| Advance Authorisation
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4.1.3 |
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.
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Duty free import of mandatory spares upto 1 0% 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. |
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Advance Authorisation can be issued either to a manufacturer
exporter or merchant exporter tied to supporting manufacturer(s) for:
i) Physical exports (including exports to SEZ); and/ or
ii) Intermediate supplies; and /or
iii) Supply of goods to the categories mentioned in paragraph 8 .2 (b),
(c), (d), (e), (f), (g), (i) and (j) of FTP ;
iv) supply of ‘stores’ on board of foreign going vessel/ aircraft
subject to condition that there is specific SION in respect of item(s)
supplied. |
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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 subcontractor(s) appears in main contract. |
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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 which are paid for in free foreign
exchange. |
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However, Advance Authorization for import of raw sugar, can be
issued either to a manufacturer exporter or merchant exporter tied to
supporting manufacturer(s). Exports can
also be made by procurement of white sugar from any other factory(ies).
This provision shall be applicable for exports from 17.2.2009. |
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4.1.4 |
Advance Authorisations are exempted from payment of basic customs
duty, additional customs duty, education cess, anti- dumping duty and
safeguard duty, if any. However, imports for supplies covered under
paragraph 8.2 (h) & (i) will not be exempted from payment of
applicable anti-dumping and safeguard duty, if any. |
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4.1.5 |
Advance Authorisation and / or materials imported thereunder 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. In case where CENVAT credit facility on
inputs have been availed for the exported goods, even after completion
of export obligation, the goods imported against Advance Authorisation
shall be utilized only in the manufacture of dutiable goods whether
within the same factory or outside (by a supporting manufacturer), for
which the authorisation holder shall produce a certificate from either
the jurisdictional Central Excise Supdt. or Chartered Accountant, at the
option of the exporter, at the time of filing application for EODC to RA
concerned. However, the actual user condition shall not be applicable in
case of raw sugar to be imported from 17.2.2009, till 3 0.09.2009 under
Advance Authorization Scheme.
Further the manufacturing wastes/scrap, as allowed, can be disposed off
with the payment of applicable duty before fulfilment of export
obligation. |
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4.1.6 |
Advance Authorisation necessitates exports with a minimum value
addition of 15%, except for items specified in Appendix 11B of HBP v1
and for items in Gems & Jewellery Sector, for which value addition would
be as per paragraph 4A.2.1 of HBP v1.
(This para amended by DGFT NOTIFICATION No.31/2009-14,
Dated : 16th,February 2010.)
[Old - Advance Authorisations necessitate exports with a minimum value
addition of 15 %, except for items in Gems & Jewellery sector, for which
value addition would be as per paragraph 4 A.2.1 of HBP v.1. Exports to
SEZ Units/ supplies to Developers / Co-Developers, irrespective of
currency of realization, would also be covered. ] |
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For physical exports for which payments are not received in freely
convertible currency, same shall be subject to value addition as
specified in Appendix-11 of HBP v1. |
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In case of Authorisation for import of Tea, minimum value addition
under Advance Authorisation shall be 50%. |
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Similarly, in case of spices {covered by Chapter 9 of ITC(HS)}, duty
free import of spices shall be permitted only for value addition
purposes like crushing / grinding /sterilization or for manufacture of
oils and oleoresins and not for simple cleaning, grading, re-packing
etc. |
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4.1.7 |
Advance Authorisation shall be issued in accordance with Policy and
procedure in force on Authorisation issue date. |
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Validity period of Advance Authorisation for import shall be as
prescribed in HBP v1. |
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| Free of Cost
Supply by Foreign Buyer |
4.1.8 |
Facility of Advance Authorisation shall also be available where some
or all inputs are supplied free of cost to exporter by foreign buyer.
