Chapter - 4 Duty Exemption & Remission Schemes.

CHAPTER-4 DUTY EXEMPTION / REMISSION SCHEME

DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME

DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME


Policy 4.1 Policy relating to Duty Exemption / Remission Scheme is prescribed in Chapter 4 of FTP.
General Provision 4.2 An application for grant of an Advance Authorisation / Advance Authorisation for Annual Requirement / DEPB / DFIA may be made by Registered office or Head office or a branch office or manufacturing unit of eligible exporter, to RA concerned.
4.3 Where applicant is branch office or manufacturing unit(s) of an exporter, it shall furnish self certified copy of valid RCMC where name of branch office or manufacturing unit is given.
Advance Authorisation 4.4 Where SION have been published, an application in ANF 4A, along with documents prescribed therein, shall be submitted to RA concerned.
4.4.1 In case of export of gold / silver / platinum jewellery and articles thereof, quantity, wastage and value addition norms shall be as prescribed in paragraph 4A of FTP and HBP v1.
4.4.2 In case where norms have not been published, an application in ANF 4B, along with prescribed documents, shall be furnished to concerned Norms Committee (NC) at DGFT Headquarter for fixation of Norms.

In such cases, original copy of application along with prescribed fee shall be filed with RA concerned and a self attested copy of same shall be filed with NC. Authorisation in such cases shall be issued by RA as NC recommends.

NC shall also function as a recommendatory authority for SION. DGFT may notify such norms.
4.4.3 Applications, where Acetic Anhydride, Ephedrine and Pseudo- ephedrine is required as an input for import, shall be filed with RA concerned.

Copies of such applications shall also be simultaneously endorsed to the Drug Controller of India, Nirman Bhawan, New Delhi, Narcotics Commissioner, Central Bureau of Narcotics, Gwalior and respective Zonal Director of Narcotics Control Bureau, alongwith a declaration that applicant will maintain prescribed records and also submit prescribed returns.
4.4.4 RA, while issuing Advance Authorisation for import of Acetic Anhydride, Ephedrine and Pseudo- ephedrine, shall endorse a condition that before effecting imports, NOC shall be obtained from Narcotics Commissioner of India, Central Bureau of Narcotics, Gwalior and shall also endorse a copy of Authorisation to Drug Controller, Nirman Bhawan, New Delhi and concerned Zonal Director of Narcotics Control Bureau.
4.4.5 Deleted
Advance Authorisation for applicants with multiple units 4.5 Transfer of any duty free material imported or procured against Advance Authorisation from one unit of company to another for manufacturing purpose shall be done with prior intimation to jurisdictional Excise Authorities with a clear understanding that no benefit of CENVAT shall be claimed on such transferred inputs. In case of non-excisable company / products, units should maintain a proper record. However to avail facility, all such units should be available in IEC certificate and follow rules and regulation of Central Excise for job work. Large Taxpayer Units
(LTUs) having multiple units, may not follow above job work procedure, after fulfillment of EO.
Advance Authorisation for Free of Cost and Paid Material 4.6 For policy in paragraph 4.1.8, a specific endorsement shall be made on exchange control copy of Advance Authorisation disallowing remittances for material being supplied free of cost. All inputs imported shall be utilised in manufacturing of product except wastage.
Self Declared Authorisations where SION does not exist 4.7

RA may also issue Advance Authorisations, where SIONs are not fixed, based on self declaration and an undertaking by applicant for a final adjustment as per Adhoc / SION fixed byNC.

However, no Advance Authorisation shall be issued under this paragraph for import of following products:-

  1. All vegetable / edible oils classified under Chapter - 15 and all types of oilseeds classified under Chapter - 12 of ITC (HS) book;
  2. All types of cereals classified under Chapter – 10 of ITC (HS) book;
  3. All spices other than light black pepper (light berries) having a duty of more than 30%, classified under Chapter- 9 and 12 of ITC (HS) book;
  4. All types of fruits/vegetables having a duty of more than 30%, classified under Chapter 7 and 8 of ITC (HS)
    book; and
  5. Horn, hoof and any other organ of animal.
  6.  Honey. (This is Added by DGFT PUBLIC NOTICE NO.:57 (RE-2007)/2004-2009, Dated 01-10-2007.)

For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no Authorisation shall be issued by RA and applicants may apply under Para 4.4.2 above. Where export and / or import of biotechnology items are involved, Authorisation under this paragraph shall be issued by RA only on submission of a No Objection Certificate” from Department of Biotechnology.

Entitlement 4.7.1 CIF value of one or more such authorisations shall be maximum 500% of FOB and / or FOR value of preceding year exports and / or supplies in case of status holders and Rs. 5 crore or 500% of the FOB and / or FOR value of preceding year exports and / or supply, whichever is more, for others.

