Foreign Trade Policy 2023 Table of Content Sr.No. 1 _ | Introduction to FTP & legislation governing foreign trade 2 | Salient features/key attributes of FTP 3 | Administration of the FTP 4 | Contents of FTP 2015-2020 5 | Trade facilitation and ease of doing business 6 | Provisions Regarding Imports And Exports 7 | Duty Exemption & Remission Schemes:~ A.Duty Exemption Schemes:~ ~Advance Authorisation (AA) Scheme -Duty Free Import Authorisation Scheme (DFIA) B.Duty Remission Schemes:~ -Duty Drawback (DBK) C.Scheme for Remission of Duties & Taxes on Exported Products (RoDTEP) 8 | Export Promotion Capital Goods Scheme (EPCG) 9 | EOU, EHTP, STP and BTP:- 10 | Deemed Exports Note:= Provisions for SEZ are given in separate Act & are not part of FTP but they are closely related to FTP. By : CA Vishal Bhattad CAVISHAL BHATTAD {© 09850850800 www.vsmartacademy.com, V'Smart Academy rly \ Foreign Trade (D&R) Act 1992 Foreign Trade Policy 2023 Government of India Ministry of Commerce and Industry — 4 [5 year Policy & —— pp FIP Formulates Annual Updation] |, eensicaly Handbook CBIC Ly ‘Supervised STATE VAT DEPT. @ CBIC comes under Ministry of Finance | It has two Departments namely, Customs and Central GST facilitate in implementing the ® RBI is the nodal bank in the country which formulates the policies related to management of money, including payments and Since VAT is payable on domestic goods but not on export goods, formalities with State VAT departments assume importance in ra CAVISHAL BHATTAD {© 09850850800 provisions ofthe FTP. receipts of foreign| | ensuringtaxfreeexports. Customs authorities follow the exchange policy formed by the DGFT while| | (@ It also monitors the receipt clearing the goods. and payments for exports }@ Central GST authorities need to and imports. RBI works be involved for all matters of| under the Ministry of exports, where goods have to be Finance. cleared without payment of GST. www.vsmartacademy.com, V'Smart AcademyIntroduction to FTP & legislation governi > Ministry of Commerce & Industry governs the promotion & regulation of foreign tradein India. 2 Inthe era of globalization, international trade has become the lifeline of any economy & thus, FTP is a set of guidelines or instructions issued by Central Government (CG) which specifies policy for exports & imports viz., foreign trade. > The Foreign Trade Policy, 2023 (as updated) is notified by CG under the Foreign Trade (Development and Regulation) Act,1992 FT(D&R) Act. > FTP was earlier called as Export Import policy i.e., EXIM Policy. Now, export import policy is referred to as Foreign Trade Policy (FTP) of country as it covers areas much beyond export & import. 2 This policy is updated every year, in addition to changes that are made throughout the year. > In general, FTP aims at developing export potential, improving export performance, encouraging foreign trade and creating favourable balance of payments position. Salient features/key attributes of FTI Export-Import of goods & services is free unless specifically regulated by Policy or any other law. 2, | Export & import goods are broadly categorized as - (a) Free (b) Restricted (c) Prohibited 3. | Some goods are ‘free’ for import and export but can be imported/exported only through State Trading Enterprises (STE). 4, | There are restrictions on exports & imports for strategic, health, defence, environment, & other reasons. If goods are restricted for import/export but not prohibited, Government can give a permission/ license for specific reasons. 5. | Exports are promoted through various promotional schemes. 6, | Goods and services to be exported but, not the taxes. Hence, any indirect taxes on exports are either exempted or refunded on both outputs and inputs, through application of various schemes in the form of Duty Exemption / Duty Refund (Drawbacks and Rebates), as the case may be. 7. | Capital goods can be imported at NIL duty forthe purpose of exports under the scheme of EPCG. 8. | For units undertaking to export all their production, there are special schemes so that they can avoid taxes at every stage under the scheme of EOU/SEZ. 9, | Inspecified cases, imports get duty exemption/concession/ remission for certain special purposes. To enable domestic suppliers to compete with international suppliers, supplies of domestic suppliers are treated as deemed exports. 10.| FTP 2023- It was announced (effective) on 01.04.2023 which is an integrated policy for export & import of goods & services. It shall continue to bein operation unless otherwise specified or amended. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy co4 en Aue > FTP is formulated, controlled & supervised by office of Director General of Foreign Trade (DGFT), an attached office of Ministry of Commerce & Industry, Government of India. 2 DGFT has several offices in various parts of the country which work on the basis of the policy formed by the headquarters at Delhi. > DGFTissues authorization (licence) i.e.,a permission for import/export as per FTDR Act. > Italso grants Importer Exporter Code (IEC) Number to importers & exporters as import & export without lEC number is not permitted, unless specifically exempted. > DGFT's decision is final & binding for interpretation of Policy, provision in Handbook of Procedures, Appendices and Aayat Niryat Forms or classification of any item for import / exportin the ITC (HS). > APolicy Interpretation Committee (PIC) may be constituted to aid and advice DGFT. Exemption from Policy/ Procedures: > In public interest, DGFT may pass orders or grant exemption, relaxation or relief to any person from any provision of FTP or procedures, on grounds of genuine hardship and adverse impact on trade. ‘> However, DGFT may impose certain conditions after consulting: Norms Committees] for Fixation/modification of product norms under all schemes IEPCG Committee | Nexus with Capital Goods (CG) and benefits under EPCG Schemes Policy Relaxation | for all other issues Committee (PRC) > Ifanimporter/ exporter is aggrieved by decision/ order by any authority in DGFT, a specific request for Personal Hearing (PH) has to be made to DGFT. DGFT may consider request for relaxation after consulting concerned Committee and then decision conveyed shall be final and binding 2 Governmentis committed to easy and speedy redressal of grievances from Trade and Industry. 2D Settlement Commission set up by Department of Revenue is empowered to settle matters of default in export obligation also. Pc aces Though FTP is formulated by DGFT, it is administered in close coordination with other agencies as under: 1, | Central Board of | 2 CBIC comes under Ministry of Finance & its 2 Departments i.e., Indirect Taxes & | Customs & GST facilitate in implementing FTP. 2 Customs Department is responsible for clearance of export & import Customs (CBIC) goods after valuation & examination & for which, they follow policy formed by DGFT. 2 Since there is GST on all goods & services (except petroleum products, tobacco products & alcoholic liquor), Central GST authorities have to be CAVISHAL BHATTAD (© 09850850800 wwwvsmartacademy.com —-W’Smart Academyinvolved for exports, where goods have to be cleared with/without payment of GST. 2 | Reserve Bank of | 2 RI works under Ministry of Finance & formulates policies related to India (RB!) management of money, including payments and receipts of foreign exchange. 2 Italso monitors the receipt and payments for exports and imports. 3. | State GST 2 To avoid dual control, some taxable persons are under jurisdiction of Departments State GST authorities who will then bethe controlling authorities here. Contents of FTP 2015: 1, | FTP 2023 > It has 11 Chapters giving basic policy & is notified by CG on 01.04.2023. 2. | Handbook of ‘> It contains 11 chapters, covering procedural aspects of policy fis Procedures 2023 | notified by DGFT on 01.04.2023. (HBP 2023):- 2 ltis amended from time to time as per requirements. 