
89
4.38
Value Addition ......................................................................
90
4.39
Wastage Norms....................................................................
91
4.40
DFIA not available ..............................................................
91
4.41
Nominated Agencies .........................................................
91
4.42
Import of Diamonds for Certification /
Grading & Re- export ........................................................
92
4.43
Export of Cut & Polished Diamonds
for Certification/ Grading & Re-import ....................
92
4.44
Export of Cut & Polished Diamonds with
Re-import Facility at Zero Duty ...................................
92
4.45
Export against Supply by Foreign Buyer .................
93
4.46
Export Promotion Tours/
Export of Branded Jewellery .........................................
93
4.47
Personal Carriage of Export / Import Parcels .......
94
4.48
Export by Post ......................................................................
94
4.49
Private / Public Bonded Warehouse .........................
94
4.50
Diamond & Jewellery Dollar Accounts ......................
94
4.51
Export of cut & polished precious and
semi-precious stones for treatment and
re-import ................................................................................
96
4.52
Re-import of rejected Jewellery ...................................
96
4.53
Export and import on consignment basis ...............
96
CHAPTER 5 ...............................................................................................
97
EXPORT PROMOTION CAPITAL GOODS (EPCG)
SCHEME ...................................................................................................
97
5.00
Objective .................................................................................
97
5.01
EPCG Scheme ........................................................................
97
5.02
Coverage .................................................................................
99
5.03
Actual User Condition .....................................................
100
5.04
Export Obligation (EO) ...................................................
100
9
5.05
Provision for units under BIFR /Rehabilitation . 101
5.06
LUT/Bond/BG in case of Agro units ........................
102
5.07
Indigenous Sourcing of Capital Goods and
benefits to Domestic Supplier .....................................
102
5.08
Calculation of Export Obligation ................................
102
5.09
Incentive for early EO fulfilment ...............................
102
5.10
Reduced EO for Green Technology Products ......
103
5.11
Reduced EO for North East Region and
Jammu & Kashmir ............................................................
103
5.12
Post Export EPCG Duty Credit Scrip(s) ...................
103
CHAPTER 6 .............................................................................................
105
EXPORT ORIENTED UNITS (EOUs), ELECTRONICS
HARDWARE TECHNOLOGY PARKS (EHTPs),
SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-
TECHNOLOGY PARKS (BTPs) ...................................................
105
6.00
Introduction and Objective ..........................................
105
6.01
Export and Import of Goods ........................................
105
6.02
Secondhand Capital goods ...........................................
108
6.03
Leasing of Capital Goods ...............................................
108
6.04
Net Foreign Exchange Earnings .................................
109
6.05
Letter of Permission / Letter of Intent and
Legal Undertaking ............................................................
110
6.06
Investment Criteria ..........................................................
111
6.07
Applications & Approvals .............................................
111
6.08
DTA Sale of Finished Products / Rejects /
Waste/ Scrap / Remnants and By-products .......
111
6.09
Other Supplies ....................................................................
115
6.10
Export through others ....................................................
117
6.11
Entitlement for Supplies from the DTA ..................
117
6.12
Other Entitlements ..........................................................
119
6.13
Inter Unit Transfer ...........................................................
120
6.14
Sub – Contracting ..............................................................
121
10
6.15 Sale of Unutilized Material 123
6.16 Reconditioning / Repair and Re - engineering 124
6.17 Replacement / Repair of Imported /
Indigenous Goods 124
6.18 Exit from EOU Scheme 125
6.19 Conversion 127
6.20 Monitoring of NFE 128
6.21 Export through Exhibitions / Export Promotion Tours /
Showrooms Abroad / Duty Free Shops ..................
128
6.22
Personal Carriage of Import /
Export Parcels including through
Foreign Bound Passengers ...........................................
128
6.23
Export / Import by Post / Courier ............................
129
6.24
Administration of EOUs / Powers of DC ................
129
6.25
Revival of Sick Units ........................................................
129
6.26
Approval of EHTP / STP ................................................
129
6.27
Approval of BTP ................................................................
129
6.28
Warehousing Facilities ...................................................
130
CHAPTER 7 .............................................................................................
131
DEEMED EXPORTS ..........................................................................
131
7.00
Objective ...............................................................................
131
7.01
Deemed Exports ................................................................
131
7.02
Categories of Supply ........................................................
131
7.03
Benefits for Deemed Exports ......................................
134
7.04
Benefits to the Supplier /Recipient ..........................
134
7.05 Conditions for refund of terminal excise duty ....
135
7.06
Conditions for refund of deemed export
drawback ..............................................................................
135
7.07
Common conditions for deemed export
benefits ..................................................................................
136
7.08
Benefits on specified supplies.....................................
136
11
7.09 Liability of Interest 137
7.10 Risk Management and Internal Audit
mechanism 137
7.11 Penal Action 138
CHAPTER 8 139
QUALITY COMPLAINTS AND TRADE DISPUTES 139
8.00 Objective 139
8.01 Quality Complaints/ Trade disputes 139
8.02 Obligation on the part of importer/ exporter 140
8.03 Provisions in FT (D&R) Act &
FT (Regulation) Rules for necessary
action against erring exporters/ importers 140
8.04 Mechanism for handling of Complaints/
Disputes 141
8.05 Proceedings under CQCTD 142
8.06 Procedures to deal with complaints and
trade disputes 142
8.07 Corrective Measures 143
8.08 Nodal Officer 143
CHAPTER 9 144
DEFINITIONS 144
GLOSSARY (ACRONYMS) 154
Acronym Explanation 154
12
CHAPTER 1
LEGAL FRAMEWORK AND TRADE FACILITATION
A. LEGAL FRAMEWORK
1.00 Legal Basis of Foreign Trade Policy (FTP)
The Foreign Trade Policy, 2015-20, is notified by Central Government, in exercise of powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992) [FT (D&R) Act], as amended.
1.01 Duration of FTP
The Foreign Trade Policy (FTP), 2015-2020, incorporating provisions relating to export and import of goods and services, shall come into force with effect from the date of notification and shall remain in force up to 31st March, 2020, unless otherwise specified. All exports and imports made upto the date of notification shall, accordingly, be governed by the relevant FTP, unless otherwise specified.
1.02 Amendment to FTP
Central Government, in exercise of powers conferred by Section 5 of FT (D&R) Act, 1992, as amended from time to time, reserves the right to make any amendment to the FTP, by means of notification, in public interest.
1.03 Hand Book of Procedures (HBP) and Appendices & Aayat Niryat Forms (AANF):
Director General of Foreign Trade (DGFT) may, by means of a Public Notice, notify Hand Book of Procedures, including Appendices and Aayat Niryat Forms or amendment thereto, if any, laying down the procedure to be followed by an exporter or importer or by any Licensing/Regional
13
Authority or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and provisions of FTP.
1.04 Specific provision to prevail over the general
Where a specific provision is spelt out in the FTP/Hand Book of Procedures (HBP), the same shall prevail over the general provision.
1.05 Transitional Arrangements
(a) Any License / Authorisation / Certificate / Scrip / any instrument bestowing financial or fiscal benefit issued before commencement of FTP 2015-20 shall continue to be valid for the purpose and duration for which such License/Authorisation/ Certificate / Scrip / any instrument bestowing financial or fiscal benefit Authorisation was issued, unless otherwise stipulated.
(b) In case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted, notwithstanding such restriction or regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of an irrevocable commercial letter of credit, established before the date of imposition of such restriction and it shall be restricted to the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerized receipt, within 15 days of the imposition of any such restriction or regulation.
14
B. TRADE FACILITATION & EASE OF DOING BUSINESS
1.06 Objective
Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian exports more competitive. The various provisions of FTP and measures taken by the Government in the direction of trade facilitation are consolidated under this chapter for the benefit of stakeholders of import and export trade.
1.07 DGFT as a facilitator of exports/imports
DGFT has a commitment to function as a facilitator of exports and imports. Focus is on good governance, which depends on efficient, transparent and accountable delivery systems. In order to facilitate international trade, DGFT consults various Export Promotion Councils as well as Trade and Industry bodies from time to time.
1.08 Niryat Bandhu - Hand Holding Scheme for new export / import entrepreneurs
(a) DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential exporter on the intricacies of foreign trade through counselling, training and outreach programmes.
(b) Considering the strategic significance of small and medium scale enterprises in the manufacturing sector
and in employment generation, ‘MSME clusters’ have been identified, based on the export potential of the product and the density of industries in the cluster, for focussed interventions to boost exports.
(c) Outreach activities shall be organized in a structured way with the help of Export Promotion Councils as
15
‘industry partners’ and other willing ‘knowledge partners’ in academia and research community to achieve the objective of Niryat Bandhu Scheme. Further, in order to ensure optimum utilization of resources, efforts would be made to associate all the stakeholders, including Customs, ECGC, Banks and concerned Ministries.
1.09 Citizen’s Charter
DGFT has in place a Citizen’s Charter, giving time schedules for providing various services to clients.
1.10 Online Complaint Registration and Monitoring System
An EDI Help Desk is available to assist the exporters in filing online applications on the DGFT portal and resolving other EDI related issues. For assistance an email may be sent at dgftedi@nic.in or Toll Free number 1800111550 can be used. Help Desk facility is also operational at the 4 DGFT Zonal Offices (details at http://dgft.gov.in). An Online Complaint registration and monitoring system allows users to register complaint and receive status/ reply online (details are at http://dgft.gov.in).
1.11 Issue of e-IEC (Electronic-Importer Exporter Code)
(a) Importer Exporter Code (IEC) is mandatory for export/import from/to India as detailed in paragraph 2.05 of this Policy. DGFT has recently introduced the facility of issuing Importer Exporter Code in electronic form (e-IEC). For issuance of e-IEC an application can be made online on DGFT website (http//:dgft.gov.in). Applicants can upload the documents and pay the required fee through Net banking.
16
(b) Processing of such applications by Regional Authority (RAs) of DGFT would be done online and a digitally signed e-IEC would normally be issued/ e-mailed to the applicant within 2 working days.
(c) In case the application is incomplete or otherwise ineligible, the same shall be rejected and a Rejection letter/email (with reasons for rejection) would be sent to the applicant.
(d) Application for issue of e-IEC can also be made from eBiz platform (https://www.ebiz.gov.in).
1.12 e-BRC
One prominent initiative in recent times has been the e-BRC (Electronic Bank Realisation Certificate) project and its successful implementation by DGFT. It has enabled DGFT to capture details of realisation of export proceeds directly from the Banks through secured electronic mode. This has facilitated the implementation of various export promotion schemes without any physical interface with the stake holders. So far more than one crore e-BRCs have been captured by this system.
1.13 MoU with State Governments for sharing of e-BRC data
MoU has been signed with state governments for sharing of e-BRC data to facilitate refund of VAT by the state governments to exporters. MoU has also been signed with Enforcement Directorate.
17
1.14 Exporter Importer Profile
An electronic procedure has been created to upload various documents in exporter importer profile. Once uploaded, there will be no need to submit these documents / copies of these documents to Regional Authority repeatedly with each application. It intends to reduce the transaction cost and time and is a step towards paperless processing of different applications in DGFT.
1.15 Reduction in mandatory documents required for Export and Import
The number of mandatory documents required for exports and imports of goods from/into India have been reduced to three each, as prescribed under paragraph 2.06 of FTP.
1.16 Facility of online filing of applications
All the Regional Authorities (RA) of DGFT and extension counters have been networked with high speed internet. The applications are received and processed electronically. DGFT under the EDI initiatives has provided the facility of on line filing of applications to obtain Importer Exporter Code and various authorizations /scrips. DGFT is one of the first digital signature enabled organisation of the Government of India (GOI), which has introduced a higher level of Encrypted 2048 bit digital signature. There is a web interface for online filing of application after accessing DGFT website ( http://dgft.gov.in). The application can be filed by exporter/CHA sitting at home or office in 24X7 environment. Application fee can also be paid online from linked banks. Efforts are being made to allow payment by debit/credit cards as well. The applications are signed with a digital signature and submitted electronically to the concerned Regional Authority of DGFT, which are then processed on computer by the Regional Authority and authorisations/
18
scrips are issued. Online filing has minimized the physical interface.
1.17 Online Inter-ministerial consultation
Presently, the exporters are required to file applications online on the website of DGFT under the Icon E-COM and are required to submit the duly signed and stamped printout of the online application along with all the necessary documents viz. technical specifications, literature etc. Now, a facility is being provided to upload copies of all the required documents including technical specifications, literature etc in PDF/JPG/JPEG/GIF format in the online filing system in respect of (a) Fixation of norms under Advance Authorisation by Norms Committees (b) Export of Restricted Items (c) Import of Restricted Items (d) SCOMET Items. The exporters would not be required to submit the hard copy of application except architectural drawings, machine drawings etc which may be difficult to scan and upload. The processing of the applications will also be done online.
1.18 Facility to upload documents by Chartered Accountant / Company Secretary / Cost Accountant
In order to move towards paperless processing, an electronic procedure is being developed to upload digitally signed documents by Chartered Accountant / Company Secretary / Cost Accountant. To start with, this facility would be created for Export From India Schemes under Chapter 3. Such documents like Annexure Attached to ANF 3B, ANF 3C and ANF 3D, which are at present signed by these signatories, can be facilitated by this procedure. Exporter shall link digitally uploaded annexure with his online applications after creation of such facility. These facilities may be extended in phased manner to upload
19
documents pertaining to other schemes like Advance Authorisation, DFIA and EPCG.
1.19 Electronic Data Interchange (EDI)
DGFT has put in place a robust EDI system for the purpose of export facilitation and good governance. DGFT has set up a secured EDI message exchange system for various documentation related activities including import and export authorizations established with other administrative departments, namely, Customs, Banks and EPCs. This has reduced the physical interface of exporters and importers with the Government Departments and is a significant measure in the direction of reduction of transaction cost. The endeavour of DGFT has been to enlarge the scope of EDI to achieve higher level of integration with partner departments.
1.20 Message Exchange with Community partners
Customs, Banks, Export Promotion Councils (EPCs) are major community partners of DGFT for message exchange. An effective message exchange system is in place with various community partners which is as follows:
(a) Message Exchange with Customs
(i) Importer Exporter Code Number.
(ii) Authorisations/Scrips for DFIA, AA, EPCG.
(iii) Shipping Bills for Duty Free Import Authorisation (DFIA), Advance Authorisation (AA), Export Promotion Capital Goods (EPCG), Reward Scrips.
(b) Message Exchange with eBiz ( https://www.ebiz.gov.in)
(i) Application for Importer Exporter Code Number
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(ii) Application for e-IEC.
(c) Message Exchange with Banks
(i) Application Fee
(ii) electronic Bank Realisation Certificate (e-BRC) data
(d) Message Exchange with EPCs
Registration cum Membership Certificate (RCMC) data.
1.21 Encouraging development of Third Party API
DGFT will encourage development of third party software for integration with its system to offer users multiple options for interfacing with the DGFT.
1.22 Forthcoming e-Governance Initiatives
DGFT is currently working on the following EDI initiatives:
(i) Message exchange for transmission of export reward scrips from DGFT to Customs.
(ii) Message exchange for transmission of Bills of Entry (import details) from Customs to DGFT.
(iii) Online issuance of Export Obligation Discharge Certificate (EODC).
(iv) Message exchange with Ministry of Corporate Affairs for CIN & DIN information.
(v) Message exchange with CBDT for PAN.
(vi) Acceptance of payment through debit / credit card for payment of application fee under FTP.
(vii) Open API for submission of e-IEC application.
(viii) Mobile Applications for FTP.
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1.23 Free passage of Export consignment
Consignments of items meant for exports shall not be withheld/ delayed for any reason by any agency of Central/ State Government. In case of any doubt, authorities concerned may ask for an undertaking from exporter and release such consignment.
1.24 No seizure of export related Stock
No seizure shall be made by any agency so as to disrupt manufacturing activity and delivery schedule of exports. In exceptional cases, concerned agency may seize the stock on the basis of prima facie evidence of serious irregularity. However, such seizure should be lifted within 7 days unless the irregularities are substantiated.