However, in cases where NC has already ratified norms for same export and import products in respect of an authorization obtained under paragraph 4.7, such norms shall be valid for a period of one year reckoned from the date of ratification. ( This Para amended by DGFT PUBLIC NOTICE NO.:37 (RE-2007)/2004-2009 Dated 23.08.2007).

[Old - However, in cases where NC has already ratified norms for same export and import products in respect of an Authorisation obtained under paragraph 4.7, such norms shall be valid for a period of six months reckoned from date of ratification.]

In such cases Authorisations shall be issued by RA concerned under Adhoc Norms Fixed category and application copies need not be forwarded to NC for fixation / ratification of norms.

Authorisation holder in such cases shall be entitled for further authorisation(s) as per norms ratified by NC without need for subsequent ratification by NC. In such cases applicant would file application under Adhoc Norms Fixed category.  However, NC should ensure that such adhoc norm(s), if not notified already are notified within a period of one month after one year of ratification of such adhoc norms(s). (This Para Amended by DGFT PUBLIC NOTICE NO.56(RE-2007)/2004-2009, DATED 1-10-2007.)
[Old -However, NC should ensure that such adhoc norm(s), if not notified already, are notified within a period of one month after six months of ratification of such adhoc norm(s).] (The Last Sentances of this  Para of has amended by DGFT PUBLIC NOTICE NO.:37 (RE-2007)/2004-2009 Dated 23.08.2007)
4.7.2 Once norms are fixed by NC, value limits mentioned in above paragraph would not be applicable to advance authorisations issued under this paragraph. Such authorisations, subsequent to fixation of norms by NC, may be enhanced.

It is mandatory for industry to provide production data etc. as may be required by DGFT / EPC for fixation of SION. Otherwise, applicant shall not be allowed to take benefit of Advance Authorization scheme for taking repeat advance authorizations on self-declared basis.
Authorisation in Excess of Entitlement 4.7.3 An applicant shall be entitled for authorisation in excess of entitlement mentioned in paragraph 4.7.1 subject to furnishing of 100% Bank Guarantee to Customs authority to cover exemption from customs duties. A specific endorsement to this effect shall be made on authorisation.
Application 4.7.4 Original application with prescribed documents shall be submitted to concerned RA. RA shall forward a copy of application within 7 days from Authorisation issue date to NC for fixation of norms within prescribed time.
Undertaking 4.7.5 Applicant shall give an undertaking that he shall abide by norms fixed by NC and accordingly pay duty, together with interest, on unutilised inputs as per norms fixed by NC. However Authorisation holder has option to undertake additional EO in proportion to excess unutilized inputs. In case application is rejected by NC, authorization holder shall pay customs duty saved along with interest on imported inputs, as notified.

In addition, an amount as per Para 4.28(i)(b) below has to be deposited.

However, NC should ensure that such adhoc norm(s), if not notified already, are notified within six months of the ratification of such adhoc norm(s).

[Old - However in such cases where the NC decides adhoc norms based on information available to it and the exporter represents against the decision of the NC, time limit for filing representation, if any, before the Norms Committee shall be four months from the date of communication of decision of the fixation of adhoc norms by NC. (This Paragraph is added by DGFT PUBLIC NOTICE NO.:37 (RE-2007)/2004-2009 Dated 23.08.2007).]
4.7.6 In such cases, where norms are not finalised by NC within four months from Authorisation issue date, norms as applied for shall be treated as final and no adjustment will be made. However, where application for fixation of adhoc / SION is rejected on account of non-furnishing of required documents / information, Authorisation holder shall be liable for penalty as stated in above paragraph. In case SION for the said product is notified, SION would be made applicable for deciding wastage norm and EO.

In such cases, where export obligation is completed pending fixation of norms by NC, entitlement for authorisation as given in paragraph 4.7.1 may be re-credited upon production of documentary evidence (copies of Shipping bill / bill of export / Central Excise certified copies of invoices) showing fulfillment of export obligation in respect of previous authorisations. However, bond waiver / redemption shall not be allowed pending fixation of norms in such cases.
Financial Powers 4.8 Financial powers of RA and NC are given in table below:

Category of Application On published norms and under paragraph 4.7 of HBP v1
CIF value of Authorisation
RA RA on recommendation of DGFT Hqr (SION cases) / NC (adhoc Norms cases).
Petroleum /Petrochemical products& Advance Authorisationfor Annual Requirements Others
Petroleum /Petrochemical products& Advance Authorisationfor Annual Requirements Others
Upto Rs. 500 crore Upto Rs.100 crore Rs. 500 crore or above Rs. 100 croreor above
Standardisation of Adhoc Norms 4.9

For standardization of norms, an application may be made by manufacturer exporter or merchant exporter tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to NC in ANF 4B.