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In such cases, for calculation of value addition, notional value of
free of cost inputs along with value of other dutyfree inputs shall be
taken into consideration. However, if all inputs are supplied free of
cost, exporter shall also have option to follow provision prescribed by
DoR. |
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| Export Obligation |
4.1.9 |
Period for fulfillment of export obligation under Advance
Authorisation shall be as prescribed in HBP v1. |
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| Provision for BIFR units |
4.1.9 |
Any firm / company registered with BIFR or any firm/ company
acquiring a unit, which is under BIFR shall be allowed Export Obligation
Period (EOP) extension as per rehabilitation package prepared, subject
to approval of BIFR or 5 years if not specified, without payment of
composition fee. |
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Above provisions apply also to SSI units as per rehabilitation
scheme of concerned State government. |
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| Advance
Authorisation for Annual Requirement |
4.1.10 |
Advance Authorisation can also be issued for annual requirement. |
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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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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 licensing year or Rs 1 crore, whichever is higher. |
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Advance Release Orders (ARO) and Invalidation Letter
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4.1.11 |
Holder of Advance Authorisation, Advance Authorisation for Annual
Requirement and Duty Free
Import Authorisation intending to source inputs from indigenous sources
/ State Trading Enterprises, in lieu of direct import, has option to
source them either against Advance Release Order (ARO) or Invalidation
letter denominated in free foreign exchange / Indian rupees.However,
supplies may be obtained against Authorisation from EOU / EHTP / BTP /
STP / SEZ units, without conversion into ARO or Invalidation letter. |
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Transferee of DFIA shall also be eligible for ARO /invalidation
letter facility. |
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Validity period of ARO shall be as prescribed in HBP v1. |
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| Back-to-Back Inland
Letter of Credit |
4.1.12 |
Holder of Advance Authorisation, Advance Authorisation for Annual
Requirement and DFIA may, instead of applying for an ARO or Invalidation
letter, avail of the facility of Back-to-Back Inland Letter of Credit in
accordance with procedure specified in HBP v1. |
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| Prohibited Items |
4.1.13 |
Prohibited items of imports mentioned in ITC(HS) shall not be
imported under Advance Authorisation / DFIA.Further 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. |
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STEs are also allowed to sell goods on High Sea Sale basis to
holders of Advance Authorisation / DFIA holder. |
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In addition, STEs are 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 administrative Department
for monitoring with a copy endorsed to DGFT. |
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Similarly prohibited items of exports mentioned in ITC(HS) shall not
be exported under Advance Authorisation / DFIA scheme. Export of
restricted items shall be subject to all conditionalities or
requirements of Export Authorisation or permission, as may be required,
under Schedule II of ITC (HS). |
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| Admissibility of Drawback
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4.1.14 |
In case of an Advance Authorisation, drawback shall be available
for any duty paid material, whether imported or indigenous, used in
goods exported, as per drawback rate fixed by DoR, Ministry of Finance
(Directorate of Drawback). Drawback allowed shall be mentioned in
Authorisation. |
| Scheme |
4.2.1 |
DFIA is issued to allow duty free import of inputs, fuel,oil, energy
sources, catalyst which are required for production of export product.
DGFT, by means of Public Notice, may exclude any product(s) from purview
of DFIA. This scheme is in force from 1st May, 2006. |
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| Entitlement |
4.4.2 |
Provisions of paragraph 4 .1.3 shall be applicable in case of DFIA.
However, these Authorisations shall be issued only for products for
which Standard Input and Output Norms (SION) have been notified. |
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In case of post export DFIA, a merchant exporter shall be required
to mention only name(s) and address(s) of manufacturer(s) of the export
product(s). Applicant is required to file application to concerned RA
before effecting exports under DFIA. |
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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. |
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In case of actual user DFIA and where CENVAT credit facility on
inputs have been availed for the exported goods, even after completion
of export obligation, the goods imported against such DFIA shall be
utilized in the manufacture of dutiable goods whether within the same
factory or outside (by a supporting manufacturer). |
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| Import items |
4.2.3 |
Provisions of paragraphs 4 .1.11 , 4 .1.12, 4 .1.13 and 4 .1.14 of
FTP shall be applicable for DFIA holder. |
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| Value Addition |
4.2.4 |
A minimum 2 0% value addition shall be required for issuance of such
authorisation, except for items in gems and jewellery sector, for which
value addition would be as per paragraph 4 A.2.1 of HBP v1. Items for
which higher value addition is prescribed under Advance Authorisation
Scheme, shall be applicable. |
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| Export Obligation
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4.2.5 |
Procedure and time period related to fulfillment of Export
Obligation have been laid down in Chapter 4 of HBP v1. |
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| Transferability |
4.2.6 |
Once export obligation has been fulfilled, request for
transferability of Authorisation or inputs imported against it may be
made before concerned RA. Once, transferability is endorsed,
Authorisation holder may transfer DFIA or duty free inputs, except fuel
and any other item(s) notified by DGFT. However, for fuel, import
entitlement may be transferred only to companies which have been granted
authorisation to market fuel by Ministry of Petroleum and Natural Gas. |
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Once transferability is endorsed, imports / domestic procurement
against authorisation or transfer of imported inputs / domestically
procured inputs shall be subject to payment of applicable additional
customs duty / excise duty. While endorsing transferability,
authorisation would bear a note as to liability of such additional
customs duty / excise duty. However, in case where CENVAT facility has
not been availed, exemption from additional customs duty/ excise duty
would be available even after endorsement of transferability on DFIA. |
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Wherever SIONs prescribe actual user condition and in case of Acetic
Anhydride, Ephedrine and Pseudo-Ephedrine, DFIA shall be issued with
actual user condition for these inputs and no transferability shall be
allowed for these inputs even after fulfillment of export obligation. |
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However, for authorizations issued prior to 1 .4.2007,exemption from
Additional Customs Duty/ Excise Duty shall continue to be available even
after endorsement of transferability as provided in FTP (RE-2006). |
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| CENVAT Facility
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4.2.7 |
CENVAT credit facility shall be available for inputs either imported
or procured indigenously. |
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| Duty Entitlement
Passbook Scheme |
4.3 |
Objective of DEPB is to neutralise incidence of customs duty on
import content of export product. Component of customs duty on fuel
(appearing as consumable in the SION) shall also be factored in the DEPB
rate. Component of Special Additional Duty shall also be allowed under
DEPB (as brand rate) in case of non-availment of CENVAT credit.