1.25 24 X 7 Customs clearance
(a) The facility of 24 X 7 Customs clearance for specified import viz. Goods covered by ‘facilitated’ Bills of Entry and specified exports viz. Factory stuffed containers and goods exported under free Shipping Bills has been made available, at the 18 sea ports at : Chennai, Cochin, Ennore, Gopalpur, JNPT, Kakinada, Kandla, Kolkata, Mumbai, New Mangalore, Marmagoa, Mundra, Okha, Paradeep, Pipavav, Sikka, Tuticorin, Vishakapatnam.
(b) The facility of 24 X 7 Customs clearance for specified imports viz. Goods covered by ‘facilitated’ Bills of Entry and all exports viz. Goods covered by all Shipping Bills has also been made available at the 17 air cargo complexes at: Ahmedabad, Amritsar, Bangalore, Chennai, Coimbatore, Cochin, Calicut, Delhi, Goa, Hyderabad, Indore, Jaipur, Kolkata, Mumbai, Nashik, Thiruvananthapuram, Vishakhapatnam.
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1.26 Single Window in Customs
(a) To facilitate trade, the importer and exporter would lodge their clearance documents at a single point only. Required permission if any, from other regulatory agencies would be obtained online without the trader having to approach these agencies. This would reduce interface with Governmental agencies, dwell time and cost of doing business.
(b) Single Window provides a common platform to trade to meet requirements of all regulatory agencies (such as Animal Quarantine, Plant Quarantine, Drug Controller, Textile Committee, etc) involved in exim trade through message exchange. Single Window Scheme is basically a network of cooperating facilities bound by trust and set of agreed interface specifications in which trade has seamless access to regulatory services delivered through electronic means. Benefits of Single Window Scheme include reduced cost of doing business, enhances transparency, integration of regulatory requirements at one common platform reduces duplicity and cost of compliance, optimal utilization of manpower.
1.27 Self-Assessment of Customs Duty
Self-Assessment of Customs duty by importers or exporters was introduced vide Finance Act, 2011. The system is trust based. The objective is to expedite release of imported / export goods. The system operates on an electronic Risk Management System (RMS).
1.28 Authorised Economic Operator (AEO) Programme
Based upon WCO’s SAFE Framework of Standards (FoS), ‘Authorised Economic Operator (AEO) programme’ has been
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developed by Indian Customs to enable business involved in the international trade to reap the following benefits:
(i) Secure supply chain from point of export to import;
(ii) Ability to demonstrate compliance with security standards when contracting to supply overseas importers / exporters;
(iii) Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries;
(iv) Minimal disruption to flow of cargo after a security related disruption;
(v) Reduction in dwell time and related costs; and
(vi) Customs advise / assistance if trade faces unexpected issues with Customs of countries with which India have MRA.
The AEO programmes have been implemented by other Customs administrations that give AEO status holders preferential Customs treatment in terms of reduced examination, faster clearances and other benefits. Thus, the AEO programme is expected to result in Mutual Recognition Agreements (MRA) with these Customs administrations. MRAs would ensure export goods get due Customs facilitation at the point of entry in the foreign country. Apart from securing supply chain, the benefits include reduction in dwell time and consequent cost of doing business. Indian Customs has signed MRA with Hong Kong Customs to recognise respective AEO Programmes to enable trade to get benefits on reciprocal basis. Indian Customs is also engaged in finalising MRA with other counties such as South Korea, Taiwan, USA etc.
1.29 Prior filing facility for Shipping Bills
To facilitate processing of shipping bills before actual shipment, prior online filing facility for shipping bills has
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been provided by the Customs - 7 days for air shipments & ICDs and 14 days for shipments by sea.
1.30 Cutting down delay in filing of Export General Manifest (EGM) for duty drawback
To facilitate quicker filing of EGMs and quicker rectification of EGM errors, there is a mechanism of monthly monitoring of EGMs by Chief Commissioners of Customs to ensure that facilitation does not lag on this account (Instruction No. 603/01/2011-DBK dated 31.07.2013).
1.31 Facility of Common Bond / LUT against authorizations issued under different EP Schemes
CBEC Circular 11(A)/2011-Cus dated 25.02.2011 has provided the financial year-wise facility of executing common Bond/LUT against Advance Authorization (AA)/Export Promotion Capital Goods (EPCG) Authorisation which is usable across all EDI ports/locations.
1.32 Exemption from Service Tax on Services received abroad
For all goods and services exported from India, services received / rendered abroad, where ever possible, shall be exempted from service tax.
1.33 Export of perishable agricultural Products
To reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been introduced. The system will involve creation of multi-functional nodal agencies to be accredited by Agricultural and Processed Food Products Export Development Authority (APEDA), New Delhi. The detailed procedure has been notified at Appendix 1C to Appendices & ANFs.
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1.34 Time Release Study (TRS)
Central Board of Excise and Customs has decided to undertake ‘Time Release Study’ (TRS) as per WCO guidelines at major Customs locations on six monthly basis. WCO Time Release Study (TRS) is a unique tool and method for measuring the actual performance of Customs. The underlying objectives of Time Release Study are:
(i) Identifying bottlenecks in the international supply chain / or constraints affecting Customs release.
(ii) Establishing baseline trade facilitation performance measurement.
1.35 Towns of Export Excellence (TEE)
(a) Objective: Development and growth of export production centres. A number of towns have emerged as dynamic industrial clusters contributing handsomely to India’s exports. It is necessary to grant recognition to these industrial clusters with a view to maximize their potential and enable them to move up the value chain and also to tap new markets.
(b) Selected towns producing goods of Rs. 750 Crore or more may be notified as TEE based on potential for growth in exports. However for TEE in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs.150 Crore. The following facilities will be provided to such TEE’s:
(i) Recognized associations of units will be provided financial assistance under MAI scheme, on priority basis, for export promotion projects for
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marketing, capacity building and technological services.
(ii) Common Service Providers in these areas shall be entitled for EPCG scheme.
(c) Notified Towns (TEEs) are listed in Appendix 1 B of Appendices & ANFs.
1.36 Director General of Commercial Intelligence and Statistics (DGCI&S), Kolkata as the provider of trade data
DGCI&S is an ISO certified organization under the administrative control of DGFT and it is the provider of trade data which is a source of guidance and direction for export & import trade and which help the exporters and importers formulate their trade strategy. Foreign trade data is disseminated by DGCI&S through (i) Monthly & Quarterly publications in CD form and (ii) Generation of data from the Foreign Trade database as per user’s request. The DGCI&S has a Priced Information System (PIS) for disseminating data except for purely Central and State Governments and United Nations bodies. DGCI&S has put in place a Data Suppression Policy. The aim of this policy is to maintain confidentiality of importer’s and exporter’s commercially sensitive business data. Transaction level data would not be made publicly available to protect privacy. DGCI&S trade data shall be made available at aggregate level with a minimum possible time lag on commercial criteria. DGCI&S can be visited at http://dgciskol.nic.in.
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CHAPTER 2
GENERAL PROVISIONS REGARDING IMPORTS AND
EXPORTS
2.00 Objective
The general provisions governing import and export of goods and services are dealt with in this chapter.
2.01 Exports and Imports – ‘Free’, unless regulated
(a) Exports and Imports shall be ‘Free’ except when regulated by way of ‘prohibition’, ‘restriction’ or ‘exclusive trading through State Trading Enterprises
(STEs)’ as laid down in Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports. The list of ‘Prohibited’, ‘Restricted’ and ‘STE’ items can be viewed by clicking on ‘Downloads’ at http://dgft.gov.in.
(b) Further, there are some items which are ‘free’ for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force.
2.02 Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports
(a) ITC (HS) is a compilation of codes for all merchandise / goods for export/ import. Goods are classified based on their group or sub-group at 2/4/6/8 digits.
(b) ITC (HS) is aligned at 6 digit level with international Harmonized System goods nomenclature maintained by World Customs Organization (http://www. wcoomd.org). However, India maintains national Harmonized System of goods at 8 digit level which may
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be viewed by clicking on ‘Downloads’ at http://dgft.gov.in.
(c) The import/export policies for all goods are indicated against each item in ITC (HS). Schedule 1 of ITC (HS) lays down the Import Policy regime while Schedule 2 of ITC (HS) details the Export Policy regime.
(d) Except where it is clearly specified, Schedule 1 of ITC (HS), Import Policy is for new goods and not for the Second Hand goods. For Second Hand goods, the Import Policy regime is given in Para 2.31 in this FTP.
2.03 Compliance of Imports with Domestic Laws
(a) Domestic Laws/ Rules/ Orders/ Regulations / Technical specifications/ environmental/ safety and health norms applicable to domestically produced goods shall apply, mutatis mutandis, to imports, unless specifically exempted.
(b) However, goods to be utilized/ consumed in manufacture of export products, as notified by DGFT, may be exempted from domestic standards/quality specifications.
2.04 Authority to specify Procedures
DGFT may specify procedure to be followed by an exporter or importer or by any licensing/Regional Authority (RA) or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedure, or amendments, if any, shall be published by means of a Public Notice.
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Importer-Exporter Code / e-IEC
2.05 Importer-Exporter Code (IEC)
(I) An IEC is a 10-digit number allotted to a person that is mandatory for undertaking any export/import activities. Now the facility for IEC in electronic form or e-IEC has also been operationalised.
(a) Application for IEC/e-IEC:
Application for obtaining IEC can be filed manually and submitting the form in the office of Regional Authority (RA) of DGFT. Alternatively, an application for e-IEC may be filed online in ANF 2A, in accordance with Para 2.08 of Handbook of Procedure on payment of application fee of Rs. 500/-, to be paid online through net banking or credit/debit card (to be operationalised shortly). Documents/ details required to be uploaded/ submitted along with the application form are listed in the Application Form (ANF 2A).
(b) When an e-IEC is approved by the competent authority, applicant is informed through e-mail that a computer generated e-IEC is available on the DGFT website. By clicking on “Application Status” after having filled and submitted the requisite details in “Online IEC Application” webpage, applicant can view and print his e-IEC.
(c) Briefly, following are the requisite details /documents (scanned copies) to be submitted/ uploaded along with the application for IEC:
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(i) Details of the entity seeking the IEC:
(1) PAN of the business entity in whose name Import/Export would be done (Applicant individual in case of Proprietorship firms).
(2) Address Proof of the applicant entity.
(3) LLPIN /CIN/ Registration Certification Number (whichever is applicable).
(4) Bank account details of the entity.
Cancelled Cheque bearing entity’s pre-printed name or Bank certificate in prescribed format ANF2A(I).
(ii) Details of the Proprietor/ Partners/ Directors/ Secretary or Chief Executive of the Society/ Managing Trustee of the entity:
(1) PAN (for all categories)
(2) DIN/DPIN (in case of Company /LLP firm)
(iii) Details of the signatory applicant:
(1) Identity proof
(2) PAN
(3) Digital photograph
(d) In case the applicant has digital signature, the application can also be submitted online and no physical application or document is required. In case the applicant does not possess digital signature, a print out of the application filed online duly signed by the applicant has to be submitted to the concerned jurisdictional RA, in person or by post.
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(e) Detailed guidelines for applying for e-IEC are available at < http://dgft.gov.in/exim/2000/ iec_anf/ iecanf.htm>.
(II) No Export/Import without IEC:
(i) No export or import shall be made by any person without obtaining an IEC number unless specifically exempted.
(ii) Exempt categories and corresponding permanent IEC numbers are given in Para 2.07 of Handbook of Procedures.
(III) Only one IEC against one Permanent Account Number (PAN)
Only one IEC is permitted against on Permanent Account Number (PAN). If any PAN card holder has more than one IEC, the extra IECs shall be disabled.
2.06 Mandatory documents for export/import of goods from/into India
(a) Mandatory documents required for export of goods from India:
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Shipping Bill/Bill of Export
(b) Mandatory documents required for import of goods into India
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Bill of Entry
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[Note: *(i) As per CBEC Circular No. 01/15-Customs dated 12/01/2015. (ii) Separate Commercial Invoice and Packing List would also be accepted.]
(c) For export or import of specific goods or category of goods, which are subject to any restrictions/policy conditions or require NOC or product specific compliances under any statute, the regulatory authority concerned may notify additional documents for purposes of export or import.
(d) In specific cases of export or import, the regulatory authority concerned may electronically or in writing seek additional documents or information, as deemed necessary to ensure legal compliance.
(e) The above stipulations are effective from 1st April, 2015.
2.07 Principles of Restrictions
DGFT may, through a Notification, impose restrictions on export and import, necessary for: -
(a) Protection of public morals;
(b) Protection of human, animal or plant life or health;
(c) Protection of patents, trademarks and copyrights, and the prevention of deceptive practices;
(d) Prevention of use of prison labour;
(e) Protection of national treasures of artistic, historic or archaeological value;
(f) Conservation of exhaustible natural resources;
(g) Protection of trade of fissionable material or material from which they are derived;
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(h) Prevention of traffic in arms, ammunition and implements of war.
2.08 Export/Import of Restricted goods/Services
Any goods /service, the export or import of which is
‘Restricted’ may be exported or imported only in accordance with an Authorisation / Permission or in accordance with the procedure prescribed in a Notification / Public Notice issued in this regard.
2.09 Export of SCOMET Items
Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET), as indicated in Appendix-3 of Schedule 2 of ITC(HS) Classification of Export & Import Items, shall be governed by the specific provisions of (i) Chapter IV A of the FT(D&R) Act, 1992 as amended from time to time (ii) Sl. No. 4 & 5 of Table A and Appendix-3 of Schedule 2 of ITC(HS) Classification of Export & Import Items (iii) Para 2.16, Para 2.17, Para 2.18 of FTP and (iv) Para 2.73-2.82 of Hand Book of Procedures, in addition to the other provisions of FTP and Handbook of Procedures governing export authorizations.
2.10 Actual User Condition
Goods which are importable freely without any ‘Restriction’ may be imported by any person. However, if such imports require an Authorisation, actual user alone may import such good(s) unless actual user condition is specifically dispensed with by DGFT.
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2.11 Terms and Conditions of an Authorisation
Every Authorisation shall, inter alia, include such terms and conditions as may be specified by RA along with the following:
(a) Description, quantity and value of goods;
(b) Actual User condition (as defined in Chapter 9);
(c) Export Obligation;
(d) Minimum Value addition to be achieved;
(e) Minimum export/import price;
(f) Bank guarantee/ Legal undertaking / Bond with Customs Authority/RA (as in para 2. 35 of FTP).
(g) Validity period of import/export as specified in Handbook of Procedures.
2.12 Application Fee
Application for IEC/ Authorisation / License / Scrips must be accompanied by application fees as indicated in the Appendix 2K of Appendices and Aayat Niryat Forms.
2.13 Clearance of Goods from Customs against Authorization
Goods already imported / shipped / arrived, in advance, but not cleared from Customs may also be cleared against an Authorisation issued subsequently. This facility will however be not available to “restricted” items or items traded through STEs.
2.14 Authorisation - not a Right
No person can claim an Authorisation as a right and DGFT or RA shall have power to refuse to grant or renew the same in accordance with provisions of FT (D&R) Act, Rules made there under and FTP.
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2.15 Penal action and placing of an entity in Denied Entity List (DEL)
(a) If an Authorisation holder violates any condition of such Authorisation or fails to fulfill export obligation, or fails to deposit the requisite amount within the period specified in demand notice issued by Department of Revenue and /or DGFT, he shall be liable for action in accordance with FT (D&R) Act, the Rules and Orders made there under, FTP and any other law for time being in force.
(b) With a view to raising ethical standards and for ease of doing business, DGFT has provided for self certification system under various schemes. In such cases, applicants shall undertake self certification with sufficient care and caution in filling up information/particulars. Any information / particulars subsequently found untrue/ incorrect will be liable for action under FTDR Act, 1992 and Rules therein in addition to penal action under any other Act/Order.
(c) A firm may be placed under Denied Entity List (DEL), by the concerned RA, under the provision of Rule 7 of Foreign Trade (Regulation) Rules, 1993. On issuance of such an order, for reasons to be recorded in writing, a firm may be refused grant or renewal of a license, certificate, scrip or any instrument bestowing financial or fiscal benefits. If a firm is placed under DEL all new licences, scrips, certificates, instruments, etc will be blocked from printing / issue / renewal.