Import of fuel may also be allowed under SION by NC subject to following : -

  1. Facility of import of fuel shall be allowed only to manufacturer having captive power plant.
  2. In cases where SION specifically allows fuel, same shall be permitted under advance Authorisation. However, If fuel is not covered specifically under SION, it may be allowed as per general fuel Policy for products covered under SION or under paragraph 4.7 above.
  3. Fuel should be allowed only against an actual user Authorisation. However in case of DFIA, fuel can only be transferred to agencies granted marketing rights by the Ministry of Petroleum and Natural Gas.
  4. Deleted
  5. Applications of fixation for fuel entitlement for new sectors and modification of the existing entitlement as per General Note for Fuel in HBP v2 would be made to NC along with requisite data in ANF 4C pertaining to Data Sheet for Fuel Rate”.
Modification of SION 4.10 An application for modification of existing SION may be filed before the NC by manufacturer exporter or merchant-exporter, tied to supporting manufacturer, in form given in ANF 4B.
Amendment of Export item and inputs 4.10.1 An application for amendment of an export item or inputs under SION or under Adhoc Norms may be filed by any manufacturer or merchant exporter as per ANF 4B.

Applicant would give justification for seeking amendment and same would be considered by Regional Office with specific approval of Head of Office. In case of any major change in input or request for more wastage to that allowed under SION or adhoc norm, same should be referred to NC for ratification.
Revision of SION by NC 4.10.2 NC may identify SIONs which in its opinion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry / exporter(s) to provide production and consumption data etc. as may be required by DGFT / EPC for revision of SION.

Otherwise, applicant shall not be allowed to take benefit of Advance Authorization scheme.
Description of an Advance Authorisation 4.11

An Advance Authorisation shall specify:

  1. names and description of items to be imported and exported / supplied;
  2. quantity of each item to be imported or wherever quantity cannot be indicated, value of item shall be indicated. However, if in SION, quantity and value of individual inputs is a limiting factor, same shall be applicable.
  3. aggregate CIF value of imports; and
  4. FOB / FOR value and quantity of exports / supplies.
Exports in Anticipation of Authorisation 4.12 Exports / supplies made from date of EDI generated file number for an Advance Authorisation, may be accepted towards discharge of EO. Shipping / Supply document(s) should be endorsed with File Number or Authorisation Number to establish co-relation of exports / supplies with Authorisation issued. If application is approved, authorisation shall be issued based on input / output norms in force on the date of receipt of application by RA in proportion to provisional exports / supplies already made till any amendment in norms is notified. For remaining exports, Policy / Procedures in force on authorisation issue date shall be applicable.
4.12.1 Exports / supplies made in anticipation of grant of an Advance Authorisation shall be entirely on risk and responsibility of exporter.
4.12.2 Conversion of duty free shipping bills to drawback shipping bills may also be permitted by customs authorities in case application for an Advance Authorisation is rejected or modified by RA.
Advance Authorisation or DFIA for Intermediate Supplies 4.13 Application for grant of Advance Authorisation or DFIA for Intermediate supply may be made on the basis of a tie-up agreement with exporter (physical / deemed) holding an Advance Authorisation or DFIA. RA concerned shall consider such requests.

Advance Authorisation or DFIA for Intermediate supply shall be issued after making Authorisation invalid for direct import of items to be supplied by intermediate manufacturer. In such cases, a copy of the invalidation letter will be given to Authorisation holder and copy thereof will be sent to intermediate supplier as well as RA of intermediate supplier. Authorisation holder in such case has an option either to supply intermediate product to holder of Advance Authorisation DFIA or to export (physical / deemed) directly. However, once Electronic message transfer facility among the RAs becomes fully operational, sending copy of invalidation letter / ARO to jurisdictional RA shall not be required.

Facility of Advance Authorisation shall be available even in cases where intermediate supplier has supplied or intend to supply material subsequent to fulfilment of EO by exporter holding Advance Authorisation / DFIA from where invalidation letter was issued.
Advance Release Order 4.14 An application may be made to RA concerned for grant of ARO to procure inputs from indigenous sources / STEs.
4.14.1

Application shall specify:

  1. name, description and quantity of items; and
  2. individual value of items to be procured. An ARO may be issued along with Advance Authorisation / DFIA or subsequently, and its validity shall be co-terminus with validity of Advance Authorisation / DFIA.

An ARO issued for procurement of an individual item shall be automatically valid for procurement from one or more indigenous sources.

