MJ & Associates

RoDTEP, Duty Exemption & Drawback Schemes for Raw Materials

Remission of Duties or Taxes on Export Product :
Remission of Duties or Taxes on Export Product (RoDTEP) scheme was announced by the Government of India on 14th September, 2019 to bosst Exports by allowing reimbursement of taxes and duties, which are exempted or refunded under scheme of World Trade Organization. It is basically to replace the existing Merchandising Exports from India Scheme (MEIS) and subsumed the taxes and levies on exported goods. It will be WTO compliant scheme. The rates and the modalities etc. is yet to come and this scheme will be effective from 01.01.2021. To get a regular update on this scheme, you may contact us at contactus@mjassociate.co.in

Duty Exemption Scheme

The Duty Exemption Scheme enables duty free import of inputs required for export production. Under the scheme government can issue an Advance Authorisation or DFIA to import \ procure domestically the inputs duty free.
Imports under Advance Authorisation for physical exports are exempted from payment of Basic Customs Duty, whole of the integrated tax and Compensation Cess leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable and such imports shall be subject to pre-import condition. For Imports against deemed export supplies have different rules. A Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export product.
Input – Output norms (SION)/ IO Norms
SION is a shot form of Standard Input-Output Norms. The government has published the standard input-output norms (SION) for more than 6000 products. These are available in the Exim Policy. While applying for advance Authorisation the Input-Output norms are to be followed for duty exempted inputs. In case, where no norms are available, Authorisation can still be applied on self-declaration basis.
Advance Authorisation (License)
An Advance Authorization is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage) subject to actual user condition. Such Authorizations are exempted from payment of basic customs duty, anti dumping duty and safeguard duty, if any. In addition , fuel, oil, energy which are consumed/ utilized to obtain export product, may also be allowed.

Duty Drawback

Duty Drawback under section 75 of Customs Act scheme provides refund of duties (Customs) paid on Raw Material & Inputs that have gone in production of goods for exports. Deemed Exports provision under FTP also provides drawback for deemed export purposes. They are given on the following basis:
All Industry Rate
Government has published drawback rates for several products which are regularly exported through a drawback schedule. Exporters of these products can get the drawback at the prescribed rates from the customs of port of export.
Brand Rate
In case the export product is not covered under the schedule, the exporter can file for drawback under brand rate of fixation to recover the duties actually suffered in the process.
Special Brand Rates
Can be fixed in case the All Industry rates are available but is less than 4/5th of the actual duties suffered. Duty Drawback upon 98% of duty paid is available on goods re-exported within a specified time, under Section 74. Duty Drawback at a specified percentage is available for partly used capital goods and re-exported.
Advance Authorization can also be issued for supplies with in India that are categorized as Deemed Exports. Purposes like supplies to Mega Power Projects, Projects funded by IBRD/IDA/ADB UN Agencies etc, EOUs etc. Advance Authorizations are issued with an obligation to export the quantity and value of goods mentioned therein in a fixed period of 18 months. Before imports customs ask for a bond or a bank guarantee towards security for duty saved, till export obligation is fulfilled. Advance Authorizations or materials imported against it cannot be transferred even after completion of Export Obligation. Advance Authorisations are also available for Annual requirement under SION.
Duty Free Import Authorisation (DFIA)
DFIA is issued to a merchant-exporter or manufacturer-exporter for duty free import of inputs used in the manufacture of goods without payment of basic customs duty. DFIA is issued on minimum value addition of 20%, and only for export of products covered under the SION. DFIA or the material(s) imported against it are freely transferable after completion of Export Obligation.
Indigenous Sourcing
The holder of advance Authorisation and DFIA may also source their inputs from indigenous sources. In such cases, the GST paid by the indigenous supplier can be taken credit of or refunded. In addition the indigenous supplier can import his own raw material duty free or can even get a drawback.
Role of MJ & Associates (Advocates & Consultants) Team
It is very important to note in the above-mentioned process, that foresight and experience can play a big role in not only getting an optimum license issued, but also in monitoring the export obligation and documentation at each point. Furthermore, in case of delay in exports, timely actions can save a lot of problems and liabilities, which may arise in future. Therefore a proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, taking into account other schemes, compliances etc. MJ & Associates (Advocates & Consultants) team can assist clients for the whole process of Advance Authorisation / DFIA. Since the team has Sound knowledge of Policy & Procedures along with a very qualified and experienced team.
Duty Entitlement Passbook Scheme (Scheme ended on 30.09.2011)
The DEPB is provided to the Exporters of India. The objective of DEPB is to neutralize the incidence of Customs duty deemed to have been suffered on the import content of the export product. The neutralization is provided by way of grant of duty credit against the export product. The duty credit is given as a specified percentage of FOB value of exports, made in freely convertible currency. This duty credit can be utilized for import of any goods/capital goods which are not prohibited. The DEPB and/or the items imported against it are freely transferable.