(d) DEL orders may be placed in abeyance, for reasons to be recorded in writing by the concerned RA. DEL order can be placed in abeyance, for a period not more than 60 days at a time.
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(e) A firm's name can be removed from DEL, by the concerned RA for reasons to be recorded in writing, if the firm completes Export Obligation/ pays penalty/ fulfills requirement of Demand Notice(s) issued by the RA/submits documents required by the RA.
Prohibitions (Country and Product Specific):
2.16 Prohibition on Import and Export of ‘Arms and related material’ from / to Iraq
Notwithstanding the policy on Arms and related materials in Chapter 93 of ITC(HS), the import/export of Arms and related material from/to Iraq is ‘Prohibited’. However, export of Arms and related material to Government of Iraq shall be permitted subject to ‘No Objection Certificate’ from the Department of Defence Production.
2.17 Prohibition on Direct or Indirect Import and Export from / to Democratic People’s Republic of Korea
Direct or indirect export and import of following items, whether or not originating in Democratic People’s Republic of Korea (DPRK), to / from, DPRK is ‘Prohibited’:
All items, materials, equipment, goods and technology including as set out in lists in documents INFCIRC/254/Rev.11/Part 1 and INFCIRC/254/ Rev.8/Part 2 (IAEA documents), S/2012/947, S/2009/364 and S/2006/853 (UN Security Council documents) and Annex III to UN Security Council resolution 2094 (2013) which could contribute to DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes; Luxury goods, including but not limited to the items specified in Annex IV to UN Security Council resolution 2094 (2013).
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2.18 Prohibition on Direct or Indirect Import and Export from/ to Iran
(a) Direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute to Iran’s enrichment-related, reprocessing or heavy water related activities, or to development of nuclear weapon delivery systems, as mentioned below, whether or not originating in Iran, to/from Iran is ‘Prohibited’:
(i) Items listed in INFCIRC/254/Rev.9/Part 1 and INFCIRC/254/Rev.7/Part 2 (IAEA Documents).
(ii) Items listed in S/2006/263 (UN Security Council document).
(b) All the UN Security Council Resolutions/Documents and IAEA Documents referred to above are available on the UN Security Council website (www .un .org/Docs/sc) and IAEA website ( www.iaea.org).
2.19 Prohibition on Import of Charcoal from Somalia
Direct or indirect import of charcoal is prohibited from Somalia, irrespective of whether or not such charcoal has originated in Somalia [United Nations Security Council Resolution 2036 (2012)]. Importers of charcoal shall submit a declaration to Customs that the consignment has not originated in Somalia.
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Import / Export Through State Trading Enterprises:
2.20 State Trading Enterprises (STEs)
(a) State Trading Enterprises (STEs) are governmental and non-governmental enterprises, including marketing boards, which deal with goods for export and / or import. Any good, import or export of which is governed through exclusive or special privilege granted to State Trading Enterprises (STE), may be imported or exported by the concerned STE as per conditions specified in ITC (HS). The list of STEs notified by DGFT is in Appendix 2J.
(b) Such STE (s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale in a non discriminatory manner and shall afford enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales.
(c) DGFT may, however, grant an authorization to any other person to import or export any of the goods notified for exclusive trading through STEs.
Trade with Specific Countries:
2.21 Trade with neighbouring Countries
DGFT may issue instructions or frame schemes as may be required to promote trade and strengthen economic ties with neighbouring countries.
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2.22 Transit Facility
Transit of goods through India from/ or to countries adjacent to India shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with International Conventions.
2.23 Trade with Russia under Debt-Repayment Agreement
In case of trade with Russia under Debt Repayment Agreement, DGFT may issue instructions or frame schemes as may be required, and anything contained in FTP, in so far as it is inconsistent with such instructions or schemes, shall not apply.
Import of Specific Categories of Goods:
2.24 Import of Samples
Import of samples shall be governed by para 2.65 of Handbook of Procedures.
2.25 Import of Gifts
Import of gifts shall be ‘free’ where such goods are otherwise freely importable under ITC (HS). In other cases, such imports shall be permitted against an authorisation issued by DGFT.
2.26 Passenger Baggage
(a) Bona-fide household goods and personal effects may be imported as part of passenger baggage as per limits, terms and conditions thereof in Baggage Rules notified by Ministry of Finance.
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(b) Samples of such items that are otherwise freely importable under FTP may also be imported as part of passenger baggage without an Authorisation.
(c) Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts, trimming and embellishments required for export, as part of their passenger baggage without an Authorisation.
2.27 Re – import of goods repaired abroad
Capital goods, equipments, components, parts and accessories, whether imported or indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without an Authorisation.
2.28 Import of goods used in projects abroad
Project contractors after completion of projects abroad, may import without an Authorisation, goods including capital goods used in the project, provided they have been used for at least one year.
2.29 Import of Prototypes
Import of new / second hand prototypes / second hand samples may be allowed on payment of duty without an Authorisation to an Actual User (industrial) engaged in production of or having industrial licence / letter of intent for research in item for which prototype is sought for product development or research, as the case may be, upon a self- declaration to that effect, to satisfaction of customs authorities
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2.30 Import through courier service
Imports through a registered courier service are permitted as per Notifications issued by DoR. However, importability / exportability of such items shall be regulated in accordance with this FTP/ ITC(HS).
Import Policy for Second Hand Goods :
2.31 Second Hand Goods
S.
Categories
of
Import
Conditions, if any
No.
Second
Hand
Policy
Goods
I
Second Hand Capital Goods
(a)
i. Personal
Restricted
Importable against
computers/
authorization
laptops
including
their
refurbished / re-
conditioned
spares
ii. Photocopier machines/ Digital multifunction Print & Copying Machines
iii. Air conditioners
iv. Diesel generating sets.
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(b)
Refurbished
/
Free
Subject
to
re-conditioned
production
of
spares of Capital
Chartered
Engineer
Goods
certificate
to
the
effect that
such
spares have at least
80% residual life of
original spare.
(c)
All other second
Free
hand
capital
goods
{other
than (a)
&
(b)
above}
II
Second
Hand
Restricted
Importable against
Goods
other
Authorization
than
capital
goods
Import Policy for Metallic Waste and Scraps :
2. 32 Import of Metallic waste and Scrap
(a) Import of any form of metallic waste, scrap will be subject to the condition that it will not contain hazardous, toxic waste, radioactive contaminated waste/scrap containing radioactive material, any types of arms, ammunition, mines, shells, live or used cartridge or any other explosive material in any form either used or otherwise as detailed in para 2.54 of Handbook of Procedures.
(b) The types of metallic waste and scrap which can be imported freely and the procedure of import in the shredded form; unshredded compressed and loose
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form, is laid down in para 2.54 of Handbook of Procedures.
2.33 Removal of Scrap/waste from SEZ
A SEZ unit/Developer/ Co-developer may be allowed to dispose of in DTA any waste or scrap, including any form of metallic waste and scrap, generated during manufacturing or processing activity, without an authorization, on payment of applicable Customs Duty.
Other Provisions Related to Imports:
2.34 Import under Lease Financing
No specific permission of RA is required for lease financed capital goods.
2.35 Execution of Legal Undertaking (LUT) / Bank Guarantee (BG)
(a) Wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute, Legal Undertaking (LUT) / Bank Guarantee (BG) / Bond with the Customs Authority, as prescribed, before clearance of goods.
(b) In case of indigenous sourcing, Authorisation holder shall furnish LUT/BG/Bond to RA concerned before sourcing material from indigenous supplier/ nominated agency as prescribed in Chapter 2 of Handbook of Procedures.
2.36 Private/Public Bonded Warehouses for Imports
(a) Private/ Public bonded warehouses may be set up in DTA as per terms and conditions of notification issued by DoR. Any person may import goods except
44
prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such bonded warehouses.
(b) Such goods may be cleared for home consumption in accordance with provisions of FTP and against Authorisation, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods.
(c) If such goods are not cleared for home consumption within a period of one year or such extended period as the customs authorities may permit, importer of such goods shall re-export the goods.
2.37 Special provision for Hides Skins and semi-finished goods
Hides, Skins and semi-finished leather may be imported in the Public Bonded warehouse for the purpose of DTA sale and the unsold items thereof can be re-exported from such bonded warehouses at 50% of the applicable export duty. However, this facility shall not be allowed for import under Private Bonded warehouse.
2.38 Sale on High Seas
Sale of goods on high seas for import into India may be made subject to FTP or any other law in force.
Exports:
2.39 Free Exports
All goods may be exported without any restriction except to the extent that such exports are regulated by ITC (HS) or any other provision of FTP or any other law for the time being in force. DGFT may, however, specify through a
45
public notice such terms and conditions according to which any goods, not included in ITC (HS), may be exported without an Authorisation.
2.40 Exemption / Remission of Service Tax in DTA on goods & services exported
For all goods and services which are exported from units in DTA and units in EOU / EHTP / STP / BTP, exemption / remission of service tax levied and related to exports, shall be allowed, as per prescribed procedure in Chapter 4 of Handbook of Procedures.
2.41 Benefits for Supporting Manufacturers
For any benefit to accrue to the supporting manufacturer (as defined in para 9.58 of FTP), the names of both supporting manufacturer as well as the merchant exporter must figure in the concerned export documents, especially in ARE-1 / ARE-3 / Shipping Bill / Bill of Export/ Airway Bill.
2.42 Third Party Exports
Third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realisation Certificate (BRC), export order and invoice should be in the name of third party exporter.
Exports of Specific Categories
2.43 Export of Samples
Export of Samples and Free of charge goods shall be governed by provisions given in para 2.66 of Handbook of Procedures.
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2.44 Export of Gifts
Goods including edible items, of value not exceeding Rs.5,00,000/- in a licensing year, may be exported as a gift. However, items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift, without an Authorisation.
2.45 Export of Passenger Baggage
(a) Bona-fide personal baggage may be exported either along with passenger or, if unaccompanied, within one year before or after passenger's departure from India. However, items mentioned as restricted in ITC (HS) shall require an Authorisation. Government of India officials proceeding abroad on official postings shall, however, be permitted to carry along with their personal baggage, food items (free, restricted or prohibited) strictly for their personal consumption.
(b) Samples of such items that are otherwise freely exportable under FTP may also be exported as part of passenger baggage without an Authorisation.
2.46 Import for export
I. (a) Goods imported, in accordance with FTP, may be exported in same or substantially the same form without an Authorisation provided that item to be imported or exported is not restricted for import or export in ITC (HS).
(b) Goods, including capital goods (both new and second hand), may be imported for export provided:
47
(i) Importer clears goods under Customs Bond;
(ii) Goods are freely exportable, i.e., are not
“Restricted”/ “Prohibited”/ subject to “exclusive trading through State Trading Enterprises” or any conditionality/ requirement as may be required under Schedule 2 – Export Policy of the ITC (HS);
(iii) Export is against freely Convertible currency.
(c) Goods in (b) above will include ‘Restricted’ goods for import (except ‘Prohibited’ items).
(d) Capital goods, which are freely importable and freely exportable, may be imported for export on execution of LUT/BG with Customs Authority.
II. (a) Goods imported against payment in freely convertible currency would be permitted for export only against payment in freely convertible currency, unless otherwise notified by DGFT.
(b) Export of such goods to the notified countries (presently only Iran) would be permitted against payment in Indian Rupees, subject to minimum 15% value addition.
(c) However, re-export of food, medicine and medical equipments, namely, items covered under ITC(HS) Chapters 2 to 4, 7 to 11, 15 to 21, 23, 30 and items under headings 9018, 9019, 9020, 9021 & 9022 of Chapter-90 of ITC(HS) will not be subject to minimum value addition requirement for export to Iran. Exports of these items to Iran shall, however, be subject to all other conditions of FTP 2015-20 and ITC (HS) 2012, as applicable. Bird’s eggs covered under ITC (HS) 0407 &
0408 and Rice covered under ITC (HS) 1006 are not covered under this dispensation, as at II (a) above.
48
(d) Exports under this dispensation, as at II(b) and (c) above shall not be eligible for any export incentives.
2.47 Export through Courier Service
Exports through a registered courier service are permitted as per Notification issued by DoR. However, importability / exportability of such items shall be regulated in accordance with FTP/ ITC (HS).
2.48 Export of Replacement Goods
Goods or parts thereof on being exported and found defective/damaged or otherwise unfit for use may be replaced free of charge by the exporter and such goods shall be allowed clearance by Customs authorities, provided that replacement goods are not mentioned as restricted items for exports in ITC (HS).
2.49 Export of Repaired Goods
(i) “Goods or parts thereof, except restricted under ITC (HS), on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shall be allowed clearance without an Authorisation and in accordance with customs notification.
(ii) However, re-export of such defective parts/spares by the Companies/firms and Original Equipment Manufacturers shall not be mandatory if they are imported exclusively for undertaking root cause analysis, testing and evaluation purpose.”
2.50 Export of Spares
Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any other
49
goods, [except those restricted under ITC (HS)] may be exported along with main equipment or subsequently but within contracted warranty period of such goods, subject to approval of RBI.
2.51 Private Bonded Warehouses for Exports
(a) Private bonded warehouses exclusively for exports may be set up in DTA as per terms and conditions of notifications issued by Department of Revenue.
(b) Such warehouses shall be entitled to procure goods from domestic manufacturers without payment of duty. Supplies made by a domestic supplier to such notified warehouses shall be treated as physical exports provided payments are made in free foreign exchange.
Payments and Receipts on Imports / Exports
2.52 Denomination of Export Contracts
(a) All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.
(b) However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting bank service charges)
50
on account of this transaction would be taken as export realization under export promotion schemes of FTP.
(c) Contracts (for which payments are received through Asian Clearing Union (ACU) shall be denominated in ACU Dollar. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and invoices can be denominated in Indian rupees against EXIM Bank/Government of India line of credit.
2.53 Export to Iran – Realisations in Indian Rupees to be eligible for FTP benefits / incentives
Notwithstanding the provisions contained in para 2.52 (a) above, export proceeds realized in Indian Rupees against exports to Iran are permitted to avail exports benefits / incentives under the Foreign Trade Policy (2015-20), at par with export proceeds realized in freely convertible currency.
2.54 Non-Realisation of Export Proceeds
(a) If an exporter fails to realize export proceeds within time specified by RBI, he shall, without prejudice to any liability or penalty under any law in force, be liable to return all benefits / incentives availed against such exports and action in accordance with provisions of FT (D&R) Act, Rules and Orders made there under and FTP.
(b) In case an Exporter is unable to realise the export proceeds for reasons beyond his control (force-majeure), he may approach RBI for writing off the unrealised amount as per procedure laid down in para 2.87 of Handbook of Procedures.
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(c) The payment realized through insurance cover, would be eligible for benefits under FTP. The procedure to be followed in such cases is laid down in para 2.85 of Handbook of Procedures.
Export Promotion Councils
2.55 Recognition of Export Promotion Councils (EPCs) to function as Registering Authority for issue of RCMC.
(a) Export Promotion Councils (EPCs) are organizations of exporters, set up with the objective to promote and develop Indian exports. Each Council is responsible for promotion of a particular group of products/ projects/services as given in Appendix 2T of AANF.
(b) EPCs are also eligible to function as Registering Authorities to issue Registration-cum-Membership Certificate (RCMC) to its members. The criteria for EPCs to be recognized as Registering Authorities for issue of RCMC to its members are detailed in para 2.92 of the Handbook of Procedures.
2.56 Registration-cum-Membership Certificate (RCMC)
Any person, applying for:
(a) An Authorisation to import/export (except items) listed as ‘Restricted’ items in ITC (HS)
Or
(b) Any other benefit or concession under FTP shall be required to furnish or upload on DGFT’s website in the
Importer Exporter Profile, the RCMC granted by competent authority in accordance with procedure specified in HBP, unless specifically exempted under FTP. Certificate of Registration as Exporter of Spices
52
(CRES) issued by Spices Board shall be treated as Registration-Cum-Membership Certificate (RCMC) for the purposes under this Policy.