Back to Back Inland Letter of Credit (L/C) 4.15 Exporter may alternatively avail facility of a back to back inland letter of credit from banks. An Advance Authorisation / DFIA holder may approach a bank for opening an inland letter of credit (L/C) in favour of an indigenous supplier.
4.15.1 Before opening the L/C, bank will ensure that necessary BG / LUT has been executed by Advance Authorisation / Non Transferable DFIA holder and an endorsement to that effect has been made on the Authorisation.

However, execution of BG / LUT shall not be required against transferable DFIA. After opening inland L/C, bank shall make following endorsement on Exchange Control and Customs copy of Advance Authorisation/ DFIA;

Value of this Advance Authorisation / DFIA stands reduced by a sum of Rs. , being value of inland L/C No.________ opened today by authorisation holder in favour of M/s (name and address of indigenous supplier).
4.15.2 Authorisation shall be invalidated by bank for direct import only in respect of full quantity and value of item being sourced indigenously.
4.15.3 Original Letter of credit (L/C) may be retained by bank for negotiation and only non-negotiable copy of L/C may be given to indigenous supplier.
4.15.4 Responsibility of bank shall be confined to making endorsement. Bank shall not be liable for any misrepresentation or false statement made by authorisation holder while requesting bank to make endorsement. Inland L/C opened by bank in favour of indigenous supplier shall not be cancelled for any reason whatsoever.
4.15.5 Non negotiable copy of inland L/C together with photocopy of Advance Authorisation / DFIA duly carrying endorsements made by bank shall be sufficient for indigenous supplier to claim deemed export benefits. L/C issued shall be entitled to benefits given in paragraph 8.3 (b) and (c) of FTP.
4.15.6 Where import is permitted as an input under this scheme, gold / silver can be sourced through nominated agencies as given in FTP (Chapter 4) for supply against the Advance Authorisations/ DFIA issued. Before supply of material, nominated agencies should follow same procedure as given in paragraph 4.15.1 above.
Facility of Supporting Manufacturers / Jobber / co-licensee m 4.16 Imported material may be used in any unit of holder of Advance Authorisation or Non Transferable DFIA or jobber / supporting anufacturer provided same is endorsed on authorisation by RA. If applicant desires to have name of any manufacturer or jobber added to authorisation, he may apply. Such endorsement shall be mandatory where prior import before export is a condition for availing Advance Authorisation / DFIA scheme and authorisation holder desires to have material processed through any other manufacturer or jobber.

Upon such endorsement made by RA, authorisation holder and co- authorisation holder shall jointly and severally be liable for completion of EO. Any one of co-authorisation holders may import goods in his name or in joint names. BG/LUT shall also be furnished in their joint names.

However if authorisation holder is registered with Central Excise, he has an option of getting names of jobber endorsed by Central Excise as per Central Excise Rules in lieu of RA’s endorsement. In case manufacturer exporter holding authorisation is not registered / not required to be registered with Central Excise authority, job work may be allowed as per Central Excise Rules and regulations without insisting for endorsement of supporting manufacturer’s name. However, authorisation holder shall be solely responsible for imported items and fulfillment of EO.

In case BG / LUT has been redeemed, advance authorization holder can get duty free inputs processed from any manufacturer under Actual User condition as per job work regulations prescribed under Central Excise Rules. However such restriction shall not be applicable in case of transferable DFIA holder.
Facility Of Co-Licensee 4.17 Deleted.
Acceptance of BG / LUT 4.18 At the time of issue of authorisation, acceptance of undertaking given by applicant to RA concerned in relevant ANF will be endorsed on the reverse of Advance Authorisation. Authorisation holder shall execute Bank Guarantee / Legal Undertaking, as the case may be, in terms of para 2.20 of HBP v1.
Port of Registration 4.19 Advance Authorisation shall be issued for purpose of import and export through one of sea ports or airports or ICDs or LCS specified below. Authorisation holder shall register authorisation at the port specified in authorisation and thereafter all imports against said authorisation shall be made only through that port, unless the authorisation holder obtains permission from customs authority concerned to import through any other specified port. However, exports may be made through any of the specified ports.

Sea Ports: Mumbai, Kolkata, Cochin, Kakinada, Kandla, Mangalore, Marmagoa, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, T uticorin Vishakhapatnam, Dahej, Nagapattinam, Okha, Mundhra , Surat (Magdalla), Jamnagar, Nhava Sheva, Bedi (including Rozi-Jamnagar), Muldwarka, Porbander, Dharamtar and Vadinar.

Air-ports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur, Chennai, Raja Sansi (Amritsar), Lucknow (Amausi) and Indore. (This word is added by DGFT PUBLIC NOTICE NO.:21 (RE-2007)/2004-2009  Dated 17-07-2007.