2 Also, it contains Appendices and Aayat Niryat Forms (AANF) containing various appendices and forms relating to the procedural aspects & Standard Input-Output Norms (SION) of various products notified from time totime. Notes:~ > SION specify quantity & value of inputs to be used for production of specific export items & corresponding quantity of output expected. % Based on SION, exporters can make duty-free import of inputs required for manufacture of export products under the Duty Exemption Schemes like Advance Authorisation and DFIA. 3 lite (us) ‘> Export Import Policy for import/export of specific item is given in 8=digit lassificat Indian Trade Classification Code based on Harmonized System of classification of Coding [ITC(HS)]. exports and import = 11¢_43s codes are divided into 2 schedules:~ items: Schedule (- Import Policy| 1 describes rules f guidelines for import policies. Schedule ll- Export Policy| It describes rules & regulation for export policies. ‘> Presently, most of the goods can be imported without any authorization. 2D Schedule Il contains very few products, where export is prohibited or restricted. Export ofall other goodsis free. > SCOMET LISTis also provided. > Changes/formulation/ addition of new codes in ITC-HS Codes are done by DGFT. Foreign Trade Policy vis a vis tax laws:~ 2 FTPis closely knit with the Customs, GST Laws and Excise/state laws of India but the policy provisions per-sedo not overridetaxlaws. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy co> Exemptions extended by FTP are given effect to by issuing notifications under respective tax laws (e.g., Customs Tariff Act). Thus, actual benefit of the exemption depends on the language of exemption notifications issued by the CBIC. In most of the cases the exemption notifications refer to policy provisions for detailed conditions. D Ministry of Finance/ Tax Authorities cannot question the decision of authorities under the Ministry of Commerce (so far as the issue of authorization etc. is concerned). BUCO GCE LC EC eur DGFT delicately functions as a facilitator of exports and imports. NCTE National Committee on Trade Facilitation (NCFT) is constituted to facilitate coordination & implementation of the TFA provisions. Aim of i) Improvement in Ease of Doing Business through reduction in transaction cost and National time, Trade il) Reduction in cargo releasetime. ill) A paperless regulatory environment. Facilitation iv) Atransparent and predictable legal regime. Action Plan _ |v) Improved investment climate through better infrastructure. Trade > Free passage will be provided to export consignment and there will not be any facilitation seizure of export related stock except in exceptional cases. measures > Single window system to facilitate export of perishable agricultural produce. provided 2 DGFTis implementing the Niryat Bandhu Scheme for mentoring new and potential, nder FTP exporter on the intricacies of foreign trade through counselling, training and outreach programmes including the Districts as Export Hubs (explained later)’. 2 DGFT online customer portal (https://dgft.gov.in) provides information for export and import including Acts, rules, policy and procedures. ‘> DGFT has undertaken many IT Initiatives to enable a paperless, contactless and transparent environment for availing benefits under the export promotion schemes. ‘> Adedicated 24 X7 Helpdesk facility is put in place to assist the exporters in filing online applications on the DGFT portal and other matters pertaining to FTP. 2 Alarge number of Trade Facilitation measures taken by Customs Department like > 24X7 customs clearancein specified seaports and airports, > Single Window Interface for Trade (SWIFT) to lodge clearance documents online, > ESanchit or E-Storage and Computerized Handling of Indirect Tax documents facilitates traders with paperless processing, > TURANT Customs (faceless assessment), > Compliance Information Portal (CIP) for information on all clearance related procedures, duties, fee & charges for import/export ofany goods, ete Some Important terms: Authorized Economic Operator (AEO) programme of Indian Custom: ‘> Under this, a business entity engaged in international trade is granted AEO status if it is approved by Customsas compliant with supply chain security standards. > Such entities are considered as trusted trade partner of Indian customs. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy> AEO status holders get extensive benefits including preferential customs treatment in terms of reduced examination & faster processing & clearance of cargo, deferred payment of duty, direct port delivery/entry, enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries, greater facilitation and self-certification 2 AEO programmeis based on WCO's SAFE Framework of Standards (FoS). Towns of Export Excellence (TEE):~ > Selected towns which are contributing handsomely to India's exports by producing goods of specified amount may be granted recognition as TEE. > They will be provided targeted support and infrastructure development to maximize their export competitiveness and enable them to move up the value chain and also to tap new markets by granting specified privileges to them. Been alc Meaning | ® Status Holders are exporter firms recognised as business leaders who have excelled in international trade & have successfully contributed to country's foreign trade. > All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status Status recognition depends upon export performance. An applicant shall be recognition | ®ategorized as status holder upon achieving the threshold export performance in the current and preceding 3 Financial years, as indicated belo depending upon Status category Export Performance Threshold In USD Million export One Star Export House 3 performance] — [Two Star Export House 15 Three Star Export House 50 Four Star Export House 200 Five Star Export House 800 Note:= Separate FTP provisions for Gems & Jewellery sector are not relevant for exanq. Points that merit consideration while computing export performance for grant of status:~ > Export performance shall be counted based on FOB of export earnings in freely convertible foreign currencies orin Indian Rupees 2 For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at exchange rate notified by CBIC, as applicable on Ist April ofeach F.Y. > For granting status, export performance would be necessary in all 3 preceding Fys. ‘> Export performance is not transferrable among IEC holders. > Exports made on re-export basis shall not be counted for recognition. ‘> Export ofitems under authorization, including SCOMET items, would be included. 2 To calculate export performance for grant of One Star Export House Status, > exports by IEC holders under Micro and Small Enterprises, manufacturing units having ISO/BIS certification, units located in Northeastern States including Sikkim. & Union Territories of Jammu, Kashmir & Ladakh and export of fruits and vegetables shall be granted double weightage once in any of these categories. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy(a) Authorisation & custom clearances for imports & exports on self-declaration basis. of Status | (b) Fixation of Input Output Norms on priority (within 60 days) by Norms Committee Holders (where SION does not exist and recommends SION to be notified in DGFT). (c) Exemption from compulsory negotiation of documents through banks. Exception are remittance/ receipts. (a) Exemption from furnishing of Bank Guarantee in Schemes under FTP unless otherwise specified. (e) Two Star Export Houses and above are permitted to establish export warehouses. (f) Manufacturers who are also status holders (Three Star/Four Star/Five Star) will be enabled to self-certify their manufactured goods as originating from India with a view to qualify for preferential treatment under specified agreements (g) Status holders shall be entitled to export freely exportable items (excluding Gems and Jewellery, Articles of Gold and precious metals) on free of cost basis for export promotion subject to a specified annual limit. (h) The status holders would be entitled to preferential treatment and priority in handling of their consignments by the concerned agencies. Their Status Holders (other than One Star Export House) are being made “partners” in providing skilling & | mentoring and training in international trade to specified number of trainees each year mentorship | based on status theyachieve. obligations Creu ose tat Developing districts as export hubs:~ > In every district, products/services with export potential have to be identified & District Export Promotion Committees (DEPCs) at district level is to be created to ~ provide support for export promotion to increase production, grow exports, generate economic activity & achieve the goal of Atma Nirbhar Bharat, Vocal for local and Makein India & ~ address the bottlenecks for export growth in the districts. > ADistrict Export Action Plan (DEAP) may be prepared for each district. ‘> 2-3 high potential products/services from districts may be prioritised & comprehensive plan for their export growth may be prepared and implemented. ‘> DGFT Regional Authorities will be engaging with all relevant State & Central agencies in each district. Quality complaints and trade dispute: > For import/export, owner is liable to state the value, quality & description of goods/ services/ technology in Bill of Entry/ Shipping Bill, ete ‘> For export, certification is needed for quality & specification being in accordance with export contract. > Necessary action is prescribed against the erring exporters/importers. > Amechanism is also laid down to resolve complaints/ trade disputes between foreign buyer/ supplier & Indian exporter/importer for quality supplied or unethical commercial dealings including non- supply/ partial supply/ wrong supply/ non-payment; non-adherence to delivery schedules, etc. 2 Committee on Quality complaints and Trade Disputes (CQCTO) will be responsible for enquiring and investigating into all quality related complaints & other trade related complaints falling under jurisdiction of respective RAs & take prompt and effective steps to redress and resolve the grievances. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V’Smart AcademySCOMET: Special Chemicals, Organisms, Materials, Equipment and Technologies ‘> Export of dual-use items, including software and technologies, having potential civilian/ industrial applications as well as use in weapons of mass destructionis regulated under FTP. ‘Ditis either prohibited or is permitted under an Authorization unless specifically exempted. ‘> SCOMET list is our National Export Control List of dual use items munitions and nuclear related items, including software and technology and is aligned to the control lists of the all the multilateral export control regimes and conventions. or Ti da eee ieneral provisions applicable to import and export of good: > Before entering into a transaction ofimport or export, one needs to ascertain -whether item is free’ or ‘restricted’ (imposed by DGFT) or ‘prohibited’ for import or export, & - whether it is required to be traded exclusively through a State Trading Enterprise (STE). 2D Ifthere is a restriction, an authorisation is required for export / import & import authorisations are for the ‘actual user’ only, unless this condition is specifically dispensed with by DGFT. ‘> Authorisation can be applied for on the portal of OGFT by using applicant's IEC number. > Prohibitions on import/export are imposed for specified countries, organisations, individuals etc. 2 Further, product specific prohibitions are also imposed. > Special schemes may be devised to promote and regulate trade and strengthen economic ties with neighbouring countries. > Imported goods are required to comply with all domestic laws applicable to domestically produced goods, unless exempted. In addition, DGFT may prescribe procedures by public notice, to be followed by importer/ exporter. Other general provisions regarding export and impo 1. | ic(Hs) [indian |> Information regarding status of goods being free / restricted / prohibited /traded through STE, for import / export is available in ITC(HS), i.e Trade — import/export policies for all goods are indicated against each item as per its Classification mets), (Harmonised | > import/export may be subject to restrictions or conditions under any other System). law. > Indian custom uses 8-digit ITC-HS codes to suit the national trade requirements. 2 The same system is used for classifying goods in Customs Tariff for rate(s) of customs duty on goods. > ITC(HS) specifies against certain goods that they can be imported / exported only through 'STEs' notified by DGFT. [Meaning 2, | State Trading Enterprises (stEs) STEs are governmental/non-governmental enterprises, including Jof STEs | marketing boards, which deal with goods for export and /or import. Example} Food Corporation of India, Oil and Natural Gas Corporation Ltd, National Fertilizers Limited, Indian Rare Earth Ltd., etc. 2 DGFT has discretion to issue such authorisation to other entities also. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V’Smart AcademyImporter Exporter Code (1EC) > A person can export or import only after obtaining a 10-character alphanumeric number Importer-Exporter Code (IEC), unless specifically exempted > It is the same number as the applicant's PAN but is issued separately by oGFT. 2 An online application has to be filed for IEC > Specified categories of importers or exporters are exempted from obtaining IEC. 2 IEC details is to be electronically updated every year, even if there are no changes, failing which it will be de-activated till updation. Mandatory documents:- For i) Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Export Receipt. ii) Commercial Invoice cum Packing List (or separate invoice & packing list) iii) Shipping Bill/ Bill of Export/ Postal Bill of Export. For 1. Bill of Lading/ Airway Bill/Lorry Receipt/ Railway Receipt/Postal Import | Receipt. 2. Commercial Invoice cum Packing List (or separate invoice & packing list). 3. Bill of Entry. For import/export of specific goods or in specific cases of export/import, additional documents may be notified/ sought. Penal action & placing of an entity in Denied Entity List (DEL) (a) Penalaction:- In following situations, a person shall be liable to penal action under FT (D&R) Act rules & orders made thereunder, FTP & any other law:- {) | Authorisation holder ‘2 violates any condition of such Authorisation, fails to fulfill export obligation, or fails to deposit the requisite amount within period specified in demandnotice. Any information/particulars furnished by applicant subsequently found untrue/ incorrect. Note:~ For raising ethical standards & ease of doing business, OGFT| provided for self-certification system (for applicants in filling up information/ particulars) under various schemes in FTP (b) Denied Entity List (DEL):- > A firm may be placed under DEL, by concerned Regional Authority (RA) of DGFT. Dinsuchacase:- i) firm may be refused grant or renewal of a licence/authorization /certificate/ scrip/any instrument bestowing financial/ fiscal benefits, & {i) all new licences, authorisations, scrips, certificates, instruments ete. will be blocked from printing/ issue/renewal. > Firm's name can be removed from DEL by such RA for reasons, if firm completes Export Obligation/ pays penalty/ fulfils requirement of demand notice(s) issued by RA/ submits documents required by RA. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy1. | ‘actualuser’ | ® Freely importable goods may be imported by any person without any condition: ‘restriction’ seati ‘> lf such imports require an authorisation, actual user alone may import such good(s) unless said condition is specifically dispensed with by DGFT. 2. | Import of (a) Samples:~ specific > Import of samples of ‘restricted’ items is allowed without import categories of authorisation except defence/ security items, seeds, bees &new drugs goods:~ > Duty free import of samples upto Rs. 3,00,000 for all exporters shall be allowed, subject to notified terms and conditions. (b) Gifts:- > Import of gifts (including those purchased from e-commerce portals) through post/courier, where customs clearance is sought as gifts, is prohibited, except rakhi' and life-saving medicines > Gifts can beimported upon payment of applicable customs duties. 2 Ifduty leviable on rakhi is upto 100, no duty will be collected onit. (c) Passenger baggage:~ Following are allowed to be imported as part of passenger baggage without an authorisation subject to the Baggage Rules, 2016:~ > Bona-fide household goods and personal effects ‘> Samples of items freelyimportable under FTP |Any item(s) including Samples/Prototypes of items whose import policy is restricted/ prohibited or is channelised through STEs are not permitted as part of passenger baggage except with a valid authorization. > Drawings, patterns, labels, price tags, buttons, belts, trimming & embellishments required for export, imported as part of passenger baggage of exporters coming from abroad, upto prescribed value limit. (4) Re-import of repaired goods: Capital goods, equipment, components, parts & 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. (e) Goods used in projects abroad:~ Project contractors after completion of projects abroad, may import without an Authorisation, goods including capital goods used in project, provided they have been used for at least I year. (f) Prototypes: New / second hand prototypes / second hand samples may be imported without an Authorisation on following conditions: ‘D Importer is an Actual User (industrial). > He is engaged in production of or having industrial license/letter of intent for research in an item for which prototype is sought for product development/ research CAVISHAL BHATTAD (© 09850850800 wwwvsmartacademy.com —-W’Smart Academy 1> Importer files self-declaration to that effect, to the satisfaction of Customs authorities. (g) Metallic waste & scrap:- > Import of any form of metallic waste, scrap will be subject to condition that it will not contain hazardous, toxic waste, radioactive contaminated waste/scrap containing radioactive material, arms, ammunition, mines, shells, live or used cartridge or any other explosive material in any form either used or otherwise. (h) Second hand goods:~ Import policy for second hand goods is as follows: Second Hand Goods Capital Goods ‘Restricted’ for import and| require authorisation and fulfilment of specified conditions, if any Air conditioners ‘Free’ for import] (Wd Other than capital goods Remaining goods Refurbished / reconditioned lspares of capital All other second-hand capital goods, Restricted’ for import, and can be imported only against an import| authorisation ry CAVISHAL BHATTAD (© 09850850800 = = lgoods, for which a_| | other than Diesel generating sets ‘Chartered Engineer || those listed Desktop computers certifies existence of| | above [80% residual life Refurbished / reconditioned spares of Imported for the re-furbished parts of Purpose of repair/ personal computers/ refurbishing / laptops reconditioning or reengineering All notified electronic and IT goods - Freely importable subject to specified conditions www.vsmartacademy.com V’Smart AcademyMiscellaneous | > Goods for import into India can be sold on high seas, subject to FTP/other provisions laws regarding D Merchanting trade means shipment of goods from 1 foreign country to import another foreign country without touching Indian ports, involving an Indian intermediary. Subject to RBI guidelines, it is allowed, except for goods in CITES & SCOMET lists. Note: CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) is an international agreement between governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten the sutvival of species ‘> Import of capital goods under lease financing does not require any specific permission from DGFT. > For imported goods, Bank Guarantee / Letter of Undertaking/ Bond (BG/ LUT /Bond) is to be executed with customs for duty-free import or otherwise required, before clearance of goods. > For indigenously sourced goods, an authorisation-holder has to execute LUT/BG/Bond with concerned RA, before sourcing such material. C. Provisions relating to export of goods: 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 forthe time being in force. 1. | Benefits for | > Supporting manufacturer is one who manufactures goods/ products or any supporting part/ accessories/ components of a good/ product for a merchant exporter/ manufacturers | Manufacturer exporter undera specific Authorisation. ‘> For any benefit to accrue to supporting manufacturer, names of both supporting manufacturer & merchant exporter must figure in tax invoice/ shipping bill/ bill of export/ airway bill, ete. 2, | Third Party | Third party exports is allowed under FTP which means exports made by an Exports exporter/ manufacturer on behalf of another exporter(s). > Export documents such as shipping bills shall indicate names of both manufacturer exporter/ manufacturer & third-party exporter(s). > Bank Realisation Certificate (BRC), Self-Declaration Form (SDF), export order and invoice should be in the name of third-party exporter. 3, | Samples > Exports of trade & technical samples of goods of freely importable items are allowed without any limit, 4. | Gifts > Goods including edible items, of value not exceeding Rs. 5,00,000 in a licensing year (Ist April-31st March), may be exported as a gift. > However, items restricted for exports in ITC(HS) shall not be exported as a gift, without an authorisation Passanger ‘> Bona-fide personal baggage may be exported along with passenger or, if Baggage unaccompanied, within 1 year before or after passenger's departure from India. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy3 However, items restricted for exports in ITC(HS) shall not be exported as a gift, without an Authorisation. Authorisation will be required for restricted items. 3 Samples of freely exportable items may be exported as part of passenger baggage without an authorisation. Import for export > Goods that are freely importable as well as freely exportable can be imported & then exported in same or substantially same form, without authorisation. ‘> Goods including capital goods (new & second hand) can be imported under customs bond & then cleared for export against freely convertible foreign currency provided they are freely exportable. This includes goods restricted’ for import, > Capital goods that are freely importable and freely exportable can be imported for export upon execution of LUT/BG with customs authorities. 2 Notwithstanding above, goods of other than Indian origin that are ‘restricted’ for export (other than ‘prohibited’ or SCOMET items) but ‘free’ for import can be imported for exports in same or substantially same form & shall be kept in bonded warehouse & re-exported subject to section 69 of Customs Act, 1962 2 Goods imported against payment in freely convertible foreign currency can be exported only against payment in freely convertible foreign currency, unless otherwise notified Payments & Receipts on Imports / Exports (a) Denomination of Export Contracts:: 2 Export contracts may be denominated either in Indian rupees or freely convertible currency, but export proceeds should be realised in freely convertible foreign currency. Comment:~ Freely convertible foreign currency refers to a currency that| can be exchanged or converted into other currencies without significant] restrictions or limitations imposed by government or regulatory] authorities. > However, in specified cases, exports proceeds may be realized in rupees subject to fulfilment of specified conditions. (b) Non-realisation of export proceeds: 2 Ifan exporter fails to realize export proceeds within time specified by RBI, he shall be liable to return all benefits/ incentives availed against such exports and shall be liable to penal action under FT (D&R) Act & FTP. > However, if such non-realization is for reasons beyond his control, he may approach RBI for writing off the unrealized amount. (c) Export Credit Agencies (ECAs):- > ECAs provide financial support to exporters by insurance, guarantee and also direct lending. For instance, Export Credit Guarantee Corporation of India Ltd. (ECGC), Exim Bank, ete. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart AcademyExport 8. > Export Promotion Councils (EPCs) are organizations of exporters, set up to Promotion promote and develop Indian exports. Councils ‘> Each Council is responsible for promotion of a particular group of products/ projects/services. 2 EPCs are also eligible to function as Registering Authorities to issue Registration-cum-Membership Certificate (RCMC) > RCMC is required to be furnished by any person, applying for Authorisation to import/ export under FTP (except ‘Restricted’ items) or applying for any other benefit or concession under FTP. 9. | Self- 2 Till now, certificate of origin of goods for export was issued by designated certification | agencies & now, self-certification has been enabled for “approved of origin of exporters”. goods > Manufacturers who are also status holders will be eligible for ‘approved exporter’ scheme. ‘> Approved Exporters will be entitled to self-certify their manufactured goods as originating from India to qualify for preferential treatment under different Preferential Trade Agreements [PTAs], Free Trade Agreements [FTAs], Comprehensive Economic Cooperation Agreements [CECA] f Comprehensive Economic Partnerships Agreements [CEPA] which are in operation. 2 Self-certification will be permitted only for the goods that are manufactured as perthe lEM/IL/LOl issued to manufacturers. Wieck eee Remission of duties & taxes on exported products (RoDTEP) A. | Duty Duty exemption schemes enable duty free import of inputs required for export exemption _| production. The2 duty exemption schemes are as follows:~ schemes 1. Advance Authorization Scheme (which will include Advance Authorisation for Annual Requirement). 2. Duty Free Import Authorization Scheme (DFIA).. p, | Duty Duty Remission Scheme enables post export replenishment / remission of duty remission on inputs used in export product. Duty Drawback (DBK) Scheme, administered by schemes Department of Revenueis designed for this purpose. c, | Scheme for | This scheme is notified by Department of Commerce & administered by Department of Revenue. Note:~ Separate duty exemption/remission schemes for Gems & Jewellery are not relevant for exam. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart AcademyA. Duty Exemption Schemes:- Advance Authorisation (AA) Scheme:- Inputs imported without payment of Duty:- Inputs physically incorporated in export product except normal wastage & fuel, oil, catalyst consumed/utilized in production process of export product are imported duty free against AA. Eligible Applicant, Export:- ‘ AAcan be issued to a manufacturer exporter or merchant exporter tied to supporting manufacturer. 2 AA for pharmaceutical products manufactured through Non-Infringing (NI) process shall be issued to manufacturer exporter only. Eligible Supply AAisissued for procurement of inputs for following supplies:~ > Physical exports (including export to SEZ), > Intermediate supply, > Deemed exports (discussed later), or > Supply of stores on board of foreign going vessel/aircraft based on its SION. Basis of issuance AA is issued for inputs in relation to resultant product on following basis:~ > Notified SION (Standard Input Output Norms), > Self-declaration, > Applicant-specific prior fixation of norm by Norms Committee, or > Self-Ratification scheme. Self-Ratification Scheme:- 2 If there is no SION/valid Adhoc Norms for an export product or SION is| notified but exporter intends to use additional inputs in manufacturing] process, eligible exporter can apply for AA under this scheme on self- declaration & self-ratification basis > “Additional inputs” refers not to additionality in terms of quantity/value of| an input specified in a norm, but to another additional input. Say, if the inputs specified in norm are XI &X2, input ¥ will be an additional input. > RA may issue AA & such cases need not be referred to Norms Committees for ratification ofnorms. ‘> Application under this scheme shall be made along with a Certificate from Chartered Engineer in prescribed format. igiblity to opt for this scheme 2 An exporter (manufacturer or merchant), who holds AEO Certificate under Common Accreditation Programme of CBIC is eligible to opt for this scheme. ‘> Astatus holder who is a manufacturer cum actual user & holds valid 2-star or above status & who has already submitted its application for grant of AEO on CBIC's AEO portalis also eligibleto apply with specified conditions. ‘> DGFT may deny authorisation to two star and above status holder based onits risk management principles. 2 Schemeis not available for specified export products & specified inputs. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart AcademyPre-import condition: > Imported inputs are subject to pre import condition & should be physically incorporated in export product (making normal allowance for wastage) ‘> For local procurement under invalidation/ ARO, inputs shall be procured prior to manufacture of export item & shall be physically incorporated in export product. invalidation letter:~ Regional Authority shall issue Invalidation Letter when domestic supplier intends to obtain duty free material for inputs through AA for supplying resultant product to another AA / DFIA/EPCG Authorisation. Advance Release Order (ARO):- Regional Authority shall issue Advance Release Order if domestic supplier intends to seek refund of duties exempted through Deemed Exports mechanism. Validity period for import Validity period of an AA in2 situations is as follows:- 1. 12 months from date of issue of Authorisation within which the import must be made. Re-validation for another 12 months can be allowed once. 2. AA for deemed exports shall be co-terminus with contracted duration of project execution or 12 months from date of issue of authorisation, whichever is LATER. AA for Annual Requirement & Condition > It shall only be issued for items notified in SION. It shall not be available for adhoc norms under Self-Declared Authorisations where SION does not exist. ‘Dit shallalso not be available for SION where inputs notified. ‘> Exporters with past export performance (in at least preceding 2 F.Y.s) shall be entitled for this. ‘2 Entitlement in terms of CIF value of imports shall be upto 300% of FOB value of physical export &/or FOR value of deemed export in preceding F.Y. or Rs 1 Crore, whichever is HIGHER. Value Addition VA=(A-B)/Bx100, where (WA) for this [A £08 value of export realized or FOR value of supply recived (for deemed export) chapter B: CIF value of inputs under AA + value of any other inputs used on which benefit of duty drawback is claimed/intended to be claimed, Minimum VA=15% (For specified products like petroleum products, etc.), VA could be < 15%. Import of Spares to be supplied with export product can be imported duty-free under AA Mandatory upto 10% of CIF value of authorisation. Spares Note:- Import of specified products is not permissible on self-declaration basis. Details of Imports under AA are exempted for payment of:~ Duties exempted Basic Customs Duty (BCD), Anti-Dumping Duty, Additional Customs Duty (ACD), Countervailing Duty, Education