PRODUCTS ELIGIBLE TO BE IMPORTED DUTY-FREE

Advance authorization licenses the exporter to import raw materials with exempted duties. Chapter 9 of FTP, 9.44 defines raw material as an input(s) required for the manufacturing of goods. These inputs can either be considered as raw/natural/unrefined/unmanufactured or manufactured state.

List of items eligible to be imported without payment of duty under the scheme:

·         Physically incorporated inputs that have to be exported after making a normal allowance for wastage.

·         Fuel, oil, catalyst consumed/ utilized for acquiring the export product.

·         Spare that are mandatory to be exported along with the export product- up to 10% of the CIF value (Cost, Insurance, and Freight) of Authorisation.

·         Spices that are specified to be allowed for a duty-free import, only to be utilized in activities like crushing, grinding, sterilization, manufacture of oil or oleoresin and not for simpler activities like cleaning, grading, re-packing, etc.

WHAT ARE THE DUTIES EXEMPTED UNDER THE ADVANCE AUTHORISATION SCHEME?

Beneath the Advance License, imports are exempted from payment of:

·         Basic Customs Duty (BCD)

·         Additional Customs Duty

·         Education Cess

·         Anti-dumping Duty

·         Countervailing Duty

·         Safeguard Duty

·         Transition Product Specific Safeguard Duty, wherever applicable.

ADVANCE LICENSE FOR DEEMED EXPORTS

Deemed Exports is a term used to define the supply of finished goods that do not leave the country, and transactions for payment can be either in INR or foreign exchange.

These are the supplies that are categorized under Deemed Exports:

·         Supply of goods to EOU/ STP /EHTP /BTP units.

·         Supply of goods against Advance Authorisation/ Advance for annual requirement/ DFIA

·         Supply of Capital Goods/ Machinery against EPCG Authorisation.

·         Supply to other projects that are Government Funded.

The application for an Advance License for Deemed Exports can be placed in the DGFT office.

WHAT ARE STANDARD INPUT-OUTPUT NORMS?

The DGFT issued the Standard Input-Output Norms (SION) with an aim to determine the number of inputs required for the production of a unit of output to be exported.

This method has pre-fixed norms for thousands of products of different segments such as Chemical and allied products, Electronics, Engineering, Food products, Handicrafts, Leather, Plastics, Sports, textile, etc.

WHAT IS THE APPLICANT SPECIFIC-PRIOR FIXATION NORMS?

After getting the norms rectified by the Norms Committee the DGFT will provide the applicant an Advance License on the basis of the fixed norms. Except for this, the entire process remains the same.

SELF- RATIFICATION ADVANCE AUTHORISATION SCHEME

The DGFT instituted this scheme for the smooth functioning of business procedures. Under the Self -Ratification Advance Authorisation Scheme an Advance License is provided by the DGFT based on self-declaration without any direct involvement of the Norms Committee in Delhi for ratification of the norms. These are assumed to be self-ratified, thus, no further questioning is done. However, the eligibility of exporters under this method is limited, there are a few conditions to be adhered to by the exporters:

·         Only the exporter having an AEO (Authorised Economic Operator) can apply under this scheme.

·         The scheme isn’t available for all the export products mentioned in Chapters 1-24 and Chapter 71 of ITC HS, etc.

·         Before exporting, inputs must be imported and incorporated physically in the export product.

·         An audit may be held by the DGFT or the authority.

·         If the audit finds any misdeclaration or it’s found that the claimed inputs aren’t involved/utilized in the manufacturing process or excess quantity consumed is falsely mentioned, demand and recovery actions will be initiated.