ICDs: Agra, Bangalore, Coimbatore, Delhi, Faridabad, Gauhati (Amingaon), Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad, Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur(Nainital), Dighi (Pune), Vadodara, Daulatabad, (Wanjarwadi and Maliwada), Waluj (Aurangabad), Anaparthy, Salem Mallanpur, Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry, Garhi Harsaru Bhatinda, Dappar, Chheharata (Amritsar), Karur, Miraj, Rewari, Bhusawal, Jamshedpur, Surajpur and Dadri, Tuticorin, Bhadoi, Raipur, Mandideep (Distt. Raisen), Durgapur (Export Promotion Industrial Park) and Babarpur.



LCS: Ranaghat , Singhabad , Raxaul, Jogbani, Nautanva (Sonauli), Petrapole, Mahadipur, Hilly, Chengrabanda, Dawki, Atari, Nepalganj Road, Agartala, Sutrakhandi, Amritsar Rail Cargo and Atari Road, Ghojadanga(Ghojadanga newly added by DGFT PUBLIC NOTICE No.: 89(RE-2007)/2004-09, Dated 10-12-2007)

SEZ: As notified by Central Government any SEZ can be a specified port for import and export.
4.19.1 Commissioner of Customs may permit imports and exports from any other seaport / airport / ICD or LCS .
4.19.2 In such cases, where authorisation has not been registered at specified port (in Authorisation) and no import has taken place, request for change in Port of Registration may be considered by RA provided the Authorisation has not been redeemed.
4.19.3 For imports from Airport / Seaport / ICD / LCS other than port of registration, a TRA shall also be issued by the customs authority at the port of registration to customs authority at port of import.
Facility of Clubbing 4.20 Facility of clubbing shall be available only for redemption / regularisation of cases and no further import or export shall be allowed. For this facility, authorisations are required to have been issued under similar Customs notification even pertaining to different financial years. However in case of Authorisations issued in 2004-09 period, Advance Authorisations with different customs notification can be clubbed.
4.20.1 RA, under whose jurisdiction authorisation is issued or NC in other cases, shall consider a request in ANF 4D for clubbing all imports and exports of more than one Advance Authorisation provided imported inputs are properly accounted for as per norms. Value addition of the authorisations so clubbed shall be average of minimum value addition prescribed in FTP and Procedure laid thereunder, imposed on individual authorisations. Upon clubbing, authorisations shall, for all purposes, be deemed to be one Authorisation and thereafter shortfall, if any, shall be regularized in terms of para 4.28 of HBP v1.
4.20.2 Accountability of imports and exports shall be restricted in relation to individual categories of Advance Authorisations including Advance Authorisation for annual requirements.
4.20.3 Facility is available only for Advance Authorisation(s) where there is shortfall in fulfillment of EO, and which is sought to be clubbed with an advance Authorisation(s) which is valid for imports. For expired Authorisation(s) with EO shortfall and which is sought to be clubbed with an advance Authorisation(s) which is valid for imports, applicant shall pay composition fee for EO period extension as per paragraph 4.22 below.
4.20.4 Wherever exports are effected beyond EO extension period (allowed vide paragraph 4.22 below) of earlier authorisation, no clubbing shall be permitted.
4.20.5 Notwithstanding provisions of para 4.20.3 and 4.20.4 above, Clubbing of all expired Authorisations may also be permitted provided all expired Authorisations have been issued during Exim Policy period 1992-1997 & 1997-2002 i.e., 1st April 1992 to 31st March, 2002. However clubbing of erstwhile Value Based Advance licences shall not be allowed.
Enhancement / Reduction in the Value of Authorisation 4.21

In respect of an Advance Authorisation, RA concerned (as per their financial powers) may consider a request for:

  1. enhancement / reduction in CIF value of advance authorisation;
  2. enhancement / reduction in CIF value, quantity of inputs, FOB value and quantity of exports of an advance authorisation;

provided VA after such enhancement does not fall below minimum VA stipulated in FTP and HBP v1 laid thereunder and there is no change in input-output norms and FTP under which advance authorisation was issued.

