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A

report on

Duty Exemption / Remission Schemes&

Export Promotion Capital Goods Scheme(Foreign Trade Policy)

Submitted to: Submitted by:

Mrs. Shikha Sharma Abhishek Gomber

Adi Narayan Reddy

Abdulla Urfi

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Index

1. Duty Exemption Schemes

Advance Authorisation Scheme

Duty Free Import Authorisation

2. Duty Remission Scheme

Duty Entitlement Scheme

Duty Drawback Scheme

3. Export Promotion Capital Goods Scheme

4. Foreign Trade Policy 2009-2014

5. Conclusion and Suggestions

Bibliography

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Duty Exemption Schemes

Advance Authorisation Duty Free Import

Scheme Authorisation

Duty Remission Schemes

Duty Entitlement Duty Drawback

Scheme Scheme

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Advance Authorisation Scheme:

An Advance Authorisation is issued to allow duty free import of inputs, which

are physically incorporated in export product (making normal allowance for

wastage). In addition, fuel, oil, energy, catalysts which are consumed/ utilised toobtain export product, may also be allowed.

Advance License is issued under Duty Exemption Scheme to allow import of

inputs, which are physically incorporated in the export product

Advance License are issued for Physical exports, Intermediate supplies and

Deemed exports

In order to ensure proper monitoring and utilization of inputs imported against

Advance License (except Advance License for deemed exports), a Duty

Entitlement Exemption Certificate (DEEC) Book is issued along with the

Advance License by DGFT authorities. At the time of import and export against

Advance License, entries are made in the DEEC Book by Customs to keep

record of the import/export made against it. After completion of export

obligation and imports against the Advance License, the DEEC book, Advance

License and relevant export/import documents are submitted to Customs for

logging (reconciling) of DEEC Book. Thereafter the Advance License, DEEC

book and export/import documents are submitted to DGFT authorities for issue

of export obligation (EO) discharge certificate. On the basis of EO discharge

certificate issued by DGFT, redemption of bond/B.G. filed by the Advance

License holder with Customs is allowed.

Advance Authorizations are exempted from payment of basic customs duty,

additional customs duty, education cess, anti- dumping duty and safeguard duty,

if any.

Advance Authorisation and / or materials imported there under will be with

actual user condition. It will not be transferable even after completion of export

obligation.

However, Authorisation holder will have option to dispose off product

manufactured out of duty free inputs once export obligation is completed.

Status Certificate holder and all other categories of exporters having past export

performance (in preceding two years) shall be entitled for Advance

Authorisation for Annual Requirement.

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Duty Free Import Authorisation (DFIA):

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources,catalyst which are required for production of export product.

Pre-export Authorisation shall be issued with actual user condition and shall be

exempted from payment of basic customs duty, additional customs duty / excise

duty, education cess, anti-dumping duty and safeguard duty, if any.

The Authorisation shall be issued on the basis of inputs and export items given

under Standard Input and Output Norms (SION). The import entitlement shall

be limited to the quantity mentioned in SION.

Such Authorisation can be issued either to a manufacturer exporter or merchantexporter tied to supporting manufacturer(s)

A minimum 20% value addition shall be required for issuance of such

Authorisation

DFIA Advance Authorisation Scheme

Transferability Conditional Actual User Clause

Value Addition Minimum 20% Positive Value Addition

Basis of Application Only SION Based SION or Self Declared Basis

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Duty Entitlement Passbook Scheme (DEPB):

The objective of Duty Entitlement Pass Book (DEPB) is to neutralise the

incidence of Customs duty on the import content of the export product. The

neutralisation shall be provided by way of grant of duty credit against the export

product. DEPB Scrips can also be utilized for payment of duty against imports

under EPCG Scheme. Further, DEPB Scrips can also be used / debited towards

payment of Customs Duty in case of EO defaults for Authorizations. DEPB and

/ or items imported against it are freely transferable. Transfer of DEPB shall

however be for import at specified port, which shall be the port from where

exports have been made.

The normal validity period of a DEPB Scrip is 12 months and DGFT authority.

These scrips are for a certain amount of DEPB credit and can be utilized for

adjusting Customs Duties against import of any products into India, without the

necessity of any co-relation between the export product and the import goods,

i.e. it is not necessary to import only the relevant inputs corresponding to the

export product.

Commissioners of Customs have, however, been empowered to permit

import/export under the scheme from any other place which has not beennotified, on case to case basis. The DEPB and/or the items imported against it

are freely transferable.

No duty drawback is allowed on exports made under DEPB Scheme.

DEPB rates are finalized by the DEPB Committee, chaired by Additional DGFT

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Export Promotion Capital Goods Scheme (EPCG):

The scheme is available for exporters of engineering & electronic products,

basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts,

chemicals & allied products and leather & leather products; Concessional 3 %

duty EPCG scheme allows import of EPCG Scheme capital goods for pre

production, production and post production at 3 % Customs duty, subject to an

export obligation equivalent to 8 times of duty saved on capital goods imported

under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization

issue date.

In case of agro units, and units in cottage or tiny sector, import of capital goods

at 3 % Customs duty shall be allowed subject to fulfillment of export obligation

equivalent to 6 times of duty saved on capital goods imported, in 12 years from

Authorization issue-date.