Policy Interpretation and Relaxations:
2.57 Interpretation of Policy
(a) The decision of DGFT shall be final and binding on all matters relating to interpretation of Policy, or provision in Handbook of Procedures, Appendices and Aayat Niryat Forms or classification of any item for import / export in the ITC (HS).
(b) A Policy Interpretation Committee (PIC) may be constituted to aid and advise DGFT. The composition of the PIC would be as follows:
(i) DGFT: Chairman
(ii) All Additional DGFTs in Headquarters : Members
(iii) All Joint DGFTs in Headquarters looking after Policy matters : Members
(iv) Joint DGFT (PRC/PIC) : Member Secretary
(v) Any other person / representative of the concerned Ministry / Department, to be co-opted by the Chairman.
2.58 Exemption from Policy/ Procedures
DGFT may in public interest pass such orders or grant such exemption, relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade to any person or class or category of persons from any provision of FTP or any procedure. While granting such exemption, DGFT may impose such conditions as he may deem fit after consulting the Committees as under:
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Sl.
Description
Committee
No.
(a)
Fixation / modification
of product norms
Norms Committees
(b)
Nexus with Capital Goods
(CG) and benefits under
EPCG Committee
EPCG Schemes
(c)
All other issues
Policy
Relaxation
Committee (PRC)
2.59 Personal Hearing by DGFT for Grievance Redressal
(a) Government is committed to easy and speedy redressal of grievances from Trade and Industry. Paragraph 2.58 of FTP provides for relaxation of Policy and Procedures on grounds of genuine hardship and adverse impact on trade. DGFT may consider request for relaxation after consulting concerned Norms Committee, EPCG Committee or Policy Relaxation Committee (PRC).
(b) As a last resort to redress grievances of Importers/ Exporters, DGFT may provide an opportunity for Personal Hearing (PH) before PRC. For such PH, a specific request along with the prescribed application fee as per Appendix-2K has to be made to DG, if following conditions are satisfied:
(i) If an importer/exporter is aggrieved by any decision taken by Policy Relaxation Committee (PRC), or a decision/order by any authority in the Directorate General of Foreign Trade and
54
(ii) A request for review before the said Committee or Authority has been filed.
(iii) Such Committee or Authority has considered the request for a review, and
(iv) The exporter / importer continues to be aggrieved.
(c) The decision conveyed in pursuance to the personal hearing shall be final and binding.
(d) The opportunity for Personal Hearing will not apply to a decision/order made in any proceeding, including an adjudication proceeding, whether at the original stage or at the appellate stage, under the relevant provisions of FT (D&R) Act, 1992, as amended from time to time.
2.60 Regularization of EO default and settlement of Customs duty and interest through Settlement Commission
With a view to providing assistance to firms who have defaulted under FTP for reasons beyond their control as also facilitating merger, acquisition and rehabilitation of sick units, it has been decided to empower Settlement Commission in Central Board of Excise and Customs to decide such cases also with effect from 01.04.2005.
Self Certification of Originating Goods
2.61 Approved Exporter Scheme for Self Certification of Certificate of Origin.
(i) Currently, Certificates of Origin under various Preferential Trade Agreements [PTA], Free Trade Agreements [FTAs], Comprehensive Economic Cooperation Agreements [CECA] and Comprehensive Economic Partnerships Agreements [CEPA] are issued
55
by designated agencies as per Appendix 2B of Appendices and Aayat and Niryat Forms. A new optional system of self certification is being introduced with a view to reducing transaction cost.
(ii) The Manufacturers who are also Status Holders shall be eligible for Approved Exporter Scheme. Approved Exporters will be entitled to self-certify their manufactured goods as originating from India with a view to qualifying for preferential treatment under different PTAs/FTAs/CECAs/CEPAs which are in operation. Self-certification will be permitted only for the goods that are manufactured as per the Industrial
Entrepreneurial’s Memorandum (IEM) / Industrial Licence (IL)/Letter of Intent (LOI) issued to manufacturers.
(iii) Status Holders will be recognized by DGFT as Approved Exporters for self-certification based on availability of required infrastructure, capacity and trained manpower as per the details in Para 2.109 of Handbook of Procedures 2015-20 read with Appendix 2F of Appendices & Aayaat Niryaat Forms.
(iv) The details of the Scheme, along with the penalty provisions, are provided in Appendix 2F of Appendices and Aayaat Niryaat Forms and will come into effect only when India incorporates the scheme into a specific agreement with its partner/s and the same is appropriately notified by DGFT.
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CHAPTER 3
EXPORTS FROM INDIA SCHEMES
3.00 Objective
The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved and to provide exporters a level playing field.
3.01 Exports from India Schemes
There shall be following two schemes for exports of Merchandise and Services respectively:
(i) Merchandise Exports from India Scheme (MEIS).
(ii) Service Exports from India Scheme (SEIS).
3.02 Nature of Rewards
Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for :
(i) Payment of Customs Duties for import of inputs or goods, except items listed in Appendix 3A.
(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per DoR notification.
(iii) Payment of service tax on procurement of services as per DoR notification.
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(iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.
Merchandise Exports from India Scheme (MEIS)
3.03 Objective
Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.
3.04 Entitlement under MEIS
Exports of notified goods/products with ITC[HS] code, to notified markets as listed in Appendix 3B, shall be rewarded under MEIS. Appendix 3B also lists the rate(s) of rewards on various notified products [ITC (HS) code wise]. The basis of calculation of reward would be on realised FOB value of exports in free foreign exchange, or on FOB value of exports as given in the Shipping Bills in free foreign exchange, whichever is less, unless otherwise specified.
3.05 Export of goods through courier or foreign post offices using e-Commerce
(i) Exports of goods through courier or foreign post office using e-commerce, as notified in Appendix 3C, of FOB value upto Rs. 25000 per consignment shall be entitled for rewards under MEIS.
(ii) If the value of exports using e-commerce platform is more than Rs 25000 per consignment then MEIS reward would be limited to FOB value of Rs.25000 only.
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(iii) Such goods can be exported in manual mode through Foreign Post Offices at New Delhi, Mumbai and Chennai.
(iv) Export of such goods under Courier Regulations shall be allowed manually on pilot basis through Airports at Delhi, Mumbai and Chennai as per appropriate amendments in regulations to be made by Department of Revenue. Department of Revenue shall fast track the implementation of EDI mode at courier terminals.
3.06 Ineligible categories under MEIS
The following exports categories /sectors shall be ineligible for Duty Credit Scrip entitlement under MEIS
(i) EOUs / EHTPs / BTPs/ STPs who are availing direct tax benefits / exemption.
(ii) Supplies made from DTA units to SEZ units
(iii) Export of imported goods covered under paragraph 2.46 of FTP;
(iv) Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India;
(v) Deemed Exports;
(vi) SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units;
(vii) Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS), unless specifically notified in Appendix 3B.
(viii)Service Export.
(ix) Red sanders and beach sand.
(x) Export products which are subject to Minimum export price or export duty.
(xi) Diamond Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones.
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(xii) Ores and concentrates of all types and in all formations.
(xiii) Cereals of all types.
(xiv) Sugar of all types and all forms.
(xv) Crude / petroleum oil and crude / primary and base products of all types and all formulations.
(xvi) Export of milk and milk products.
(xvii)Export of Meat and Meat Products.
(xviii)Products wherein precious metal/diamond are used or Articles which are studded with precious stones.
(xix) Exports made by units in FTWZ.
Service Exports from India Scheme (SEIS)
3.07 Objective
Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India.
3.08 Eligibility
(a) Service Providers of notified services, located in India, shall be rewarded under SEIS, subject to conditions as may be notified. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of this policy shall be eligible. The notified services and rates of rewards are listed in Appendix 3D.
(b) Such service provider should have minimum net free
foreign exchange earnings of US$15,000 in preceding financial year to be eligible for Duty Credit Scrip. For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in preceding financial year.
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(c) Payment in Indian Rupees for service charges earned on specified services, shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India. The list of such services is indicated in Appendix 3E.
(d) Net Foreign exchange earnings for the scheme are defined as under:
Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.
(e) If the IEC holder is a manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances shall be taken into account for service sector only.
(f) In order to claim reward under the scheme, Service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.
3.09 Ineligible categories under SEIS
(1) Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation,
donations, receipts of repayment of loans etc. and
any
other inflow of foreign exchange, unrelated
to
rendering of service, would be ineligible.
(2) Following shall not be taken into account for calculation of entitlement under the scheme
(a) Foreign Exchange remittances:
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I. Related to Financial Services Sector
(i) Raising of all types of foreign currency Loans;
(ii) Export proceeds realization of clients;
(iii) Issuance of Foreign Equity through ADRs / GDRs or other similar instruments;
(iv) Issuance of foreign currency Bonds;
(v) Sale of securities and other financial instruments;
(vi) Other receivables not connected with services rendered by financial institutions; and
II. Earned through contract/regular employment abroad (e.g. labour remittances);
(b) Payments for services received from EEFC Account;
(c) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc.
(d) Foreign exchange turnover by Educational Institutions like equity participation, donations etc.
(e) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units;
(f) Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
(g) Exports of Goods.
(h) Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all.
(i) Service providers in Telecom Sector.
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3.10 Entitlement under SEIS
Service Providers of eligible services shall be entitled to Duty Credit Scrip at notified rates (as given in Appendix 3D) on net foreign exchange earned.
3.11 Remittances through Credit Card and other instruments for MEIS and SEIS
Free Foreign Exchange earned through international credit cards and other instruments, as permitted by RBI shall also be taken into account for computation of value of exports.
3.12 Effective date of schemes (MEIS and SEIS)
The schemes shall come into force with effect from the date of notification of this Policy, i.e. the rewards under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of this Policy.
3.13 Special Provisions
(a) Government reserves the right in public interest, to specify export products or services or markets, which shall not be eligible for computation of entitlement of duty credit scrip.
(b) Government reserves the right to impose restriction / change the rate/ceiling on Duty Credit Scrip under this chapter.
(c) Government may also notify goods in Appendix 3A which shall not be allowed for debiting through Duty Credit Scrips in case of import.
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(d) Government may prescribe value cap of any kind for a product(s) or limit total reward per IEC holder under this chapter at any time.
Common Provisions for Exports from India Schemes (MEIS and SEIS)
3.14 Transitional Arrangement
For the goods exported or services rendered upto the date of notification of this Policy, which were otherwise eligible for issuance of scrips under erstwhile Chapter 3 of the earlier Foreign Trade Policy(ies) and scrip is applied / issued on or after notification of this Policy against such export of goods or services rendered, the then prevailing policy and procedure regarding eligibility, entitlement, transferability, usage of scrip and any other condition in force at the time of export of goods or rendering of the services, shall be applicable to such scrips.
3.15 CENVAT/ Drawback
Additional Customs duty/excise duty/Service Tax paid in cash or through debit under Duty Credit scrip shall be adjusted as CENVAT Credit or Duty Drawback as per DoR rules or notifications. Basic Custom duty paid in cash or through debit under Duty Credit scrip shall be adjusted for Duty Drawback as per DoR rules or notifications.
3.16 Import under lease financing
Utilization of Duty Credit Scrip shall be permitted for payment of duty in case of import of capital goods under lease financing in terms of provision in paragraph 2.34 of FTP.
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3.17 Transfer of export performance
(a) Transfer of export performance from one IEC holder to another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shall be counted in export performance / turnover of applicant only if export proceeds from overseas are realized in applicant’s bank account and this shall be evidenced from e - BRC / FIRC.
(b) However, MEIS, rewards can be claimed either by the supporting manufacturer (along with disclaimer from the company / firm who has realized the foreign exchange directly from overseas) or by the company/ firm who has realized the foreign exchange directly from overseas.
3.18 Facility of payment of custom duties in case of E.O. defaults and fee through duty credit scrips
(a) Duty Credit Scrip can be utilised / debited for payment of Custom Duties in case of EO defaults for
Authorizations issued under Chapters 4 and 5 of this Policy. Such utilization /usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes. However, penalty / interest shall be required to be paid in cash.
(b) Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under para 4.49 of HBP 2015-20.
3.19 Risk Management System
(a) A Risk Management System shall be in operation whereby every month Computer system in DGFT
65
Headquarters, on random basis, will select 10% of cases for each RA where scrips have already been issued, under each scheme. RA in turn may call for original documents in all such selected cases for further examination in detail. In case any discrepancy and/ or over claim is found on such examination, the applicant shall be under obligation to rectify such discrepancy and/or refund over claim in cash with interest at the rate prescribed under section 28 A A of the Customs Act 1962, from the date of issue of scrip in the relevant Head of Account of Customs within one month. The original holder of scrip, however, may refund such over claim by surrendering the same scrip whether partially utilized or fully unutilized, without interest.
(b) Regional Authority may ask for original proof of landing certificate, annexures attached to ANFs or any other document, which has been uploaded digitally at any time within three years from the date of issue of scrip. Failure to submit such documents in original would make applicant liable to refund the reward granted along with interest at the rate prescribed under section 28 A A of the Customs Act 1962, from the date of issuance of scrip. It would be the responsibility of applicant to maintain such documents, certificate etc. for a period of at least three years from the date of issuance of scrips.
3.20 Status Holder
(a) Status Holders are business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade. Status Holders are expected to not only contribute towards India’s exports but also provide guidance and handholding to new entrepreneurs.
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(b) All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status recognition depends upon export performance. An applicant shall be categorized as status holder upon achieving export performance during current and previous two financial years, as indicated in paragraph 3.21 of Foreign Trade Policy. The export performance will be counted on the basis of FOB value of export earnings in free foreign exchange.
(c) For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at the exchange rate notified by CBEC, as applicable on 1st April of each Financial Year.
(d) For granting status, export performance is necessary in at least two out of three years.
3.21 Status Category
Export Performance
Status Category
FOB / FOR (as converted)
Value
(in US $ million)
One Star Export House
3
Two Star Export House
25
Three Star Export House
100
Four Star Export House
500
Five Star Export House
2000
3.22 Grant of double weightage
(a) The exports by IEC holders under the following categories shall be granted double weightage for calculation of export performance for grant of status.
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(i) Micro, Small & Medium Enterprises (MSME) as defined in Micro, Small & Medium Enterprises Development (MSMED) Act 2006.
(ii) Manufacturing units having ISO/BIS.
(iii) Units located in North Eastern States including Sikkim and Jammu & Kashmir.
(iv) Units located in Agri Export Zones.
(b) Double Weightage shall be available for grant of One Star Export House Status category only. Such benefit of double weightage shall not be admissible for grant of status recognition of other categories namely Two Star Export House, Three Star Export House, Four Star export House and Five Star Export House.
(c) A shipment can get double weightage only once in any one of above categories.
3.23 Other conditions for grant of status
(a) Export performance of one IEC holder shall not be permitted to be transferred to another IEC holder. Hence, calculation of exports performance based on disclaimer shall not be allowed.
(b) Exports made on re-export basis shall not be counted for recognition.
(c) Export of items under authorization, including SCOMET items, would be included for calculation of export performance.
3.24 Privileges of Status Holders
A Status Holder shall be eligible for privileges as under:
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(a) Authorisation and Customs Clearances for both imports and exports may be granted on self-declaration basis;
(b) Input-Output norms may be fixed on priority within 60 days by the Norms Committee;
(c) Exemption from furnishing of Bank Guarantee for Schemes under FTP, unless specified otherwise anywhere in FTP or HBP;
(d) Exemption from compulsory negotiation of documents through banks. Remittance / receipts, however, would be received through banking channels;
(e) Two star and above Export houses shall be permitted to establish Export Warehouses as per Department of Revenue guidelines.
(f) Three Star and above Export House shall be entitled to get benefit of Accredited Clients Programme (ACP) as per the guidelines of CBEC (website: http://cbec.gov.in).
(g) The status holders would be entitled to preferential treatment and priority in handling of their consignments by the concerned agencies.
(h) Manufacturers who are also status holders (Three Star/Four Star/Five Star) will be enabled to self-certify their manufactured goods (as per their IEM/IL/LOI) as originating from India with a view to qualify for preferential treatment under different preferential trading agreements (PTA), Free Trade Agreements (FTAs), Comprehensive Economic Cooperation Agreements (CECA) and Comprehensive Economic
69
Partnership Agreements (CEPA). Subsequently, the scheme may be extended to remaining Status Holders.