4.21.1 Deleted.
4.21.2 Request for prorata enhancement in value and quantity may be made either before or after exports. In such cases where there is a change in SION prior to export of said product, pro-rata enhancement shall be given after calculating entitlement on revised SION.
4.21.3 The application for the enhancement / reduction in the value of Authorisation shall be made in ANF 4E.
Application fee for enhancement 4.21.4 Application fee leviable for enhancement would be on the difference in CIF values of original and final Authorisation. However, no application fee would be charged if value of Authorisation is being reduced or applicant has paid maximum fee of Rs 150,000 (for manual applications) and Rs 75,000 (for digitally signed applications) respectively in original application for Advance Authorisation.
Export Obligation (EO) Period and its Extension 4.22 Fulfillment Period of EO under an Advance Authorisation shall commence from Authorisation issue date. EO shall be fulfilled within 24 months except in case of supplies to projects / turnkey projects in India / abroad under deemed exports category where EO must be fulfilled during contracted duration.   [Old - In case of Spices {(covered by chapter 9 of ITC (HS)}, EO shall be fulfilled within 90 days from the date on which first import consignment is cleared by Customs Authorities.]  This  is amended by DGFT PUBLIC NOTICE NO.: 06 (RE-2007)/2004-2009.

However, in case of import of spices for VA purpose like crushing / grinding / sterlisation or for manufacture of oils and oleoresins of pepper, cardamom and chillies and not for simple cleaning, grading, repacking etc., EO shall be fulfilled within 120 days from the date of importation of first consignment. In case of import of spices (other than pepper, cardamom and chillies) for manufacture of spice oils and oleoresins, EO shall be fulfilled within 12 months from the date of issuance of advance authorisation. (This Sub-Para Amended by DGFT PUBLIC NOTICE NO.:60 (RE-2007)/2004-2009, Dated 4-10-2007.)

[Old- However, in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days.

EO Period for import of drugs (with a specific export order and pre-import condition) and for import of tea shall be 6 months.]
4.22.1 Request for extension in EOP may be made in ANF 4E. RA shall grant one extension for six months from expiry date with payment of composition fee of 2% of duty saved on all unutilized imported items as per Authorisation.

Request for a further extension of six months may be considered by RA with payment of composition fee of 5% of duty based on all unutilized imported items as per Authorisation.

Facility of extension of EOP shall not be allowed in case of advance authorisation wherein import of penicillin and its salts (ITC (HS) Code No. 29411010) and 6 – APA (ITC (HS) Code No. 29411 050) have been allowed as an input and also for import of spices and tea. RA shall make an endorsement in advance authorisation to this effect.

Such extensions would not be permitted in erstwhile Value Based Advance Authorisations (VABALs). Additionally, no extension in EO would be allowed in respect of Authorisations where misrepresentation / fraud has come to notice of RA. Further, in respect of Authorisations where adjudication orders have already been passed, no extension in EOP shall be admissible.

The period for discharge of export obligation against advance authorisations (erstwhile licences) issued for Export of Sugar stands automatically extended for one year (without payment of Composition Fee) w.e.f the date on which their export obligation period expires provided the export obligation period did not expire prior to 19-4-2007. (This Para added by DGFT PUBLIC NOTICE NO.:34 (RE-2007)/2004-2009 Dated : 17.08.2007).
4.22.2 Customs may allow provisional clearance of export consignment as and when Authorisation holder produces documentary evidence of having applied for EO extension to concerned RA.
Revalidation of Authorisation 4.23 RA may consider a request of original Authorisation holder and grant one revalidation for six months from expiry date. Request(s) for revalidation of Authorisation shall be made in ANF 4I.
Monitoring of Obligation 4.24 RA, with whom undertaking is executed by Advance Authorisation holder, shall maintain a proper record in a master register indicating starting and closing dates of obligation period and other particulars to monitor EO.

Within two months from date of expiry of period of obligation, Authorisation holder shall submit requisite evidence in discharge of export obligation in accordance with paragraph 4.25 below.

However, in respect of shipments where six months period (one year in case of status certificate holder) for realisation of foreign exchange has not become due, RA shall not take action for non submission of bank certificate of exports and realisation provided other document substantiating fulfillment of EO have been furnished.
4.24.1 In case Authorisation holder fails to complete EO or fails to submit relevant information / documents, RA shall take action by refusing further Authorisations, enforce condition of Authorisation and Undertaking and also initiate penal action as per law.
Advance Authorisation for Annual Requirement 4.24A
  1. Exporters eligible for such Authorisations shall file an application in ANF 4A to RA concerned. All provisions
    as to Advance Authorisation given above would apply except the following:
    1. RA while issuing Authorisation shall mention technical characteristics quality and specifications in respect of such inputs:-

      Alloy steel including stainless steel, copper alloy, synthetic rubber, bearings, solvents, perfumes/ essential oils / aromatics chemicals, surfactants, relevant fabrics and marble.
    2. Authorisation holder shall have flexibility to export any product falling under export product group using duty exempted material.
    3. Within eligible entitlement, an exporter may apply for one or more than one authorisations in a licensing year, subject to condition that against one port of registration only one authorisation can be
      issued for same product group. One time enhancement / reduction of the authorisation shall be available in terms of paragraph 4.21 above.
    4. On completion of EO against one or more authorisations, all issued in same licensing year, entitlement of an exporter for that licensing year shall be deemed to be revived by an amount equivalent to EO completed against authorisation(s).
  2. Deleted.
  3. Deleted.
  4. Deleted.
  5. Deleted.
  6. Deleted.
  7. Deleted.
4.24B Deleted.
Fulfillment Of Export Obligation 4.25 Authorisation holder shall furnish prescribed documents in ANF 4F in support of fulfillment of EO.