cess, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable. CAVISHAL BHATTAD (© 09850850800 wwwvsmartacademy.com —-W’Smart AcademyNote:- > Specified deemed exports are not exempted from payment of anti-dumping duty, countervailing duty, safeguard duty & transition product specific safeguard duty, ifany. > Deemed exports specified for this purpose are supply of capital goods against EPCG authorisation & supply to goods to UN or international organisations for their official use or supplied to projects financed by them. ‘> Imports under AA for physical as well as deemed exports are also exempt from whole of the Integrated Tax & Compensation Cess. Actual User Condition for AA ‘> AA G/ot material imported under AA is subject to ‘Actual User’ condition i.e., it shall not be transferable even after completion of export obligation. However, Authorisation holder can dispose of product manufactured out of duty-free input once export obligation is completed. >If CENVAT/input tax credit facility on input has been availed for exported goods, even after completion of export obligation, goods imported against such AA shall be utilized only in manufacture of dutiable goods within same factory or outside (by a supporting manufacturer) > Waste/Scrap from manufacturing process, as allowed, can be disposed off on payment of applicable duty even before fulfillment of export obligation Free of Cost Supply by Foreign Buyer 2 AA is also available where some or all inputs are supplied free of cost to exporter by foreign buyer. ‘> Here, notional value of free of cost input is added in CIF value of import & FOB value of export for computation of value addition. ‘> However, realization of export proceeds will be equivalent to an amount excluding notional value of such input. Export Obligation Period & its Extension ‘> Export Obligation Period (EOP) of AA issued shall be 90 days from date of clearance of import consignment & extension shall not be allowed in EOP. “Export Obligation” means obligation to export product(s) covered by| Authorisation or permission in terms of quantity, value or both, as may be prescribed ot specified by Regional or competent authority. ‘> Import shall be subject to actual user condition & no transfer of imported raw material, for any purpose, including job work, shall be permitted. ‘Admissibility of Drawback > Duty drawback as per rate determined & fixed by Customs authority is available for duty paid imported/indigenous inputs (not specified in norms) used in the export product. ‘> Applicant shall indicate the details of duty paid input in application for AA. Audit/ Special Audit 2 Concerned Norms Committee may conduct audit of the manufacturer. > It may also initiate special audit, considering the nature f complexity of case & revenue of government, if he is of opinion at any stage of scrutiny/ enquiry/ investigation that the norms have not been claimed correctly or excess benefit has been availed. > Special audit can be conducted even if manufactureris audited before. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy2, | Outy Free Import Authorisation Scheme (DFIA):- Items to be > DFIA is issued to allow duty free import of inputs & oil & catalyst consumed/ imported:- utilised in production process of export product, ‘> Import of Tyre under DFIA scheme is not allowed. Duties 2 DFIAshall be exempted only from payment of BCD. Exempted:- | 2 Drawback as per rate determined & fixed by Customs authority shall be available for duty paid inputs (imported/indigenous) used in export product, Eligibility 2 DFIAisissued on post export basis for products for which SION is notified. > Application is to be filed with concerned Regional Authority before starting export under DFIA. 2 Merchant Exporter shall mention name & address of supporting manufacturer of export product on export document viz. Shipping Bill/ Bill of Export / Tax Invoice for export prescribed under GST rules. con inputs with “Actual User’ ion:- No DFIA for | 2 OFIAshallnot beissued for > input which is subject to pre-import condition or where SION prescribes ‘Actual User’ condition or > certain other specified inputs with pre import condition. Minimum VA | Minimum value addition of 20% shall be achieved. ‘Transferability | Regional Authority shall issue transferable DFIA. DFIA: Validity of ‘> Export shall be completed within 12 months from date of online filing of application & generation of flenumber. > DFIAis valid for 12 months from date ofissue. ‘> No further revalidation shall be granted by Regional Authority. ‘> Separate DFIA shall beissued for each SION. Common Provisions Applicable to Advance Authorisation & DFIA Schemes:~ Accounting of Input: ‘DIfSION permits use of a generic input or alternative input, the name/ description of input used (or to be used) in Authorisation must match exactly with name/ description endorsed in shipping bill ‘> Atthe time of discharge of export obligation (issue of EODC) or redemption, Regional Authority shall allow only the inputs that are specifically indicated in shipping bill togetherwith quantity. ‘> This applies also for supplies to SEZs & supplies made under Deemed exports Importability or Exportability of items that are Prohibited or Restricted or STE:- Prohibited items:~ > Export/import ofan item shall not be allowed under AA/DFIA if item is prohibited. ‘> Export of prohibited item may be allowed under AA, ifit is separately notified (with or without conditions) STE:- ‘D Items reserved for imports by STEs cannot be imported against AA/DFIA, but it can be procured from STEs against ARO or invalidation letter. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy ry> Items reserved for export by STE can be exported under AA/DFIA only after obtaining a 'No Objection Certificate’ from concerned STE. Restricted items:~ > Import of restricted items is allowed under AA/DFIA unless specifically disallowed. > Export of restricted / SCOMET items shall be subject to all conditionalities or requirements of export authorisation or permission. Domestic > Holder of an AA/DFIA can procure inputs from indigenous supplier/ Sourcing of STE/EOU/EHTP/BTP/ STP in lieu of direct import. Inputs:- 2 Such procurement can be against ARO, or Invalidation Letter. Validity of ARO/Invalidation Letter shall be co-terminous with validity of Authorisation Currency for | > Export proceeds shall be realized in freely convertible currency or in Indian Realisation of Rupees, except otherwise specified. Export > Realisation & non-realisation of export proceeds are already discussed in general Proceeds provisions for imports and exports. Re-import of _ | > Goods exported under AA/DFIA may be re-imported in same or substantially same exported goods | form subject to specified conditions. B. Duty Remission Schemes: Duty Drawback (DBK):- 2 For any goods manufactured in India & exported, “Drawback” means rebate of duty (i.e. customs duty) excluding IGST & Compensation Cess, chargeable on any imported materials or excisable ‘materials used in manufacture of such goods. 2 Customs duty paid on inputs is given back to exporter of finished product in form of Duty drawback. \ > Duty drawback u/s 7S of Customs Act, 1962 is granted when imported materials are used in the ‘manufacture of goods which are then exported, while duty drawback u/74 is applicable when imported goods are re-exported as itis, and articles easily identifiable. C. Scheme for Remission of Duties & Taxes on Exported Products (RoDTEP):- This scheme is based on principle that taxes & duties should not be exported & taxes & levies borne on exported products should be exempted or remitted to exporters & aims to refund duties & taxes on exported products which are not exempted/remitted/credited/ refunded under other provisions oflaw. Objective (i) To refund, currently unrefunded duties/ taxes/ levies, at Central, State & local level, borne on exported product, ineluding prior stage cumulative indirect taxes on goods & services used in production of exported product, & (ii) Such indirect duties/taxes/levies in respect of distribution of exported products. Salient features | 2 Rebate amount is issued in the form of a transferable duty credit/electronic scrip (e-scrip), which will be maintained in an electronic ledger by CBIC. > Such duty credit shall be used only to pay BCD on imported goods. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy2 Duty credit scrips are freely transferable (credits can be transferred to other importers) > Rebate shall not be available for duties & taxes already exempted / remitted / credited Reward under the scheme 2 Rebate will be granted to eligible exporters at a notified rate as a % of FOB value with a value cap per unit of eligible exported product, wherever required, on export of items. 2 Fixed quantum of rebate amount per unit may be notified for certain export items, Sale Proceeds > Rebate would not be dependent on realization of export proceeds at the time of issue ofrebate. 2 But in case of non-receipt of sale proceeds within time allowed under Foreign Exchange Management Act, 1999, it will be deemed that rebate have never been allowed. Ineligible supplies/ items/ categories under RoDTEP Following categories of exports/ exporters shall not be eligible for rebate under the scheme:~ > Export of imported goods in same or substantially same form. > Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India. > Export products which are subject to minimum export price or export duty. > Products which are restricted/ prohibited for export under FTP 2 Deemed Exports. > Supplies of products manufactured by DTA units to SEZ/FTWZ units. > Products manufactured in EHTP and BTP. > Products manufactured partly or wholly in a warehouse u/s 65 of Customs Act. 2 Products manufactured or exported availing the benefit of N/No. 32/1997 Cus. dt. 01.04.1997 (job work & re-export of goods supplied by foreign supplier) Note:~ Goods which are imported for execution of an export order placed on importer by supplier of goods for jobbing are exempt from BCD, |GST & GST compensation cess subject to conditions specified therein. > Exports for which the electronic documentation in ICEGATE EDI has not been generated / exports from non-EDI ports. > Goods which have been taken into use after manufacture. > Products manufactured or exported in discharge of EO against an AA/ DFIA /Special AAissued under a duty exemption scheme of relevant FTP. > Products manufactured/exported by a unit licensed as 100% EOU in terms of provisions of FTP or by any of the units situated in Free Trade Zones (FTZ)/Export processing Zones (EPZ)/ Special Economic Zones (SEZ). 2 Inclusion of exports made under these categories in RoDTEP scheme will be decided later. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy[Sr MRC Tie RS eid ue Ac} Objective 2 To facilitate import of capital goods for producing quality goods and services & enhance India's manufacturing competitiveness. 2 This scheme permits exporters to import capital goods (except specified goods) for pre-production, production and post-production at zero customs duty or procure them indigenously without paying duty. ‘2 Manufacturer exporters with or without supporting manufacturer(s), ‘> Merchant exporters tied to supporting manufacturer(s) & 2 Service providers including Common Service Provider (CSP) with given conditions. Eligible exporters Eligible capital | 2 Capital Goods including capital goods in CKD/SKD condition. goods > Computer systems & software which area part of Capital Goods being imported. > Spares, moulds, dies, jigs, fixtures, tools & refractories. > Catalysts for initial charge plus one subsequent charge. Applicability of | 2 Capital goods imported under EPCG Authorisation for physical exports are exempt \@sT & from IGST & Compensation Cess. compensation | 9 If IGST & compensation cess are paid in cash on imports under EPCG, its incidence Cess ‘would not be taken for computation ofnet duty saved provided, ITC is not availed Restricted 2 Restricted import items shall be permitted only after requisite approval under Import/ Export EPCG scheme. 2 If goods proposed to be exported under EPCG scheme are restricted for export, EPCG Authorisation shall be issued only after requisite approval for such issue. ‘Actual User Imported capital goods shall be subject to Actual User condition till export obligation is Condition completed & Export Obligation Discharge Certificate (EODC) is granted. > Authorisation shall be valid for import for 24 months from date of issue of Authorisation. 2 Revalidation of EPCG Authorisation shall not be permitted. Indigenous ‘ EPCG authorisation holder may source capital goods from a domestic manufacturer Sourcing of through Invalidation letter or Advance Release Order. Capital Goods & | > Such domestic manufacturer shall be eligible for deemed export benefits. benefits to 2 Such domestic sourcing shall also be permitted from EOUs. Domestic Supplier Export ‘> It means obligation to export products covered by Authorisation for quantity or value Obligation (EO) | or both prescribed by Regional or competent authority. 2 Import under EPCG scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes & cess saved on capital goods to be fulfilled in 6 years reckoned from date of issue of authorization > Import/procurement shall also be subjected to Average Export Obligation (AEO). CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy2 EO consists of average export obligation and specific export obligation:- a) | Average E0:- > It is the average level of exports made by applicant in preceding 3 licensing years for thesameand similar products. > It has to be achieved within the overall EO period (including extended period unless otherwise specified) > It shall be fulfilled every financial year, till £0 is completed. > Exports/ supplies made over fr above AEO shall only be considered for fulfilment of EO. b) | Specific E0:- > itis equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. > Specific EO is over & above the Average EO. DEO shall be fulfilled by authorisation holder through export of goods that are Conditions ed by 2 * * applicable to manufactured by him or his supporting manufacturer/ services rendered by him, for which the EPCG authorisation has been granted. fulfilment of | 5 epcg authorisation holder may export either directly or through third parties. Export > In case of indigenous sourcing of capital goods, Specific EO shall be 25% less than Obligation the EO mentioned above, i.e. EO will be 4.5 times (75% of 6 times) of duty saved on (Eo) such goods procured, whereas there shall be no change in average EO imposed, if any, > Exports under AA, DFIA, Duty Drawback, RoSCTL & RODTEP Schemes would also be eligible for fulfilment of £0 under EPCG Scheme. 2 Exports made from DTA units shall only be counted for calculation &/or fulfilment of AEO &/or EO. > EO can also be fulfilled by supply of Information Technology Agreement (ITA-1) items to DTA, provided realization is in free foreign exchange. > Both physical exports f specified deemed exports shall also be counted towards fulfilment of export obligation. Calculation 2 For direct imports, EO shall be reckoned with reference to actual duty/ Taxes /Cess of export saved amount. obligation > For domestic sourcing, EO shall be reckoned with reference to notional Customs (Eo) duty /Taxes/Cess saved on FOR value. Incentives for | 5 if Authorization holder has fulfilled 75% or more of specific EO & 100% of Average EO early fulfilling | till date, ifany, in halforless than halfthe original export obligation period specified, of EO > then remaining export obligation shall be eondoned & Authorization redeemed. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academy a[UA Bite Usk Introduction EOU stands for Export Oriented Unit scheme, EHTP stands for Electronics Hardware Technology Park scheme, STP stands for Software Technology Park scheme f BTP stands for Bio-Technology Park scheme. Eligibility > Units undertaking to export their entire production of goods & services (except permissible sales in DTA), may be set up under these schemes > for manufacture of goods, > including repair, remaking, 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. Objectives To promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation. Export & Iraport of goods > Units may exportall goods & services except items prohibited in ITC (HS). D These units may import/ procure all types of goods [except prohibited import items in ITC (HS)] required for its activities, without payment of BCD, additional duty u/s 3 of Customs Tariff Act), |GST & compensation cess, from:~ a) DTA, b) Bonded warehouses in DTA or ¢) international exhibition held in India. > Procurement of goods covered under GST from DTA would be on payment of applicable GST and compensation cess. > Units can also import goods including capital goods required for approved activity on aself-certification basis. 2 Goods imported by a unit shall be with actual user condition and shall be utilized for export production. Entitlement 2 State Trading regime shall not apply to EOU manufacturing units except for specified products. > Supplies from DTA to EOU/EHTP/STP/BTP units for use in their manufacture for exports will be eligible for “benefits under deemed exports”. > DTA supplier shall be eligible for relevant entitlements under deemed exports besides discharge of export obligation, if any, on the supplier. > Refund of GST paid on supply from DTA to EOU would be available to the supplier subject to specified conditions and documentations under GST law. > Reimbursement is available for CST applicable on goods manufactured in India Simple interest @ 6% p.a. will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application. > Exemption from payment of central excise duty on goods procured from DTA on such goods manufactured in India. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart AcademyOther > Exemption from industrial licensing for manufacture of items reserved for micro Entitlements and small enterprises > Export proceeds will be realized within 9 months. > Units can retain 100% of its export earnings in EEFC (Exchange Earners’ Foreign Currency) account. 2 No furnishing of bank guarantee at the time of import or going for job work in DTA, subject to fulfilment of specified conditions 2 100% FD1 investment permitted through automatic route similar to SEZ units. Net Foreign > EOU/EHTP/STP/BTP unit shall bea positive net foreign exchange earner. Exchange > Ahigher value addition & other conditions are also laid down. Earnings > NFE Earnings shall be calculated cumulatively in blocks of 5 years (extendible in specified cases), starting from commencement of production ‘Applications & Approvals/ Letter of Permission/ Intent & Legal 2 Application for setting up an EOU shall be considered by Unit Approval Committee (UAC) or Board of Approval (BoA). Undertaking:~ Investment > Projects with minimum investment of Rs.1 crore in plant & machinery shall be Criteria considered for establishment as EOUs 2 This shall not apply to existing units, units in EHTP/STP/BTP, & EOUs in handicrafts/ agriculture/ floriculture/aquaculture/ animal husbandry/ information technology, services, brass hardware and handmade jewellery sectors 2 BoA may allow establishment of EOUs with a lower investment criteria. Inter Unit ‘> Transfer of manufactured goods/ capital goods from one EOU/ EHTP/ STP/ BTP unit Transfer to another EQU / EHTP/ STP/ BTP unit is allowed on payment of applicable GST and compensation cess with prior intimation to concerned Development Commissioners of transferor and transferee units & concerned customs authorities. > Goods supplied by one unit to another unit shall be treated as imported goods for second unit for payment of duty, on DTA sale by second unit. Exit from 2 With approval of DC/Designated officer of EHTP/ STP/BTP, an EQU/ EHTP/ Scheme STP/ BTP unit may opt out of scheme. 2 Exit shall be subject to payment of applicable excise, customs duties, IGST/ C@ST/ SGST/ UTGST & compensation cess & industrial policy in force > Ifunit has not achieved obligations, penalty is leviable at time of exit. Conversion > Existing DTA units may apply for conversion into EOU/EHTP/STP/BTP unit. 2 Existing EHTP/STP units may apply for conversion to EOU unit & vice-versa. 3 In such cases, units will avail exemptions in applicablein duties & taxes. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart AcademyPre eaee Meaning For the purpose of FTP:~ > In deemed exports, goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. 2 Supply of goods as specified in FTP shall be regarded as “Deemed Exports” provided goods are manufactured in India. For the purpose of GST (Not relevant in this chapter) ‘2 It would include only the supplies notified u/s 147 of CGST/SGST Act. 2 Benefits of GST & its conditions would be specified by GST Council as per rules & notification. Scope (3 areas ) Supplies to domestic entities who can import their requirements duty freeor at covered) reduced rates of duty. b) Supplies to projects/ purposes that involve international competitive bidding. ¢) Supplies to infrastructure projects of national importance Catefories °f | { supply by Manufacturer | Supply by main/sub-contractor(s) Supplies considered as _|| Supply of goods against, Supply of goods to projects or turnkey contracts Deemed exports || AA/ AAfor annual financed by multilateral or bilateral agencies/ Funds Requirement / DFIA notified by Department of Economic Affairs (DEA), under International Competitive Bidding (\CB). Supply of goods to units | Supply of goods to any project or for any purpose located in EOU/ STP/ EHTP/ |where import is permitted at zero BCD, provided BrP supply is made against International Competitive Bidding, Supply of capital goods Supply of goods to mega power projects. ‘inst EPC! ith ti against EPCG authorisation [ly to goods to UN or international organisations for their official use or supplied to projects financed bythem. Supply of goods to nuclear projects through national/ international competitive bidding. Benefits for Deemed exports Deemed exports shall be eligible for following benefits for manufacture & supply of goods, qualifying as deemed exports, subject to specified conditions:~ a. AA/ AA for Annual requirement/ DFIA, b. Deemed Export Drawback:~ Refund of drawback on inputs used in manufacture & supply under deemed exports can be claimed on ‘All Industry Rate’ of Duty Drawback Schedule, provided no CENVAT credit is availed by supplier of goods on excisable inputs or on ‘Brand rate basis’ upon submission of documents evidencing actual payment of basic custom duties. c. Refund of terminal excise duty for specified excisable goods:~ Supply of goods will be eligible for refund of terminal excise duty, provided recipient CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academydoes not avail CENVAT credit/rebate on such goods & supply is eligible under deemed exports. Common conditions for deemed export benefits a. Supplies shall be made directly to entities listed above & third party supply shall not be eligible for benefits/ exemption. b. In all cases, supplies shall be made directly to designated Projects/ Units /Agencies/ AA/ EPCG Authorisation holder. Sub-contractors may supply 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. ©) Supply of domestically manufactured goods by an Indian Subcontractor to any Indian or foreign main contractor, directly at the designated project's/ Agency's site, shall also be eligible for deemed export benefit. CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V'Smart Academyra CAVISHAL BHATTAD (© 09850850800 www.vsmartacademy.com V’Smart Academy