(i) Manufacturer exporters who are also Status Holders shall be eligible to self-certify their goods as originating from India as per para 2.108 (d) of Hand Book of Procedures.
(j) Status holders shall be entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rs 10 lakh or 2% of average annual export realization during preceding three licencing years whichever is higher.
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CHAPTER 4
DUTY EXEMPTION / REMISSION SCHEMES
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 (DBK) Scheme, administered by Department of Revenue.
4.02 Applicability of Policy & Procedures
Authorisation under this Chapter shall be issued in accordance with the Policy and Procedures in force on the date of issue of the Authorisation.
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4.03 Advance Authorisation
(a) Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilised 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.
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 crushing
/ grinding / sterilization / manufacture of oils o r
oleoresins. Authorisation shall not be available for simply cleaning, grading, re-packing etc.
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 to manufacturer exporter only.
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(c) Advance Authorisation shall be issued for:
(i) Physical export (including export to SEZ);
(ii) Intermediate supply; and/or
(iii) Supply of goods 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 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 preceding two financial years) shall be entitled for Advance Authorisation for Annual requirement.
(ii) Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and / or FOR value of deemed export in preceding financial year or Rs 1 crore, whichever is higher.
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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:-
A - B
VA = ----------- x 100, 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 convertible currency, value addition shall be as specified in Appendix 4C.
(iv) Minimum value addition for Gems & Jewellery Sector is given in paragraph 4.61 of Handbook of Procedures.
(v) In case of Tea, minimum value addition shall be 50%.
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4.10 Import of Mandatory 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 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/ vegetables having a duty of more than 30%, classified under Chapter-7 and Chapter-8 of ITC (HS) book;
(v) Horn, hoof and any other organ of animal;
(vi) Honey;
(vii) Rough Marble Blocks/Slabs; and
(viii) Rough Granite.
(ix) Vitamins except for use in pharmaceutical 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
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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 specific input [which has been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, match the description in the relevant bill of entry, 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, 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
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Authority shall allow only those inputs which have been specifically indicated in the shipping bill.
(iv) The above provisions will also be applicable for supplies to SEZs and supplies made under Deemed export. Details as given above will have to be indicated in the relevant Bill of Export, ARE-3, Central Excise certified Invoice / import document / document for domestic procurement/supply.
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 condition.
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,
Safeguard
Duty and Transition Product Specific
Safeguard Duty,
wherever applicable.
However, Import against supplies
covered under paragraph 7.02 (c), (d) and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any.
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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 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. However, Authorisation holder will have option to dispose of product manufactured 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 Authority or Chartered Accountant, at the option of the exporter, at the time of filing application for Export Obligation Discharge Certificate to Regional Authority concerned.
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(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
(i) Validity period for import of Advance Authorisation shall be 12 months from the date of issue of Authorisation.
(ii) Advance 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 separately so notified, subject to the conditions given therein.
(ii) Items reserved for imports by STEs cannot be imported against Advance 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 of such imports to concerned
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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 / SCOMET items however, shall be subject to all conditionalities or requirements of export authorisation or permission, as may be 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 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 direct import. Such procurement can be against Advance Release Order (ARO), Invalidation Letter, Back-to-Back Inland Letter of Credit.
(ii) When domestic supplier intends to obtain duty free material for inputs through Advance Authorisation for
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supplying resultant product to another Advance Authorisation / DFIA / EPCG Authorisation, Regional Authority shall issue Invalidation Letter.
(iii) Regional Authority shall issue Advance Release Order if the domestic supplier intends to seek refund of duty 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 Letter facility.
(vii) Validity of Advance Release Order / Invalidation Letter shall be co-terminous with validity of Authorisation.
4.21 Currency for Realisation of Export Proceeds
(i) Export proceeds shall be realized in freely convertible currency except otherwise specified. Provisions regarding realization of export proceeds are given in paragraph 2.43 of FTP.
(ii) Export to Rupee Payment Area (RPA) (for which payments are not received in freely convertible currency) shall be subject to minimum value addition as specified in Appendix-4C.
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(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 procedures given in SEZ Rules, 2006.
4.22 Export Obligation
(i) Period for fulfilment of export obligation under Advance Authorisation shall be 18 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-terminus with contracted duration of the export order whichever is more.
(ii) Export Obligation Period for specified inputs, from the date of clearance of each consignment, is given in Appendix 4-J.
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4.23 Export Obligation Period (EOP) Extension for units under BIFR/ Rehabilitation.
A company holding Advance Authorisation and registered with BIFR / Rehabilitation Department of State Government or any firm / company acquiring a unit holding Advance Authorisation which is under BIFR / Rehabilitation, may be permitted export obligation extension for the Advance Authorisation(s) held by the acquired unit, as per rehabilitation package prepared by operating agency and approved by BIFR / Rehabilitation Department of State Government. If time-period upto which EO extension is to be granted is not specifically mentioned in the BIFR order, EO extension of 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-importation to the Regional Authority 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.
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(b) Provisions of paragraphs 4.12, 4.18, 4.20, 4.21 and 4.24 of FTP shall be applicable to DFIA also.
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.
(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 Regional Authority should also have clearly endorsed details of such duty paid inputs in the condition sheet of the Duty Free Import Authorization.
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 / Airway Bill / Bill of Export / ARE-1 / ARE-3.
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(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 addition of 20% shall be required to be achieved. For items where higher value addition has been prescribed under Advance Authorisation in Appendix 4C, the same value addition shall be applicable for Duty Free Import Authorisation also.
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 generation of file 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 realization) from the date of realization of export proceeds, whichever is later.
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(v) Applicant shall be allowed to file application beyond 24 months from the date of generation of file number as per paragraph 9.03 of Hand Book of Procedures.
(vi) Separate DFIA shall be issued for each SION and each port.
(vii) Exports under DFIA shall be made from from a single port as mentioned in paragraph 4.37 of Handbook of Procedures.
(viii) No Duty Free Import Authorisation shall be issued for an export product where SION prescribes ‘Actual User’ condition for any 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 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, Zinc Ingots, Citric Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped / Stranded Mat, Roving Woven Surfacing Mat), Relevant Synthetic Resin (unsaturated
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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 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 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;
(ii) Silver jewellery including partly processed jewellery, silverware, silver strips and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% silver by weight;
(iii) Platinum jewellery 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.
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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 including mountings and findings may obtain gold / silver / platinum as an input for export product from Nominated Agency, in advance or as replenishment after export in accordance with the procedure specified in this behalf.
(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 Replenishment Authorisation for Gems
(i) Exporter may obtain Replenishment Authorisation for Gems from Regional Authority in accordance with procedure specified in Handbook of Procedures.
(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).
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(iii) In case of plain or studded gold / silver / platinum jewellery and articles, value of such Authorisation shall 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 out of precious metals (other than 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 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:
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(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 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 Authorization 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 Procedures. It would be calculated as under:
A - B
VA = ----------- 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
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basis, value shall also include 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 provisions of Chapter-6 of FTP / SEZ Rules, respectively.
(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) Four Star Export House from Gems & Jewellery sector and Five Star Export House from any sector may be recognized as Nominated Agency by Regional Authority.
(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
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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 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 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.
4.43 Export of Cut & Polished Diamonds for Certification/ Grading & Re-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.
4.44 Export of Cut & Polished Diamonds with Re-import Facility at Zero Duty
An exporter (with annual export turnover of Rs 5 crores for each of the last three years) may export cut & polished
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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 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 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 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
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approval of Gem & Jewellery 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 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, subject to achievement of minimum value addition of 5% by DTA units.
4.50 Diamond & 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
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diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs.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 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 bank; and
(iv) Transfer 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.
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4.51 Export of cut & 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 of Procedures.
4.53 Export 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.
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CHAPTER 5
EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME
5.00 Objective
The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services to enhance India’s export competitiveness.
5.01 EPCG Scheme
(a) EPCG Scheme allows import of capital goods for pre-production, production and post-production at Zero customs duty. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources in accordance with provisions of paragraph 5.07 of FTP. Capital goods for the purpose of the EPCG scheme shall include:
(i) Capital Goods as defined in Chapter 9 including in CKD/SKD condition thereof;
(ii) Computer software systems;
(iii) Spares, moulds, dies, jigs, fixtures, tools & refractories for initial lining and spare refractories; and
(iv) catalysts for initial charge plus one subsequent charge.
(b) Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme.
(c) Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duty saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.
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(d) Authorisation shall be valid for import for 18 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted.
(e) In case countervailing duty (CVD) is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved, provided CENVAT is not availed.
(f) Second hand capital goods shall not be permitted to be imported under EPCG Scheme.
(g) Authorisation under EPCG Scheme shall not be issued for import of any Capital Goods (including Captive plants and Power Generator Sets of any kind) for
(i) Export of electrical energy (power)
(ii) Supply of electrical energy (power) under deemed exports
(iii) Use of power (energy) in their own unit, and
(iv) Supply/export of electricity transmission services
(h) Import of items which are restricted for import shall be permitted under EPCG Scheme only after approval from Exim Facilitation Committee (EFC) at DGFT Headquarters.
(i) If the goods proposed to be exported under EPCG authorisation are restricted for export, the EPCG authorisation shall be issued only after approval for issuance of export authorisation from Exim Facilitation Committee at DGFT Headquarters.
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5.02 Coverage
(a) EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service providers. Name of supporting manufacturer(s) shall be endorsed on the EPCG authorisation before installation of the capital goods in the factory / premises of the supporting manufacturer (s). In case of any change in supporting manufacturer (s) the RA shall intimate such change to jurisdictional Central Excise Authority of existing as well as changed supporting manufacturer (s) and the Customs at port of registration of Authorisation.
(b) Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is designated / certified as a Common Service Provider (CSP) by the DGFT, Department of Commerce or State Industrial Infrastructural Corporation in a Town of Export Excellence subject to provisions of Foreign Trade Policy/Handbook of Procedures with the following conditions:-
(i) Export by users of the common service, to be counted towards fulfilment of EO of the CSP shall contain the EPCG authorisation details of the CSP in the respective Shipping bills and concerned RA must be informed about the details of the Users prior to such export;
(ii) Such export will not count towards fulfilment of specific export obligations in respect of other EPCG authorisations (of the CSP/User); and
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(iii) Authorisation holder shall be required to submit Bank Guarantee (BG) which shall be equivalent to the duty saved. BG can be given by CSP or by any one of the users or a combination thereof, at the option of the CSP.
5.03 Actual User Condition
Import of capital goods shall be subject to Actual User condition till export obligation is completed.
5.04 Export Obligation (EO)
Following conditions shall apply to the fulfilment of EO:-
(a) EO shall be fulfilled by the authorisation holder through export of goods which are manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted.
(b) EO under the scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any; except for categories mentioned in paragraph 5.13(a) of HBP. Such average would be the arithmetic mean of export performance in the preceding three licensing years for same and similar products.
(c) In case of indigenous sourcing of Capital Goods, specific EO shall be 25% less than the EO stipulated in Para 5.01.
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(d) Shipments under Advance Authorisation, DFIA, Drawback scheme or reward schemes under Chapter 3 of FTP; would also count for fulfillment of EO under EPCG Scheme.
(e) Export shall be physical export. However, deemed exports as specified in paragraph 7.02 (a), (b), (e), (f) &
(h) of FTP shall also be counted towards fulfillment of export obligation, alongwith usual benefits available under paragraph 7.03 of FTP.
(f) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.
(g) Royalty payments received by the Authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.
(h) Payment received in rupee terms for such Services as notified in Appendix 3E shall also be counted towards discharge of export obligation under the EPCG scheme.
5.05 Provision for units under BIFR /Rehabilitation
A company holding EPCG authorisation and registered with BIFR / Rehabilitation Department of State Government or any firm/ company acquiring a unit holding EPCG authorisation which is under BIFR / Rehabilitation, may be permitted EO extension for the EPCG authorisation(s) held by the acquired unit, as per rehabilitation package prepared by operating agency and approved by BIFR / Rehabilitation Department of State Government. If time-period upto which EO extension is to be granted is not specifically mentioned in the BIFR order, EO extension of 3 years from the date of expiry of EOP (including extended period) or the date of
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BIFR order, whichever is later, shall be granted without payment of composition fee.
5.06 LUT/Bond/BG in case of Agro units
LUT/Bond or 15% BG, as applicable, may be furnished for EPCG authorisation granted to units in Agri-Export Zones provided EPCG authorisation is taken for export of primary agricultural product(s) notified or their value added variants.
5.07 Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier
A person holding an EPCG authorisation may source capital goods from a domestic manufacturer. Such domestic manufacturer shall be eligible for deemed export benefit under paragraph 7.03 of FTP. Such domestic sourcing shall also be permitted from EOUs and these supplies shall be counted for purpose of fulfilment of positive NFE by said EOU as provided in Para 6.09 (a) of FTP.
5.08 Calculation of Export Obligation
In case of direct imports, EO shall be reckoned with reference to actual duty saved amount. In case of domestic sourcing, EO shall be reckoned with reference to notional Customs duties saved on FOR value.
5.09 Incentive for early EO fulfilment
With a view to accelerating exports, in cases where Authorisation holder has fulfilled 75% or more of specific export obligation and 100% of Average Export Obligation till date, if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned and the Authorisation redeemed by RA concerned. However no benefit under para 5.21 of HBP shall
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be permitted where incentive for early EO fulfilment has been availed.
5.10 Reduced EO for Green Technology Products
For exporters of Green Technology Products, Specific EO shall be 75% of EO as stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04. The list of Green Technology Products is given in Para 5.29 of HBP.
5.11 Reduced EO for North East Region and Jammu & Kashmir
For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu & Kashmir, specific EO shall be 25% of the EO, as stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04.
5.12 Post Export EPCG Duty Credit Scrip(s)
(a) Post Export EPCG Duty Credit Scrip(s) shall be available to exporters who intend to import capital goods on full payment of applicable duties in cash and choose to opt for this scheme.
(b) Basic Customs duty paid on Capital Goods shall be remitted in the form of freely transferable duty credit scrip(s), similar to those issued under Chapter 3 of FTP.
(c) Specific EO shall be 85% of the applicable specific EO under the EPCG Scheme. However, average EO shall remain unchanged.
(d) Duty remission shall be in proportion to the EO fulfilled.
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(e) All provisions for utilization of scrips issued under Chapter 3 of FTP shall also be applicable to Post Export EPCG Duty Credit Scrip (s).
(f) All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this scheme.
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CHAPTER 6
EXPORT ORIENTED UNITS (EOUs), ELECTRONICS
HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE
TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY
PARKS (BTPs)
6.00 Introduction and Objective
(a) Units undertaking to export their entire production of goods and services (except permissible sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering, rendering of services, development of software, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not covered under these schemes.
(b) Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation.
6.01 Export and Import of Goods
(a) An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS).
(b) Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfilment of the conditions indicated in ITC (HS). In respect of an EOU, permission to export a
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prohibited item may be considered, by BOA, on a case to case basis, provided such raw materials are imported and there is no procurement of such raw material from DTA.
(c) Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc up to a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed.
(d) An EOU / EHTP / STP / BTP unit may import and / or procure, from DTA or bonded warehouses in DTA / international exhibition held in India, without payment of duty, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Any permission required for import under any other law shall be applicable. Units shall also be permitted to import goods including capital goods required for approved activity, free of cost or on loan / lease from clients. Import of capital goods will be on a self-certification basis. Goods imported by a unit shall be with actual user condition and shall be utilized for export production.
(e) State Trading regime shall not apply to EOU manufacturing units. However, in respect of Chrome Ore / Chrome concentrate, State Trading Regime as stipulated in export policy of these items, will be applicable to EOUs.
(f) EOU / EHTP / STP / BTP units may import / procure from DTA, without payment of duty, certain specified goods for creating a central facility. Software EOU / DTA units may use such facility for export of software.
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(g) An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture, pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in connection with its activities for use outside bonded area.
(h) Gems and jewellery EOUs may source gold / silver / platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold / silver / platinum from nominated agencies, either on loan basis or outright purchase basis shall export gold / silver / platinum within 90 days from date of release.
(i) EOU / EHTP / STP / BTP units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit/ Escrow Rupee Account of buyer subject to RBI clearance, if any.