A (i) to (iv) Deleted.

B (i) to (iv) Deleted.
Redemption / No Bond Certificate 4.26 In case EO has been fulfilled, RA shall redeem the case. After redemption, RA shall forward a copy of redemption letter indicating shipping bill number(s), date(s), FOB value in Indian rupees as per shipping bill(s) and description of export product in respect of shipment which were taken into account for the purpose of fulfillment of EO to Customs authority at port of registration. Such details shall also be placed by the Zonal Offices in their website immediately after issuance of export obligation discharge/redemption letter / No Bond Certificate (in case of No BG / LUT” facility) and by DGFT Hqr in DGFT website on monthly basis for customs authority to access it from website.

Cancellation / redemption of BG / LUT would be undertaken by Customs within 30 days of issue of Export Obligation Discharge Certificate (EODC) / bond waiver by RA.

Ordinarily, redemption of BG / LUT shall not preclude customs authority from conducting random checks and from taking action against Authorisation holder for any misrepresentation, mis- declaration and default detected subsequently.

Further RA shall also take action against authorisation holder in case of non-submission of Appendix 23, duly filled in, as stipulated in Paragraph 4.30 below or for any misrepresentation, misdeclaration and default detected subsequently in details declared and furnished in Appendix 23. An endorsement to this effect shall be made by RA in the redemption certificate.
Transitional Arrangement for Authorisations issued upto 31.8.2004 4.27 Advance Licences including Advance Licences for Annual Requirement issued upto 31.8.2004 shall be governed by provisions contained in Chapter-7 of HBP v1 (RE-2001) and Chapter 4 of HBP v1 (2002-2007) as Notified on 31.3.2002 respectively as amended from time to time, excepting provisions relating to clubbing and extension in E.O. period which shall be governed by provisions of paragraphs 4.20 and 4.22.1 respectively above and any other provision, as notified by DGFT.

However, wherever Customs duty is to be paid on unutilised material, same shall be paid alongwith interest thereon as notified.
Regularisation of Bonafide Default. 4.28

Cases of bonafide default in fulfillment of EO may be regularised by RA as under:

  1. If EO is fulfilled in terms of value, but there is a shortfall in terms of quantity, the Authorisation holder shall, for regularisation, pay:-
    1. to customs authorities, customs duty on unutilized value of imported / indigenously procured material along with interest as notified; and (This para amended by DGFT Public Notice No. 120(RE-2007)/2004-2009, Dated 29th February, 2008).

      [Old-to customs authority, customs duty on unutilised value of imported material alongwith interest as notified; and ]
    2. an amount equivalent to 3% of the CIF value of unutilised imported material through a TR in authorised branch of Central Bank of India indicating the Head Account: 1453, Foreign Trade and Export Promotion and Minor Head 102”. Authorisation holder shall also be required to obtain
      a separate authorisation for regularisation of excess imported input. However, provisions of this sub paragraph shall not be applicable if unutilised imported material was freely importable on date of import.
  2. If the EO is fulfilled in quantity but there is shortfall in value, no penalty shall be imposed if Authorisation holder has achieved minimum value addition prescribed. However, if value addition falls below the minimum value addition prescribed Authorisation holder shall be required to deposit an amount equal to 1% of shortfall in FOB value in Indian Rupee through TR in authorised branch of Central Bank of India as above or through EFT mode.

