Foreign Trade Policy, Chapter-4 Duty Exemption & Remission Schemes.

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 to obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation.

Duty free import of mandatory spares upto 10% of CIF value of Authorisation which are required to be exported / supplied with resultant product are allowed under Advance Authorisation.

Advance Authorisations are issued for inputs and export items given under SION. These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of HBP v1.

Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for:

1. Physical exports (including exports to SEZ); and/ or
2. Intermediate supplies; and /or
3. supply of goods to the categories mentioned in paragraph 8.2 (b), (c), (d), (e), (f), (g), (i) and (j) of FTP;
4. supply of ‘stores’ on board of foreign going vessel / aircraft subject to condition that there is specific SION in respect of item(s) supplied.

In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d), (e), (f), (g) and (j) of FTP, an Advance Authorisation can also be availed by sub-contractor to such project provided name of sub contractor(s) appears in main contract.

Such Authorisation can also be issued for supplies made to United Nations Organisations or under Aid Programme of the United Nations or other multilateral agencies and paid for in free foreign exchange.

Following items, if exported, would be eligible for facilities:

1. 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;
2. 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;
3. 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.

An Advance Authorisation may be granted for duty free import of:

1. Gold of fineness not less than 0.995 and mountings, sockets, frames and findings of 8 carats and above;
2. Silver of fineness not less than 0.995 and mountings, sockets, frames and findings containing more than 50% silver by weight;
3. Platinum of fineness not less than 0.900 and mountings, sockets, frames and findings containing more than 50% platinum by weight.

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 3 years in import or export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs. 5 crore or above during preceding three licensing years may also carry out their business through designated Diamond Dollar Accounts (DDA).

Dollars in such accounts available from bank finance and / or export proceeds shall be used only for

1. Import / purchase of rough diamonds from overseas / local sources;
2. Purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources;
3. Import / purchase of gold from overseas / nominated agencies and repayment of dollar loans from the bank; and
4. Transfer to Rupee Account of exporter. Details of this DDA Scheme are given in HBP v1.

A non DDA holder is also permitted to supply cut and polished diamonds to DDA holder, receive payment in dollars and convert 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.

1. 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. (This Para 4A.20.1 has been amended by  DGFT NOTIFICATION No.:19/2007 Dated:30-07-2007.)

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1. Gems & Jewellery exporters shall be allowed to export cut and polished precious and semi-precious stones for treatment and re-import without payment of Customs duty as per customs rules and regulations and subject to condition that exporter shall declare at the time of shipment:
2. nature of treatment on cut and polished precious and semi-precious stones ; and
3. likely change of such stones after treatment.

1. Re-importation would be allowed from the same port from where stones were exported for treatment. On re-importation, customs authority shall cross verify the details with the export documents. A maximum time period of 120 days shall be allowed for re-import.
   
   However in case treated precious stones or semi-precious stones are meant for domestic consumption, re-imported consignment shall be allowed by Customs on payment of duty on fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges, both ways.
2. Imported items shall be re-exported. ]