(j) Procurement and export of spares / components, upto 5% of FOB value of exports, may be allowed to same consignee / buyer of the export article, subject to the condition that it shall not count for NFE and direct tax benefits.
(k) BOA may allow, on a case to case basis, requests of EOU / EHTP / STP/ BTP units in sectors other than Gems & Jewellery, for consolidation of goods related to manufactured articles and export thereof along with manufactured article. Such goods may be allowed to be imported / procured from DTA by EOU without payment of duty, to the extent of 5% FOB value of such manufactured articles exported by the unit in preceding financial year. Details of procured / imported goods and articles manufactured by the EOU will be listed separately in the export documents. In such cases, value of procured / imported goods will
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not be taken into account for calculation of NFE and DTA sale entitlement. Such procured / imported goods shall not be allowed to be sold in DTA. BOA may also specify any other conditions.
6.02 Secondhand Capital goods
Second hand capital goods, without any age limit, may also be imported duty free.
6.03 Leasing of Capital Goods
(a) An EOU / EHTP / STP / BTP unit may, on the basis of a firm contract between parties, source capital goods from a domestic / foreign leasing company without payment of customs / excise duty. In such a case, EOU / EHTP / STP / BTP unit and domestic / foreign leasing company shall jointly file documents to enable import / procurement of capital goods without payment of duty.
(b) An EOU / EHTP / BTP / STP unit may sell capital goods and lease back the same from a Non Banking Financial Company (NBFC), subject to the following conditions:
(i) The unit should obtain permission from the jurisdictional Deputy / Assistant Commissioner of Customs or Central Excise, for entering into transaction of ‘Sale and Lease Back of Assets’, and submit full details of the goods to be sold and leased back and the details of NBFC;
(ii) The goods sold and leased back shall not be removed from the unit’s premises;
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(iii) The unit should be NFE positive at the time when it enters into sale and lease back transaction with NBFC;
(iv) A joint undertaking by the unit and NBFC should be given to pay duty on goods in case of violation or contravention of any provision of the notification under which these goods were imported or procured, read with Customs Act, 1962 or Central Excise Act, 1944, and that the lien on the goods shall remain with the Customs / Central Excise Department, which will have first charge over the said goods for recovery of sum due from the unit to Government under provision of Section 142(b) of the Customs Act, 1962 read with the Customs (Attachment of Property of Defaulters for Recovery of Govt. Dues) Rules, 1995.
6.04 Net Foreign Exchange Earnings
EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner except for sector specific provision of Appendix 6 B of Appendices & ANFs, where a higher value addition shall be required. NFE Earnings shall be calculated cumulatively in blocks of five years, starting from commencement of production. Whenever a unit is unable to achieve NFE due to prohibition / restriction imposed on export of any product mentioned in LoP, the five year block period for calculation of NFE earnings may be suitably extended by BoA. Further, wherever a unit is unable to achieve NFE due to adverse market condition or any grounds of genuine hardship having adverse impact on functioning of the unit, the five year block period for calculation of NFE earnings may be extended by BOA for a period of upto one year, on a case to case basis.
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6.05 Letter of Permission / Letter of Intent and Legal Undertaking
(a) On approval, a Letter of Permission (LoP) / Letter of Intent (LoI) shall be issued by DC / designated officer to EOU/ EHTP / STP / BTP unit. LoP / LoI shall have an initial validity of 2 years to enable the Unit to construct the plant & install the machinery and by this time the unit should have commenced production. In case the unit is not able to commence production in initial validity of 2 years, an extension of one year may be given by the DC for valid reasons to be recorded in writing. Subsequent extension of one year may be given by the Unit Approval Committee subject to condition that two-thirds of activities including construction, relating to the setting up of the Unit are complete and Chartered Engineer’s certificate to this effect is submitted by the Unit. Further extension, if necessary, will be granted by the Board of Approval. Once unit commences production, LoP / LoI issued shall be valid for a period of 5 years for its activities. This period may be extended further by DC for a period of 5 years at a time.
(b) LoP / LoI issued to EOU / EHTP / STP / BTP units by concerned authority, subject to compliance of provision in Para 6.01 above, would be construed as an Authorisation for all purposes.
(c) Unit shall execute an LUT with DC concerned. Failure to ensure positive NFE or to abide by any of the terms and conditions of LoP / LoI / IL / LUT shall render the unit liable to penal action under provisions of the FT (D&R) Act, as amended, and Rules and Orders made thereunder, without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL.
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6.06 Investment Criteria
Only projects having a minimum investment of Rs. 1 Crore in plant & machinery shall be considered for establishment as EOUs. However, this shall not apply to existing units, units in EHTP / STP / BTP, and EOUs in Handicrafts / Agriculture / Floriculture / Aquaculture / Animal Husbandry / Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BOA may allow establishment of EOUs with a lower investment criteria.
6.07 Applications & Approvals
(a) Applications for setting up of units under EOU scheme shall be approved or rejected by the Units Approval Committee within 15 days as per criteria indicated in Handbook of Procedures (HBP).
(b) In other cases, approval may be granted by BOA set up for this purpose as indicated in HBP.
(c) Proposals for setting up EOU requiring industrial licence may be granted approval by DC after clearance of proposal by BOA and DIPP within 45 days.
(d) Applications for conversion into an EOU / EHTP / STP / BTP unit from existing DTA units, having an investment of Rs. 50 crores and above in plant and machinery or exporting Rs. 50 crores and above annually, shall be placed before BOA for a decision.
6.08 DTA Sale of Finished Products / Rejects / Waste/ Scrap / Remnants and By-products
Entire production of EOU / EHTP / STP / BTP units shall be exported subject to following:
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(a) Units, other than gems and jewellery units, may sell goods upto 50% of FOB value of exports, subject to fulfilment of positive NFE, on payment of concessional duties. Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. However, units which are manufacturing and exporting more than one product can sell any of these products into DTA, upto 90% of FOB value of export of the specific products, subject to the condition that total DTA sale does not exceed the overall entitlement of 50% of FOB value of exports for the unit, as stipulated above. No DTA sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, books, tea (except instant tea), pepper & pepper products, marble and such other items as may be notified from time to time.
Such DTA sale shall also not be permissible to units engaged in activities of packaging / labelling / segregation / refrigeration / compacting / micronisation / pulverization / granulation / conversion of monohydrate form of chemical to anhydrous form or vice-versa. Sales made to a unit in SEZ shall also be taken into account for purpose of arriving at FOB value of export by EOU provided payment for such sales are made from Foreign Currency Account of SEZ unit. Sale to DTA would also be subject to mandatory requirement of registration of pharmaceutical products (including bulk drugs). An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.
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(b) For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of foreign exchange earned, where payment of such services is received in foreign exchange.
(c) Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA, subject to fulfilment of positive NFE. In respect of sale of plain jewellery, recipient shall pay concessional rate of duty as applicable to sale from nominated agencies. In respect of studded jewellery, duty shall be payable as applicable.
(d) Unless specifically prohibited in LoP, rejects within an overall limit of 50% may be sold in DTA on payment of duties as applicable to sale under Sub - para 6.08 (a) on prior intimation to Customs authorities. Such sales shall be counted against DTA sale entitlement. Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE.
(e) Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of
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full duties. Scrap / waste / remnants may also be exported.
(f) There shall be no duties / taxes on scrap / waste / remnants, in case same are destroyed with permission of Customs authorities.
(g) By-products included in LoP may also be sold in DTA subject to achievement of positive NFE, on payment of applicable duties, within the overall entitlement of Sub - para 6.08 (a). Sale of by-products by units not entitled to DTA sales, or beyond entitlements of Sub-para 6.08 (a), shall also be permissible on payment of full duties.
(h) EOU / EHTP / STP / BTP units may sell finished products, except pepper and pepper products and marble, which are freely importable under FTP in DTA, under intimation to DC, against payment of full duties, provided they have achieved positive NFE. An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.
(i) In case of units manufacturing electronics hardware and software, NFE and DTA sale entitlement shall be reckoned separately for hardware and software.
(j) In case of DTA sale of goods manufactured by EOU / EHTP / STP / BTP, where basic duty and CVD is nil, such goods may be considered as non-excisable for payment of duty.
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(k) In case of new EOUs, advance DTA sale will be allowed not exceeding 50% of its estimated exports for first year, except pharmaceutical units where this will be based on its estimated exports for first two years.
(l) Units in Textile and Granite sectors shall have an option to sell goods into DTA in terms of Sub - paras 6.08 (a), (d), (e), (g) and (k) above, on payment of an amount equal to aggregate of duties of excise leviable under section 3 of the Central Excise Act, 1944 or under any other law for the time being in force, on like goods produced or manufactured in India other than in an EOU, subject to the condition that they have not used duty paid imported inputs in excess of 3% of the FOB value of exports of the preceding year and they have achieved positive NFE. Once this option is exercised, the unit will not be allowed to import any duty free inputs for any purpose.
(m) Procurement of spares / components, up to 2% of the value of manufactured articles, cleared into DTA, during the preceding year, may be allowed for supply to the same consignee / buyer for the purpose of after-sale-service. The same can be cleared in DTA on payment of applicable duty but such clearances shall be within the overall entitlement of the unit for DTA sale at concessional rate of duty as prescribed in Para 6.08
(a) of FTP.
6.09 Other Supplies
Following supplies effected from EOU / EHTP / STP / BTP units will be counted for fulfilment of positive NFE. Such supplies shall not include “marble”, except if such supply of marble is an inter unit supply as provided at Sub - para (c) below:
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(a) Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIA under duty exemption / remission scheme / EPCG scheme. However, printing sector EOUs
(or any other sector that may be notified in HBP), can’t supply goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance Authorisation / Advance Authorization for annual requirement.
(b) Supplies effected in DTA against foreign exchange remittance received from overseas.
(c) Supplies to other EOU / EHTP / STP / BTP / SEZ units, provided that such goods are permissible for procurement in terms of Para 6.01 of FTP.
(d) Supplies made to bonded warehouses set up under FTP and / or under section 65 of Customs Act and free trade and warehousing zones, where payment is received in foreign exchange.
(e) Supplies of goods and services to such organizations which are entitled for duty free import of such items in terms of general exemption notification issued by MoF, as may be provided in HBP.
(f) Supplies of Information Technology Agreement (ITA-1) items and notified zero duty telecom / electronics items.
(g) Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.
(h) Supply of LPG produced in an EOU refinery to Public Sector domestic oil companies for being supplied to household domestic consumers at subsidized prices
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under the Public Distribution System (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas vide notification No. E-20029/18/2001-PP dated 28.01.2003 (hereinafter referred to as PDS Scheme) subject to the following conditions:-
(i) Only supply of such quantity of LPG would be eligible for which Ministry of Petroleum and Natural Gas declines permission for export and requires the LPG to be cleared in DTA; and
(ii) The Ministry of Finance by a notification has permitted duty free imports of LPG for supply under the aforesaid PDS Scheme.
6.10 Export through others
An EOU / EHTP / STP / BTP unit may export goods manufactured / software developed by it through another exporter or any other EOU / EHTP / STP / SEZ unit subject to conditions mentioned in Para 6.19 of HBP.
6.11 Entitlement for Supplies from the DTA
(a) Supplies from DTA to EOU / EHTP / STP / BTP units will be regarded as “deemed exports” and DTA supplier shall be eligible for relevant entitlements under chapter 7 of FTP, besides discharge of export obligation, if any, on the supplier. Notwithstanding the above, EOU / EHTP / STP / BTP units shall, on production of a suitable disclaimer from DTA supplier, be eligible for obtaining entitlements specified in chapter 7 of FTP. For claiming deemed export duty drawback, they shall get brand rates fixed by DC wherever All Industry Rates of Drawback are not available.
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(b) Suppliers of precious and semi-precious stones, synthetic stones and processed pearls from DTA to EOU shall be eligible for grant of Replenishment Authorisations at rates and for items mentioned in HBP.
(c) In addition, EOU / EHTP / STP / BTP units shall be entitled to following:-
(i) Reimbursement of Central Sales Tax (CST) on goods manufactured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in Para 9.10
(b) of HBP).
(ii) Exemption from payment of Central Excise Duty on goods procured from DTA on goods manufactured in India.
(iii) Reimbursement of duty paid on fuel procured from Domestic Oil Companies / Depots of Domestic Oil Public Sector Undertakings as per drawback rate notified by DGFT from time to time. Reimbursement of additional duty of excise levied on fuel under the Finance Acts would also be admissible.
(iv) CENVAT Credit on service tax paid.
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6.12 Other Entitlements
Other entitlements of EOU / EHTP / STP / BTP units are as under:
(a) Exemption from industrial licensing for manufacture of items reserved for SSI sector.
(b) Export proceeds will be realized within nine months.
(c) Units will be allowed to retain 100% of its export earnings in the EEFC account.
(d) Unit will not be required to furnish bank guarantee at the time of import or going for job work in DTA, where:
(i) the unit has turnover of Rs. 5 crore or above;
(ii) the unit is in existence for at least three years; and
(iii) the unit:
(1) has achieved positive NFE / export obligation wherever applicable;
(2) has not been issued a show cause notice or a confirmed demand, during the preceding 3 years, on grounds other than procedural violations, under the penal provision of the Customs Act, the Central Excise Act, the Foreign Trade (Development & Regulation) Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder, on account of fraud / collusion / wilful mis-statement / suppression of facts
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or contravention of any of the provisions thereof;
(e) 100% FDI investment permitted through automatic route similar to SEZ units.
(f) Units shall pay duty on the goods produced or manufactured and cleared into DTA on monthly basis in the manner prescribed in the Central Excise Rules.
(g) The Units Approval Committee may consider on a case-to-case basis request for sharing of infrastructural facilities among EOUs and it shall forward its recommendation to the Board of Approval for its consideration. While accepting such proposals, the NFE obligations of the Units shall not be altered. Such facilities will be available to Units in EHTP / STP after getting approval from IMSC. However, sharing of facilities between EOUs and SEZ Units shall not be permitted.
6.13 Inter Unit Transfer
(a) Transfer of manufactured goods from one EOU / EHTP / STP / BTP unit to another EOU / EHTP / STP / BTP unit is allowed with prior intimation to concerned Development Commissioners of the transferer and transferee units as well as concerned Customs authorities, following procedure of in-bond movement of goods. Transfer of manufactured goods shall also be allowed from EOU / EHTP / STP / BTP unit to a SEZ developer or unit as per procedure prescribed in SEZ Rules, 2006.
(b) Capital goods may be transferred or given on loan to other EOU / EHTP / STP / BTP / SEZ units, with prior intimation to concerned DC and Customs authorities.
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Such transferred goods may also be returned by the second unit to the original unit in case of rejection or for any reason without payment of duty.
(c) Goods supplied by one unit of EOU / EHTP / STP / BTP to another unit shall be treated as imported goods for second unit for payment of duty, on DTA sale by second unit.
(d) In respect of a group of EOUs / EHTPs / STPs / BTP Units which source inputs centrally in order to obtain bulk discount and / or reduce cost of transportation and other logistics cost and / or to maintain effective supply chain, inter unit transfer of goods and services may be permitted on a case-to-case basis by the Unit Approval Committee. In case inputs so sourced are imported and then transferred to another unit, then value of the goods so transferred shall be taken as inflow for the unit transferring these goods and as outflow for the unit receiving these goods, for the purpose of calculation of NFE.
6.14 Sub – Contracting
(a) (i) EOU / EHTP / STP / BTP units, including gems and jewellery units, may on the basis of annual permission from Customs authorities, sub - contract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in DTA.
(ii) These units may sub - contract upto 50% of overall production of previous year in value terms in DTA with permission of Customs authorities.
(b) (i) EOU may, with annual permission from Customs authorities, undertake job work for export, on behalf of DTA exporter, provided that goods are exported
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directly from EOU and export document shall jointly be in name of DTA / EOU. For such exports, DTA units will be entitled for refund of duty paid on inputs by way of brand rate of duty drawback.
(ii) Duty free import of goods for execution of export order placed on EOU by foreign supplier on job work basis, would be allowed subject to condition that no DTA clearance shall be allowed.
