Custom Law Services > Duty Exemption Scheme

The Duty Exemption Scheme facilitates duty free import of inputs requirement for export production. Under the scheme government can issue an Advance Authorization or DFIA to import inputs the duty free. In addition DEPB is issued after export as a script mentioning the duty amount that can be used for further imports.

INPUT - OUTPUT NORMS (SION)

The standard input-output norms (SION) have been published by the government for more than 6000 products. These are available in the Handbook of Procedures (Vol-II) of Exim Policy. The input-output norms are to be followed for duty free inputs, while applying for advance Authorization. Authorization can still be applied on self- declaration basis, if however no norms are available.

ADVANCE AUTHORISATION

  • An Advance Authorization is issued to permit duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage) subject to genuine user condition. Such Authorizations avail exemption from payment of basic customs duty, additional customs duty, anti dumping duty and safeguard duty, if any.
  • Advance Authorization can also be issued for supplies within India that are classified as Deemed Exports. Purposes like supplies to Power Projects, Projects financed by WB/ADB/JBIC etc, EOUs etc.
  • Advance Authorizations are issued with a responsibility to export the quantity and value of goods mentioned therein in a fixed period of 24 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 can-not be transferred even after completion of Export Obligation.
  • Advance Authorizations are also available for Annual Requirement on basis of SION as well as on SELF-DECLARATION

DUTY FREE IMPORT AUTHORISATION (DFIA)

  • DFIA is issued to a merchant-exporter or manufacturer-exporter for duty free import of inputs utilized in the manufacture of goods without payment of basic customs duty, additional customs duty/excise duty, antidumping duty and safeguard duty, if any. DFIA is issued on minimum value addition of 20%, and only for export of products covered under the SION. DFIA and or the material(s) imported against it are freely transferable after completion of Export Obligation.
  • DFIA can also be issued for supplies within India that are classified as Deemed Exports. Objectives like supplies to Power Projects, Projects funded by WB/ADB/JBIC etc, EOUs etc.
  • DFIA can also be issued for supplies within India that are classified as Deemed Exports. Objectives like supplies to Power Projects, Projects funded by WB/ADB/JBIC etc, EOUs etc.

DUTY ENTITLEMENT PASSBOOK SCHEME

The purpose of DEPB is to reduce the effect of 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 prescribed percentage of FOB value of exports, made in freely convertible currency.

This duty credit can be used for import of any goods/capital goods which are not prohibited. The DEPB and/or the items imported against it are freely transferable.

INDIGENOUS SOURCING

The holder of advance Authorization and DFIA may also source their inputs from indigenous sources. In such cases, there can be exemption of excise duty payable by the indigenous supplier. Additionally, the indigenous supplier can import his own raw material duty free or can even get a drawback.

What Rajput Jain & Associates Offers

We can provide you assistance in assessing the feasibility of the scheme for your exports/domestic supplies, planning for maximum benefits, documentation, application preparations, representation and coordination with DGFT and other associated Government Departments unless & until you finally get the Authorisation.

In case of domestic procurement we can assist in getting essential invalidations from the authority, for duty free import of second stage raw materials and the Drawbacks, wherever applicable.

Later we will assist you in getting the ratification of the norms from the Norms Committee. Finally we can provide you assistance in redemptions of the Authorization.

We also undertake the jobs of Norms Fixation, DEPB rate fixation, Clarifications from the committee etc.

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