Neutralisation shall be provided by way of grant of duty credit against
export product. |
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4.3.1 |
An exporter may apply for credit, at specified percentage of FOB
value of exports, made in freely convertible currency. In case of supply
by a DTA unit to a SEZ unit/SEZ Developer/Co-Developer, an exporter may
apply for credit for exports made in freely convertible currency or
payment made from foreign currency account of SEZ Unit/SEZ
Developer/Co-Developer. In addition, the exporter shall also be entitled
for DEPB benefit in case payment is made in Indian Rupees by SEZ
Developer/Co-Developer for supplies received w.e.f 10.2.2006.
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Credit shall be available against such export products and at such
rates as may be specified by DGFT by way of public notice. Credit may be
utilized for payment of Customs Duty on freely importable items and/or
restricted items. 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 issued under Chapters 4 and 5 of this Policy.
However,penalty / interest shall be required to be paid in cash. |
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Prohibited items of exports mentioned in ITC(HS) Book (as amended
from time to time) shall not be entitled for DEPB credit except for the
exports effected under transitional facility, wherever allowed, in terms
of paragraph 1.5 of FTP. |
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4.3.2 |
DEPB holder shall have option to pay additional customs duty in cash
as well. |
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| Validity |
4.3.3 |
Validity period of DEPB for import shall be as prescribed in HBP v1. |
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Transferability |
4.3.4 |
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. Imports from a port
other than the port of export shall be allowed under TRA facility as per
terms and conditions of DoR notification. |
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| Applicability
of Drawback |
4.3.5 |
Additional customs duty / Excise Duty and Special Drawback
Additional Duty paid in cash or through debit under DEPB may also be
adjusted as CENVAT Credit or Duty Drawback as per DoR rules. |
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| Scheme for Gems
and Jewellery |
4A |
Exporters of gems and Jewellery can import / procure and duty free
inputs for manufacturing. |
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Replenishment Authorisations |
4A.1 |
Exporters may obtain Replenishment (REP) Authorisations from RA in
accordance with procedure specified in HBP v1. |
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4A.1.1 |
Replenishment authorisation may also be issued for consumables &
tools as per paragraph 4A.28 of HBP v1. |
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Import of Diamonds for
Certification/ Grading & re-export |
4A.2 |
The authorized offices/agencies in India of Gemological & Institute
of America (GIA) or any other agency approved in this regard, shall be
permitted to import diamonds to their laboratories for the purpose of
certification/grading reports by them with a condition that the same
should be re-exported with the certification/grading reports issued by
them without any import duty, as per the procedure laid down in HBP v1. |
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Schemes for Gold/
Silver/ Platinum
Jewellery |
4A.3 |
Exporters of gold / silver / platinum jewellery and
articles thereof
Silver / Platinum may import their essential inputs such as gold, silver,
platinum,
Jewellery mountings, findings, rough gems, precious and semi-precious stones,synthetic stones and unprocessed pearls etc. in accordance with
the procedure specified in this behalf. |
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| Nominated
Agencies |
4A.4 |
Nominated agencies are MMTC Ltd, Handicraft and Handloom Export
Corporation (HHEC), State
Trading Corporation (STC), the Project and Equipment Corporation (PEC)
of India Ltd, STCL Ltd, MSTC Ltd, Diamond India Limited (DIL), Gems &
Jewellery Export Promotion Council (G&J EPC)), Star Trading House (only
for Gems & Jewellery sector) and Premier Trading House under Paragraph 3
.10.2 of FTP and any other agency authorised by RBI. Exporters (except
EOUs and units in SEZ) may obtain gold / silver / platinum from
nominated agency(s). |
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Procedure for import of precious metal by these agencies (other than
those authorized by RBI 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 HBP v1 in this regard. |
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A bank authorised by RBI is allowed export of gold scrap for
refining and import standard gold bars as per RBI guidelines. |
| Items of Export |
4A.5 |
Following items, if exported, would be eligible for facilities:
(a) 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;
(b) 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;
(c) Platinum jewellery including partly processed jewellery and articles
including medallions and coins (excluding legal tender coins and any
engineering goods) containing more than 5 0% platinum by weight. |
| Value Addition |
4A.6 |
Value Addition (VA) for gems and jewellery sector shall be
as per