(iii) Sub - contracting of both production and production processes may also be undertaken without any limit through other EOU / EHTP / STP/ BTP / SEZ units, on the basis of records maintained in unit.
(iv) EOU / EHTP / STP / BTP units may sub - contract part of production process abroad and send intermediate products abroad as mentioned in LoP. No permission would be required when goods are sought to be exported from sub - contractor premises abroad. When goods are sought to be brought back, prior intimation to concerned DC and Customs authorities shall be given.
(c) Scrap / waste / remnants generated through job work may either be cleared from job worker’s premises on payment of applicable duty on transaction value or destroyed in presence of Customs / Central Excise authorities or returned to unit. Destruction shall not apply to gold, silver, platinum, diamond, precious and semi-precious stones.
(d) Sub - contracting / exchange by gems and jewellery EOUs through other EOUs or SEZ units or units in DTA, shall be as per procedure indicated in HBP.
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6.15 Sale of Unutilized Material
(a) In case an EOU / EHTP / STP / BTP unit is unable to utilize goods and services, imported or procured from DTA, it may be:
(i) Transferred to another EOU / EHTP / STP / BTP
/ SEZ unit; or
(ii) Disposed of in DTA with approval of Customs authorities on payment of applicable duties and submission of import authorization; or
(iii) Exported.
Such transfer from EOU / EHTP / STP / BTP unit to another such unit would be treated as import for receiving unit.
(b) Capital goods and spares that have become obsolete / surplus, may either be exported, transferred to another EOU / EHTP / STP / BTP / SEZ unit or disposed of in DTA on payment of applicable duties. Benefit of depreciation, as applicable, will be available in case of disposal in DTA only when the unit has achieved positive NFE taking into consideration the depreciation allowed. No duty shall be payable in case capital goods, raw material, consumables, spares, goods manufactured, processed or packaged, and scrap / waste / remnants / rejects are destroyed within unit after intimation to Customs authorities or destroyed outside unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi-precious stones.
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(c) In case of textile sector, disposal of left over material / fabrics upto 2% of CIF value or quantity of import, whichever is lower, on payment of duty on transaction value, may be allowed, subject to certification of Central Excise / Customs officers that these are leftover items.
(d) Disposal of used packing material will be allowed on payment of duty on transaction value.
6.16 Reconditioning / Repair and Re - engineering
(a) EOUs shall be set up with approval of UAC to carry out reconditioning, repair, remaking, testing, calibration, quality improvement, upgradation of technology and re-engineering activities for export in foreign currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and para 6.29(a), (b), (c) and (d) of HBP shall not, however, apply to such activities.
(b) EHTP/STP/BTP units shall be set up with approval of IMSC to carry out reconditioning, repair, remaking, testing, calibration, quality improvement, upgradation of technology and re-engineering activities for export in foreign currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and para 6.29(a), (b), (c) and (d) of HBP shall not, however, apply to such activities.
6.17 Replacement / Repair of Imported / Indigenous Goods
(a) General provisions of FTP relating to export / import of replacement / repair of goods would also apply equally to EOU / EHTP / STP / BTP units. Cases not covered by these provisions shall be considered on merits by DC.
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(b) Goods sold in DTA and not accepted for any reasons, may be brought back for repair / replacement, under intimation to concerned jurisdictional Customs / Central Excise authorities.
(c) Goods or parts thereof, on being imported / indigenously procured and found defective or otherwise unfit for use or which have been damaged or become defective subsequently, may be returned and replacement obtained or destroyed. In the event of replacement, goods may be brought back from foreign suppliers or their authorized agents in India or indigenous suppliers. The unit can take free of cost replacement (duty paid) from the authorized agents in India of foreign suppliers, provided the defective part is re - exported or destroyed. However, destruction shall not apply to precious and semi-precious stones and precious metals.
6.18 Exit from EOU Scheme
(a) With approval of DC, an EOU may opt out of scheme. Such exit shall be subject to payment of Excise and Customs duties and industrial policy in force.
(b) If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.
(c) In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gems and other materials available for manufacture of jewellery, shall be handed over to an agency nominated by DoC, at price to be determined by that agency.
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(d) An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit from the scheme at any time on payment of duty on capital goods under the prevailing EPCG Scheme for DTA Units. This will be subject to fulfilment of positive NFE criteria under EOU scheme, eligibility criteria under EPCG scheme and standard conditions indicated in HBP.
(e) Unit proposing to exit out of EOU scheme shall intimate DC and Customs and Central Excise authorities in writing. Unit shall assess duty liability arising out of de-bonding and submit details of such assessment to Customs and Central Excise authorities. Customs and Central Excise authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has achieved positive NFE, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain “No Dues Certificate” from Customs and Central Excise authorities. On the basis of “No Dues Certificate” so issued by the Customs and Central Excise authorities, unit shall apply to DC for final de-bonding. In case there is no proceeding pending under FT(D&R) Act, as amended, DC shall issue final de-bonding order within a period of 7 working days. Between “No Dues Certificate” issued by Customs and Central Excise authorities and final de-bonding order by DC, unit shall not be entitled to claim any exemption for procurement of capital goods or inputs. However, unit can claim Advance Authorisation / DFIA / Duty Drawback. Since the duty calculations and dues are disputed and take a long time, a BG / Bond / Instalment processes backed by BG shall be provided for expediting the exit process.
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(f) In cases where a unit is initially established as DTA
unit with machines procured from abroad after payment of applicable import duty, or from domestic market after payment of excise duty, and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA after de-bonding would be without payment of duty. Similarly, in cases where a DTA unit imported capital goods under EPCG Scheme and after completely fulfilling export obligation gets converted into EOU, unit would not be charged customs duty on capital goods at the time of removal of such capital goods in DTA when de-bonding.
(g) An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit under Advance Authorization as one time option. This will be subject to fulfilment of positive NFE criteria.
(h) A simplified procedure may be provided to fast track the De-bonding/ Exit of the STP / EHTP Unit which has not availed any duty benefit on procurement of raw material, capital goods etc.
6.19 Conversion
(a) Existing DTA units may also apply for conversion into an EOU / EHTP / STP / BTP unit.
(b) Existing EHTP / STP units may also apply for conversion / merger to EOU unit and vice-versa. In such cases, units will remain in bond and avail exemptions in duties and taxes as applicable.
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6.20 Monitoring of NFE
Performance of EOU / EHTP / STP / BTP units shall be monitored by Units Approval Committee as per guidelines in HBP.
6.21 Export through Exhibitions / Export Promotion Tours / Showrooms Abroad / Duty Free Shops
EOU / EHTP / STP / BTP are permitted to:
(i) Export goods for holding / participating in Exhibitions abroad with permission of DC.
(ii) Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads and articles.
(iii) Export goods for display / sale in permitted shops set up abroad.
(iv) Display / sell in permitted shops set up abroad, or in showrooms of their distributors / agents.
(v) Set up showrooms / retail outlets at International Airports.
6.22 Personal Carriage of Import / Export Parcels including through Foreign Bound Passengers
Import / export through personal carriage of gems and jewellery items may be undertaken as per Customs procedure. However, export proceeds shall be realized through normal banking channel. Import / export through personal carriage by units, other than gems and jewellery units, shall be allowed provided goods are not in commercial quantity. An authorized person of Gems & Jewellery EOU may also import gold in primary form, upto 10 Kgs in a
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financial year through personal carriage, as per guidelines prescribed by RBI and DoR.
6.23 Export / Import by Post / Courier
Goods including free samples, may be exported / imported by airfreight or through foreign post office or through courier, as per Customs procedure.
6.24 Administration of EOUs / Powers of DC
Details of administration of EOUs and power of DC is given in HBP.
6.25 Revival of Sick Units
Subject to a unit being declared sick by appropriate authority, proposals for revival of the unit or its take over may be considered by BOA.
6.26 Approval of EHTP / STP
In case of units under EHTP / STP schemes, necessary approval / permission under relevant paras of this Chapter shall be granted by officer designated by Ministry of Communication and Information Technology, Department
of Electronics & Information
Technology, instead
of DC,
and
by
Inter-Ministerial
Standing Committee
(IMSC)
instead of BOA.
6.27 Approval of BTP
Bio-Technology Parks (BTP) would be notified by DGFT on recommendations of Department of Biotechnology. In case of units in BTP, necessary approval / permission under relevant provisions of this chapter will be granted by designated officer of Department of Biotechnology.
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6.28 Warehousing Facilities
An EOU which intends to set up warehousing facilities outside the EOU premises and outside the jurisdiction of DC, at a place near to the port of export, to reduce lead time for delivery of goods overseas and to address unpredictability of supply orders, is permitted to do so subject to the provisions related to export warehousing as per terms and conditions of Notifications issued by the Department of Revenue.
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CHAPTER 7
DEEMED EXPORTS
7.00 Objective
To provide a level-playing field to domestic manufacturers in certain specified cases, as may be decided by the Government from time to time.
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;
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B. Supply by main / sub-contractor (s):
(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
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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.
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7.03 Benefits for Deemed Exports
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
Categori
Benefits on supplies, as
given in
Para
7.03
above,
es
of
whichever is applicable.
supplies
Para 7.03 (a)
Para
Para 7.03 (c)
as
per
Advance
7.03(b)
Para
Authorisation
Duty
Terminal Excise Duty
7.02
Drawback
Yes (for
Yes
(i) Exemption, in case of
(a)
intermediate
(against ARO
Invalidation Letter
supplies against
or Back
to
(ii) Refund, in case of ARO
an invalidation
Back letter of
or back to back letter of
letter)
credit)
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
Yes
Yes
Exemption,
if
supplies
(f)
under
ICB.
Refund, if
supplies under
tariff
based
competitive
bidding.
(g)
Yes
Yes
Exemption
(h)
Yes
Yes
Refund
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7.05 Conditions for refund of terminal excise duty
(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.
7.06 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
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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”:
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(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.
7.10 Risk Management and Internal Audit mechanism
(a) A Risk Management system shall be in operation, wherein every month, Computer system in DGFT headquarters, on random basis, will select 10% of cases, for each RA, where benefit(s) under this chapter has/have already been granted. Such cases shall be scrutinized by an internal Audit team, headed by a Joint DGFT, in the office of respective Zonal Addl. DGFT. The
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team will be responsible to audit claims of not only for its own office but also the claims of all RAs falling under the jurisdiction of the Zone.
(b) The respective RA may also, either on the basis of report from Internal Audit/ External Audit Agency(ies) or suo-motu, reassess any case, where any erroneous/in-eligible payment has been made/claimed. RA will take necessary action for recovery of payment along with interest at the rate of 15% per annum on the recoverable amount.
7.11 Penal Action
In case, claim is filed by submitting mis-declaration/mis-representation of facts, then in addition to effecting recovery under Para 7.10(b) above, the applicant shall be liable for penal action under the provisions of F.T. (D&R) Act, Rules and orders made thereunder.
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CHAPTER 8
QUALITY COMPLAINTS AND TRADE DISPUTES
8.00 Objective
Exporters need to project a good image of the country abroad to promote exports. Maintaining an enduring relationship with foreign buyers is of utmost importance, and complaints or trade disputes, whenever they arise, need to be settled amicably as soon as possible. Importers too may have grievances as well.
In an endeavour to resolve such complaints or trade disputes and to create confidence in the business environment of the country, a mechanism is being laid down to address such complaints and disputes in an amicable way.
8.01 Quality Complaints/ Trade disputes
The following type of complaints may be considered:
(a) Complaints received from foreign buyers in respect of
poor quality of the products supplied by exporters from India;
(b) Complaints of importers against foreign suppliers in respect of quality of the products supplied; and
(c) Complaints of unethical commercial dealings categorized mainly as non-supply/ partial supply of goods after confirmation of order; supplying goods other than the ones as agreed upon; non-payment; non-adherence to delivery schedules, etc.
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8.02 Obligation on the part of importer/ exporter
(a) Rule 11 of the Foreign Trade (Regulation) Rules, 1993, requires that on the importation into, or exportation out of, any customs ports of any goods, whether liable to duty or not, the owner of such goods shall in the Bill of Entry or the Shipping Bill or any other documents prescribed under the Customs Act, 1962 (52 of 1962), state the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, certify that the quality and specification of the goods as stated in those documents, are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe a declaration of the truth of such statement at the foot of such Bill of Entry or Shipping Bill or any other documents. Violation of this provision renders the exporter liable for penal action.
(b) Certain export commodities have been notified for Compulsory Quality Control & Pre-shipment Inspection prior to their export. Penal action can be taken under the Export (Quality Control & Inspection) Act, 1963 as amended in 1984, against exporters who do not conform to these standards and/ or provisions of the Act as laid down for such products.
8.03 Provisions in FT (D&R) Act & FT (Regulation) Rules for necessary action against erring exporters/ importers
Action against erring exporters can be taken under the Foreign Trade (Development and Regulation) Act, 1992, as amended and under Foreign Trade (Regulation) Rules, 1993, as follows:-
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(a) Section 8 of the Act empowers the Director General of Foreign Trade or any other person authorized by him to suspend or cancel the Importer Exporter Code Number for the reasons as given therein.
(b) Section 9 (2) of the Act empowers the Director General of Foreign Trade or an officer authorised by him to refuse to grant or renew a license, certificate, scrip or any other instrument bestowing financial or fiscal benefit granted under the Act.
(c) Section 9(4) empowers the Director General of Foreign Trade or the officer authorized by him to suspend or cancel any License, certificate, scrip or any instrument bestowing financial or fiscal benefit granted under the Act.
(d) Section 11(2) of the Act provides for imposition of fiscal penalty in cases where a person makes or abets or attempts to make any import or export in contravention of any provision of the Act, any Rules or Orders made there under or the Foreign Trade Policy.
8.04 Mechanism for handling of Complaints/ Disputes
(a) Committee on Quality complaints and Trade Disputes (CQCTD)
To deal effectively with the increasing number of complaints and disputes, a ‘Committee on Quality Complaints and Trade Disputes’ (CQCTD) will be constituted in the 22 offices of the RA’s of DGFT. Names of RAs, where CQCTD has been constituted and jurisdiction of CQCTD is given in Chapter 8 of the Handbook of Procedures.
141
(b) Composition of the CQCTD
The CQCTD would be constituted under the Chairpersonship of the Head of Office. The constitution of CQCTD is given in Chapter 8 of the Hand Book of Procedures.
(c) Functions of CQCTD
The Committee (CQCTD) will be responsible for enquiring and investigating into all Quality related complaints and other trade related complaints falling under the jurisdiction of the respective RAs. It will take prompt and effective steps to redress and resolve the grievances of the importers, exporters and overseas buyers, preferably within three months of receipt of the complaint. Wherever required, the Committee (CQCTD) may take the assistance of the Export Promotion Councils/FIEO/Commodity Boards or any other agency as considered appropriate for settlement of these disputes.
8.05 Proceedings under CQCTD
CQCTD proceedings are only reconciliatory in nature and the aggrieved party, whether the foreign buyer or the Indian importer, is free to pursue any legal recourse against the other erring party.
8.06 Procedures to deal with complaints and trade disputes
The procedure for making an application for such complaints or trade disputes and the procedure to deal with such quality complaints and disputes is given in the Handbook of Procedures.
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8.07 Corrective Measures
The Committee at RA level can authorize the Export Inspection Agency or any technical authority to assess whether there has been any technical failure of not meeting the standards, manufacturing/ design defects, etc. for which complaints have been received.
8.08 Nodal Officer
Director General of Foreign Trade would appoint an officer, not below the rank of Joint Director General, in the
Headquarters, to function as the ‘Nodal Officer’ for coordinating with various Regional Authorities of DGFT.
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CHAPTER 9
DEFINITIONS
9.00 For purpose of FTP, unless context otherwise requires, the following words and expressions shall have the following meanings attached to them:-
9.01 "Accessory" or "Attachment" means a part, sub-assembly or assembly that contributes to efficiency or effectiveness of a piece of equipment without changing its basic functions.
9.02 "Act" means Foreign Trade (Development and Regulation) Act, 1992 (No.22 of 1992) [FT (D&R) Act] as amended from time to time.
9.03 “Actual User” is a person (either natural or legal) who is authorized to use imported goods in his/its own premise which has a definitive postal address.