For SSI units, import of capital goods at 3 % Customs duty shall be allowed,

subject to fulfillment of export obligation equivalent to 6 times of duty saved on

capital goods, in 8 years from Authorization issue-date, provided the landed cif

value of such imported capital goods under the scheme does not exceed Rs. 5 0

lakhs and total investment in plant and machinery after such imports does not

exceed SSI limit. However, in respect of EPCG Authorization with a duty saved

amount of Rs. 1 00 crores or more, export obligation

shall be fulfilled in 12 years.

Where the license holder is certified as a superstar trading house, star

trading house, etc. by DGFT.

In such cases, a mere bond is sufficient.

Capital goods imported under EPCG Scheme are subject to actual user

condition and the same cannot be transferred/sold till the fulfillment of export

obligation specified in the license. In order to ensure that the capital goods

imported under EPCG Scheme are utilized in the manufacture of resultant

export product, after importation/clearance of capital goods from Customs, the

license holder is required to produce certificate from the jurisdictional Central

Excise Authority(CEA) or Chartered Engineer(CE) confirming installation ofsuch capital goods in the declared premises.

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The normal validity period of EPCG license is 24 months and DGFT authority

(who issues the license) is empowered to grant further revalidation. In order to

ensure proper accountable of fulfillment of export obligation, the EPCG license

holder is required to indicate the EPCG license

In cases where the EPCG License holder is unable to maintain the specified

level of year wise/block wise EO or overall EO., extension of year wise / block

wise EO period upto a maximum of 1 year/block is allowed by DGFT

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Foreign Trade Policy 2009-2014

Technological up gradation, EPCG relaxation, DEPB:

EPCG Scheme at Zero Duty for engineering & electronic products, basic

chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, and

leather. Not available for current beneficiaries of other schemes like TUFS, or

Status Holder scheme.

To increase the life of existing plant and machinery, export obligation on

import of spares, moulds under the EPCG Scheme has been reduced to 50% of

the normal specific export obligation.

Taking into account the decline in exports, the facility of Re-fixation of

Annual Average Export Obligation for a particular financial year in which

there is decline in exports from the country has been extended for the 5-year

policy period 2009-14.

To accelerate exports, additional Duty Credit scrips shall be given to status

holders @ 1% of the FOB value of past exports. The Duty Credit scrips can be

used for procurement of capital goods. This facility were available till March

31, 2011.

Stability/continuity of the Foreign Trade Policy:

To impart stability to the policy regime, the Duty Entitlement Passbook (DEPB)

Scheme were extended by a year till December 31, 2010. The interest

subvention of 2% for pre-shipment credit for 7 sectors extended till March 31,

2010 in Budget 2009.

DEPB rate shall also include factoring of custom duty component on fuel where

fuel is allowed as a consumable in Standard Input-Output Norms.

Income Tax exemption to 100% EOUs and to STPI units under Section 10B and

10A of IT Act has been extended for the financial year 2010-11 in Budget 2009-

10.

The adjustment assistance scheme initiated in December, 2008 to provide

enhanced ECGC cover at 95% to the adversely affected sectors is continued till

March 2010.

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Concession for the marine sector:

Fisheries have been included in the sectors which are exempted from

maintenance of average export obligations under the EPCG Scheme. Fishing

trawlers, boats, ships and other similar items shall not be allowed to be imported

under this provision.

Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate

of Entitlement (DFCE) Scheme for status holders has been given to marine

sector.

Concession for Gems & Jewellery sector:

To neutralise duty incidence on gold jewellery exports, the policy allows duty

drawback on these. To make India a diamond international trading hub, it is

planned to establish Diamond Bourses, The first one has come up in

Mumbai.

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Conclusion and Suggestion

Flexibility provided to exporters:

Payment of customs duty for export obligation shortfall under Advance

Authorisation / DFIA / EPCG Authorisation has been allowed by way of debit

of Duty Credit scrips.

The payment was allowed in cash only.

Import of restricted items, as replenishment, should be allowed against

transferred DFIAs. Time limit of 60 days for re-import of exported gems and

jewellery items for participation in exhibitions should be extended to 90 days in

case of USA.

The Export Promotion Schemes should have a correct time period. Once it is

applied, it should not be changed before time.

The Export Promotion Schemes should not be written off before time, nor they

should be extended if they are meant to be written off.

Conferences and Seminars should be organized to create awareness in

Exporters

The bank loan should be provided easily to the Exporter and at low interestrates. So that the bank loan does not becomes burden for Exporter.

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Bibliography

Internet Sources:-

1 www.google.com

2 www.wekipedia.org

3 www.DGFT.gov.in

Other Sources:-

1 Ministry of Commerce and Trade

2 Federation of Chamber Commerce & Industry (FICCI)

3 Directorate General of Foreign Trade (DGFT)

http://www.google.com/http://www.google.com/http://www.wekipedia.org/http://www.wekipedia.org/http://www.dgft.gov.in/http://www.dgft.gov.in/http://www.dgft.gov.in/http://www.wekipedia.org/http://www.google.com/

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