paragraph 4A.2.1 of HBP v1. 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 basis,
value shall also include interest paid in free foreign exchange to foreign
supplier. |
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| Wastage Norms |
4A.7 |
Wastage or manufacturing loss for gold / silver / platinum jewellery
shall be admissible as per paragraph 4 A.2 of HBP v1. |
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Export against Supply
by Foreign Buyer |
4A.8 |
Where export orders are placed on nominated agencies
/ status
by holder / exporters of three years standing having an annual
average turnover of Rs. Five Crores during preceding three licensing 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. |
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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 of 1 0%. However,
if so imported semi finished gold / silver /platinum jewellery is
exported as studded jewellery, value addition of 15 % shall be achieved.
In such cases of export, wastage of 2 % may be permitted. |
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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. |
Export Against Supply
by Nominated Agencies |
4A.9 |
Exporter may obtain gold / silver / platinum as an input for export
products from nominated agencies in advance or as replenishment after
exports in accordance with specified procedure. |
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Export Against
Advance
Authorisation |
4A.10 |
An Advance Authorisation may be granted for duty free import of:
(a) Gold of fineness not less than 0.995 and mountings, sockets, frames
and findings of 8 carats and above;
(b) Silver of fineness not less than 0.995 and mountings,sockets, frames
and findings containing more than 50% silver by weight;
(c) Platinum of fineness not less than 0.900 and mountings, sockets,
frames and findings containing more than 50% platinum by weight. |
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4A.11 |
Such authorisations shall carry an export obligation to be fulfilled
as per procedure specified in paragraph 4A of HBP v1. Value addition
shall be as per paragraph 4 A.2.1 of HBP v.1. |
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Advance Authorisation holder may obtain gold / silver/platinum from
nominated agencies in lieu of direct import. |
| Gem
Replenishment Authorisation |
4A.12 |
Gem Replenishment (Gem & Jewellery REP) Authorisation may be issued
as given in paragraph 4 A.8,4A.9 and 4A.10 above. |
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In case of plain or studded gold / silver / platinum jewellery and
articles, value of such Authorisations shall be determined with
reference to realisation in excess of prescribed minimum VA. |
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Such Gem REP Authorisations shall be freely transferable. |
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| Gem REP Rate
and Item |
4A.13 |
Replenishment Rate and item of import will be as prescribed in
Appendix 12B of HBP v1. |
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Export
Promotion
Tours/Export of
Branded Jewellery |
4A.14 |
Nominated agencies and their associates, with the approval of
Department of Commerce, and others, with the approval of Gem & Jewellery
EPC (GJEPC), may export gold / silver / platinum jewellery and articles
thereof for exhibitions abroad. |
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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 HBP v1. |
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Personal Carriage
of
Export / Import Parcels |
4A.15 |
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 in HBP v1. |
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| Export by Post
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4A.16 |
In case of exports through Foreign Post Office (including via Speed
Post), value of jewellery parcels shall not exceed US$ 75000 and 20 kg.
by weight. |
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Diamond & Jewellery
Dollar Accounts
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4A.17 |
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 diamonds / coloured
gemstones/ diamond and coloured gemstones studded jewellery / plain gold
jewellery, and having an average annual turnover of Rs. 3 crores or
above during preceding three licensing years, may also carry out their
business through designated Diamond Dollar Accounts (DDA). |
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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 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. |
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4A.18 |
Gems and Jewellery exporters shall be allowed to export cut and
polished precious and semi-precious stones forthe 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. |
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Re-import of rejected
jewellery |
4A.19 |
Gems & Jewellery exporters shall be allowed to re-import rejected
precious metal jewellery as per para 4 A.32 of HBP v1. |
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Export on
consignment
basis |
4A.20. |
Gems & Jewellery exporters shall be allowed to export diamond,
gemstones & jewellery on consignment basis as per HBP v1 and Customs
rules and regulations. |
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