"Actual User (Industrial)" is a person (either natural & legal) who utilizes imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit which has a definitive postal address.
"Actual User (Non-Industrial)" is a person (either natural & legal) who utilizes the imported goods for his own use in:
(i) any commercial establishment, carrying on any business, trade or profession, which has a definitive postal address; or
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(ii) any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital which has a definitive postal address; or
(iii) any service industry which has a definitive postal address.
9.04 "AEZ" means Agricultural Export Zones notified by
DGFT in Appendix 2V of Appendices and Aayat Niryat Forms.
9.05 “Appeal” is an application filed under section 15 of the Act and includes such applications preferred by DGFT officials in government interest against decision by designated adjudicating/appellate authorities.
9.06 "Applicant" means person on whose behalf an application is made and shall, wherever context so requires, includes person signing the application.
9.07 “Authorization” means permission as included in Section 2 (g) of the Act to import or export as per provisions of FTP.
9.08 "Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological up-gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control.
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Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector.
9.09 "Competent Authority" means an authority competent to exercise any power or to discharge any duty or function under the Act or the Rules and Orders made there under or under FTP.
9.10 "Component" means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A component includes an accessory or attachment to another component.
9.11 "Consumables" means any item, which participates in or is required for a manufacturing process, but does not necessarily form part of end-product. Items, which are substantially or totally consumed during a manufacturing process, will be deemed to be consumables.
9.12 "Consumer Goods" means any consumption goods, which can directly satisfy human needs without further processing and includes consumer durables and accessories thereof.
9.13
"Counter Trade" means
any arrangement under
which exports/imports from /to India are balanced
either
by
direct
imports/exports
from
importing/exporting country or through a third
country under a Trade Agreement or otherwise.
Exports/ Imports under Counter Trade may be carried out through Escrow Account, Buy Back
146
arrangements, Barter trade or any similar arrangement. Balancing of exports and imports could wholly or partly be in cash, goods and/or services.
9.14 "Developer" means a person or body of persons, company, firm and such other private or government undertaking, who develops, builds, designs, organises, promotes, finances, operates, maintains or manages a part or whole of infrastructure and other facilities in SEZ as approved by Central Government and also includes a co- developer.
9.15 "Development Commissioner" means Development Commissioner of SEZ
9.16 "Domestic Tariff Area (DTA)" means area within India which is outside SEZs and EOU/ EHTP/ STP/BTP.
9.17 "Drawback on deemed export” in relation to any goods manufactured in India and supplied as deemed exports, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods.
9.18 "EOU" means Export Oriented Unit for which a letter of permit has been issued by Development Commissioner.
9.19 "Excisable goods" means any goods produced or manufactured in India and subject to duty of excise under Central Excise and Salt Act 1944 (1 of 1944).
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9.20 “Export” is as defined in FT (D&R) Act, 1992, as amended from time to time.
9.21 "Exporter" means a person who exports or intends to export and holds an IEC number, unless otherwise specifically exempted.
9.22 "Export Obligation" means obligation to export product or products covered by Authorisation or permission in terms of quantity, value or both, as may be prescribed or specified by Regional or competent authority.
9.23 “Free” as appearing in context of import/export policy for items means goods which do not need any
‘Authorisation’/ License or permission for being imported into the country or exported out.
9.24 “FTP” means the Foreign Trade Policy which specifies policy for exports and imports under Section 5 of the Act.
9.25 “Import” is as defined in FT (D&R) Act, 1992 as amended from time to time.
9.26 "Importer" means a person who imports or intends to import and holds an IEC number, unless otherwise specifically exempted.
9.27 ITC (HS) refers to Indian Trade Classification
(Harmonized System) at 8 digits.
9.28 "Jobbing" means processing or working upon of raw materials or semi-finished goods supplied to job worker, so as to complete a part of process resulting in manufacture or finishing of an article or any
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operation which is essential for aforesaid process.
9.29 "Licensing Year" means period beginning on the 1st April of a year and ending on the 31st March of the following year.
9.30 "Managed Hotel" means hotels managed by a three star or above hotel/ hotel chain under an operating management contract for a duration of at least three years between operating hotel/ hotel chain and hotel being managed. Management contract must necessarily cover the entire gamut of operations/ management of managed hotel.
9.31 "Manufacture" means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes
such as
refrigeration,
re-packing,
polishing,
labeling,
Re-conditioning
repair,
remaking,
refurbishing, testing, calibration, re-engineering.
Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining.
9.32 "Manufacturer Exporter" means a person who exports goods manufactured by him or intends to export such goods.
9.33 “Merchant Exporter” means a person engaged in trading activity and exporting or intending to export goods.
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9.34 “NC” means the Norms Committee in the Directorate General of Foreign Trade for approval of adhoc input –output norms in cases where SION does not exist and recommend SION to be notified in DGFT.
9.35 "Notification" means a notification published in Official Gazette.
9.36 "Order" means an Order made by Central
Government under the Act.
9.37 "Part" means an element of a sub-assembly or assembly not normally useful by itself, and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory.
9.38 "Person" means both natural and legal and includes an individual, firm, society, company, corporation or any other legal person including the DGFT officials.
9.39 "Policy" means Foreign Trade Policy (2015-2020) as amended from time to time.
9.40 "Prescribed" means prescribed under the Act or the Rules or Orders made there under or under FTP.
9.41 “Prohibited” indicates the import/export policy of an item, as appearing in ITC (HS) or elsewhere, whose import or export is not permitted.
9.42 "Public Notice" means a notice published under provisions of paragraph 2.04 of FTP.
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9.43 “Quota” means the quantity of goods of a specific kind that is permitted to be imported without restriction or imposition of additional Duties.
9.44 "Raw material" means input(s) needed for manufacturing of goods. These inputs may either be in a raw/natural/ unrefined/ unmanufactured or manufactured state.
9.45 "Regional Authority" means authority competent to grant an Authorisation under the Act / Order.
9.46 "Registration-Cum-Membership Certificate" (RCMC) means certificate of registration and membership granted by an Export Promotion Council / Commodity Board / Development Authority or other competent authority as prescribed in FTP or Handbook of Procedures.
9.47 “Restricted” is a term indicating the import or export policy of an item, which can be imported into the country or exported outside, only after obtaining an authorization from the offices of DGFT.
9.48 "Rules" means Rules made by Central Government under Section 19 of the FT (D&R)Act.
9.49 “SCOMET” is the nomenclature for dual use items of
Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). Export of dual-use items and technologies under India’s Foreign Trade
Policy is regulated. It is either prohibited or is permitted under an authorization.
9.50 "Services" include all tradable services covered under General Agreement on Trade in Services (GATS) and earning free foreign exchange.
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9.51 "Service Provider" means a person providing:
(i) Supply of a ‘service’ from India to any other country; (Mode1- Cross border trade)
(ii) Supply of a ‘service’ from India to service
consumer(s) of any other country; (Mode 2-Consumption abroad)
(iii)Supply of a ‘service’ from India through commercial presence in any other country. (Mode 3
– Commercial Presence.)
(iv)Supply of a ‘service’ from India through the presence of natural persons in any other country (Mode 4- Presence of natural persons.)
9.52 "Ships" mean all types of vessels used for sea borne trade or coastal trade, and shall include second hand vessels.
9.53 "SION" means Standard Input Output Norms notified by DGFT.
9.54 "Spares” means a part or a sub-assembly or
assembly for substitution that is ready to replace an identical or similar part or sub- assembly or assembly. Spares include a component or an accessory.
9.55 "Specified" means specified by or under the provisions of this Policy through Notification / Public Notice.
9.56 "Status holder" means an exporter recognized as One Star Export House/ Two Star Export House / Three Star Export House / Four Star Export House/ Five Star Export House by DGFT/ Development Commissioner.
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9.57 “Stores” means goods for use in a vessel or aircraft
and includes fuel and spares and other articles of equipment, whether or not for immediate fitting.
9.58 (a) "Supporting Manufacturer" is one who manufactures goods/products or any part/accessories/components of a good/product for a merchant exporter or a manufacturer exporter under a specific authorization.
(b) “Supporting Manufacturer” for the EPCG Scheme shall be one in whose premises/factory Capital Goods imported/ procured under EPCG authorization is installed.
9.59 State Trading Enterprises (STEs), for the purpose of this FTP, are those entities which are granted exclusive right / privileges export and / or import as per para 2.20 (a) of FTP.
9.60 "Third-party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s).
In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter /manufacturer and third party exporter(s). Bank Realisation Certificate, Self Declaration Form (SDF), export order and invoice should be in the name of third party exporter.
9.61 "Transaction Value” is as defined in Customs Valuation Rules of Department of Revenue.
9.62 "Wild Animal" means any wild animal as defined in Section 2(36) of Wildlife (Protection) Act, 1972.
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GLOSSARY (ACRONYMS)
Acronym Explanation
AA Advance Authorisation
AANF Appendices and Aayaat Niryaat Form
ACU Asian Clearing Union
AEZ Agri Export Zone
ANF Aayat Niryaat Form
ARE-1 Application for Removal of Excisable Goods
for Export (By Air/Sea/Post/Land)
ARE-3 Application for Removal of Excisable Goods
from a factory or a warehouse to another
warehouse
ACP Accredited Clients Programme
AEO Authorised Economic Operator
AES Approved Exporter’s Scheme
APEDA Agricultural & Processed Food Products
Export Development Authority
ARO Advance Release Order
ASEAN Association of South- East Asian Nations
ASIDE Assistance to States for Infrastructure
Development of Exports
AU Actual User
BCD Basic Customs Duty
BG Bank Guarantee
BIFR Board of Industrial and Financial
Reconstruction
BOA Board of Approval
BOT Board of Trade
BRC Bank Realisation Certificate
BTP Biotechnology Park
BIS Bureau of Indian Standards
CBEC Central Board of Excise and Customs
CCP Customs Clearance Permit
CEA Central Excise Authority
CEC Chartered Engineer Certificate
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CED
Central Excise Duty
CENVAT
Central Value Added Tax
CETF
Common Effluent Treatment Facility
CFCs
Common Facility Centres
CG
Capital Goods
CIF
Cost, Insurance & Freight
CIN
Corporate Identification Number
CIS
Commonwealth of Independent States
CKD
Completely Knocked Down
CoD
Cash on Delivery
CoO
Certificate of Origin
CQCTD
Committee on Quality Complaints and Trade
Disputes
CRES
Certificate of Registration as Exporter of
Spices
CST
Central Sales Tax
CIN
Company Identification Number
CRES
Certification of Registration as Exporter of
Spices
CEPA
Comprehensive
Economic
Partnership
Agreement
CBEC
Central Board of Excise and Customs
CSP
Common Service Provider
CECA
Comprehensive
Economic
Cooperation
Agreement
CVD
Countervailing Duty
DA
Document against Acceptance
DBK
Drawback
DC
Development Commissioner
DDA
Diamond Dollar Accounts
DEA
Department of Economic Affairs
DEL
Denied Entity List
DES
Duty Exemption Schemes
DFIA
Duty Free Import Authorisation
DGCI&S
Director General, Commercial Intelligence &
Statistics.
DIN
Director Identification Number
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DPIN Designated Partner Identification Number
DGFT Director General of Foreign Trade
DIPP Department of Industrial Policy & Promotion
DoBT Department of Bio-Technology
DoC Department of Commerce
DeitY Department of Electronics and Information
Technology
DoR Department of Revenue
DoT Department of Telecommunications
DRS Duty Remission Schemes
DTA Domestic Tariff Area
e-BRC Electronic Bank Realisation Certificate
e-IEC Electronic Importer-Exporter Code
ECA Enforcement- cum-Adjudication
EDI Electronic Data Interchange
ECGC Export Credit Guarantee Corporation
EEFC Exchange Earners’ Foreign Currency
EFC Exim Facilitation Committee
EFT Electronic Fund Transfer
EGM Export General Manifest
EHTP Electronic Hardware Technology Park
EIC Export Inspection Council
EO Export Obligation
EODC Export Obligation Discharge Certificate
EOP Export Obligation Period
EOU Export Oriented Unit
EPC Export Promotion Council
EPCG Export Promotion Capital Goods
EPO Engineering Process Outsourcing
EXIM Export Import
FDI Foreign Direct Investment
FE Foreign Exchange
FEMA Foreign Exchange Management Act
FIEO Federation of Indian Export Organisation
FIRC Foreign Exchange Inward Remittance
Certificate
FOB Free On Board
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FOR
Freight on Road and Rails
FT (D&R)Act
Foreign Trade ( Development & Regulation)
Act, 1992 (22 of 1992)
FTDO
Foreign Trade Development Officer
FTP
Foreign Trade Policy
FT(R) Rules
Foreign Trade (Regulation) Rules
FTWZ
Free Trade and Warehousing Zone
FTA
Free Trade Agreement
G&J EPC
Gems & Jewellery Export Promotion Council
GOI
Government of India
GATS
General Agreement on Trade in Services
GR
Guarantee of Realisation
HACCP
Hazard Analysis and Critical Control Process
HBP
Handbook of Procedures
HHEC
Handicraft
&
Handlooms
Exports
Corporation
ICB
International Competitive Bidding
ICD
Inland Container Depot
ICM
Indian Commercial Mission
IEC
Importer Exporter Code
ISO
International
Organisation
for
Standardisation
IAEA
International Atomic Energy Agency
INFCIRC
International
Atomic Energy
Agency
Information Circular
IEM
Industrial Entrepreneurial Memorandum
IMSC
Inter-Ministerial Standing Committee
IL
Industrial Licensing
ISO
International Standards Organisation
ITC (HS)
Indian Trade
Classification (Harmonised
System) for Export & Import Items
KVIC
Khadi and Village Industries Commission
LC
Letter of Credit
LCS
Land Customs Station
LLPIN
Limited Liability Partnership Number
LPG
Liquefied Petroleum Gas
LoC
Line of Credit
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LoI Letter of Intent
LoP Letter of Permit
LUT Legal Undertaking
MAI Market Access Initiative
MDA Market Development Assistance
MEA Ministry of External Affairs
MEIS Merchandise Exports from India Scheme
MRA Mutual Recognition Agreements
MoD Ministry of Defence
MoF Ministry of Finance
MSME Ministry of Micro Small and Medium
Enterprises
MSMED Micro Small and Medium Enterprises
Development
MSTC Metal Scrap Trade Corporation
NBFC Non- Banking Financial Company
NC Norms Committee
NFE Net Foreign Exchange
NI Non-Infringing
NCB National Competitive Bidding
NOC No Objection Certificate
PDS Public Distribution System
PEC Project and Equipment Corporation of India
Ltd.
PIC Policy Interpretation Committee
PRC Policy Relaxation Committee
PAN Permanent Account Number
PH Personal Hearing
PTA Preferential Trade Agreement
PSU Public Sector Undertaking
R&D Research and Development
RA Regional Authority
RBI Reserve Bank of India
RCMC Registration-cum-Membership Certificate
REP Replenishment
RPA Rupee Payment Area
S/B Shipping Bill
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SAD
Special Additional Duty
SCOMET
Special
Chemicals,
Organisms,
Materials,
Equipment and Technology
SEI CMM
Software
Engineers
Institute’s Capability
Maturity Model
SEZ
Special Economic Zone
SEIS
Service Exports from India Scheme
SIA
Secretariat for Industrial Assistance
SIIC
State Industrial Infrastructure Corporation
SION
Standard Input Output Norms
SKD
Semi- Knocked Down
SLEPC
State Level Export Promotion Committee
STC
State Trading Corporation
STCL
Spices Trading Corporation Limited
STE
State Trading Enterprise
STH
Star Trading House
STPI
Software Technology Park of India
STR
State Trading Regime
SUVs
Sports Utility Vehicles
TED
Terminal Excise Duty
TEE
Towns of Export Excellence
TH
Trading House
TPO
Trade Promotion Organization
TRA
Telegraphic Release Advice
TRQ
Tariff Rate Quota
TUFS
Technology Upgradation Fund Scheme
UAC
Units Approval Committee
UN
United Nations
VA
Value Addition
WCO
World Customs Organisation
WHOGMP
World
Health
Organisation
Good
Manufacturing Practices
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