    Value wise shortfall shall be calculated with reference to actual quantity of exports and FOB value of realisation with reference to prorata quantity of imports and CIF value. For example, if export performance is only 50% quantitywise but import has been for complete CIF value permitted, then value addition would be calculated on a prorata basis, i.e with reference to 50% of CIF value of imports. This would accordingly imply that where Authorisation holder is unable to export, no penalty on valuewise shortfall shall be imposed.
  3. If EO is not fulfilled both in terms of quantity and value, the Authorisation holder shall, for the regularisation, pay as per (i) and (ii) above.
  4. In case an exporter is unable to complete EO undertaken in full and he has not made any import under Authorisation, Authorisation holder will also have an option to get the Authorisation canceled and apply for drawback after obtaining permission from Customs authorities for conversion of shipping bills to Drawback Shipping Bills.
  5. RA shall compare relevant portion of Appendix 23 duly verified and certified by Chartered Accountant with that of norms allowed in Authorisation(s) and actual quantity imported against Authorisation(s) in the beginning of licensing year for all such Authorisations redeemed in preceding licensing year. In this verification process, in case it if found that Authorisation holder has consumed lesser quantity of inputs than imported, authorisation holder shall be liable to pay customs duty on unutilized value of imported material alongwith interest thereon as notified or effect additional export within the EO period.
Time Period For Depositing Fines, Customs Duty, etc. 4.29 Customs duty with interest to be recovered from Authorisation holder on account of regularisation or enforcement of BG / LUT, shall be deposited by Authorisation holder in relevant Head of Account of Customs Revenue i.e., Major Head 0037 - Customs and minor head 001- Import Duties” in prescribed T.R. Challan within 30 days of demand raised by regional / customs authority and documentary evidence shall be produced to this effect to RA / customs authority immediately.

On receipt of such documentary evidence from Authorisation holder, RA shall intimate details of recovery / deposits made to Customs Authority at port of registration under intimation to Joint Secretary (Drawback), Department of Revenue, Ministry of Finance, Jeevan Deep Building, New Delhi.

Payment of amount of duty, interest and any dues for regularisation shall, however, be without prejudice to any other action that may be taken by Customs Authorities at any stage under Customs Act, 1962.
Maintenance of Proper Accounts. 4.30 Every Advance Authorisation holder shall maintain a true and proper account of consumption and utilisation of duty free imported / domestically procured goods against each authorisation as prescribed in Appendix 23. These records are required to be sent to the concerned RA at the beginning of each licensing year for all those authorisations, which have been redeemed in previous licencing year. However, these records in said format are required to be submitted for authorisations issued on or after 13-05-2005. Such records should be preserved for a period of at least three years from date of redemption.
  4.30A  In case where Original EP copy of Shipping Bill / original BRC has been lost, request for EODC, No BG / LUT condition under Advance Authorisation / DFIA scheme or endorsement of transferability under DFIA scheme can be considered subject to submission of following documents in lieu of those original documents: -

a) A duplicate / certified copy of concerned document issued by Customs Authority / Bank in lieu of original;
b) An application fee equivalent to 1% of duty saved amount. However, no fee shall be charged when such document is lost by Government agencies and a documentary proof to this effect is submitted;
c) An affidavit by exporter about loss of document and an undertaking to surrender it immediately to concerned RA, if found subsequently;
d) An indemnity bond by exporter to the effect that he would indemnify Government for financial loss, if any, on account of duty free import entitlement availed / allowed against lost Shipping Bills / BRC. Customs Authority, before allowing redemption of BG / LUT or clearance after endorsement of No BG / LUT condition or endorsement of transferability, shall ensure that no double benefit against such shipping bill has been availed.

However, in case of submission of reconstructed copy of shipping bill in lieu of original shipping bill, conditions at b), c) and d) above shall not be applicable.(This New Para is inserted by DGFT Public Notice No.:79(RE-2007)/2004-2009, Date 5th, November, 2007)
Duty Free Replenishment
Certificate(DFRC)		 4.31 Deleted.
4.31A Deleted.
4.32 to 4.34 Deleted.
4.34.1 to 4.34.3 Deleted.
4.35 Deleted
4.35.1 Deleted
4.36 Deleted
4.36A Deleted.

DUTY ENTITLEMENT PASSBOOK (DEPB) SCHEME


Duty Entitlement Passbook (DEPB) Scheme 4.37 Policy relating to Duty Entitlement Passbook (DEPB) Scheme is given in Chapter-4 of FTP. Duty credit under the scheme shall be calculated by taking into account deemed import content of said export product as per SION. Value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the scheme.
Fixation of DEPB Rate 4.38 ANF 4C prescribes form regarding fixation of DEPB rates. All applications for fixation of DEPB rates shall be routed through concerned EPCs which shall verify the FOB value of exports as well as international price of inputs covered under SION.
Provisional DEPB Rate 4.38A To encourage diversification and to promote export of new products, DEPB Committee would be empowered to notify provisional DEPB rates. However, such DEPB rates would be valid for a limited period of time during which exporter would furnish data on export and import for regular fixation of rates.
Exports in anticipation of DEPB Rate 4.39 No exports shall be allowed under DEPB scheme unless DEPB rate of concerned export product is notified.
Port of Registration 4.40 Exports / imports made from specified Sea Ports, Airports, ICD & LCSs given in paragraph 4.19 above and made to any Special Economic Zone (SEZ), notified by Central Government, are entitled to DEPB.
4.40.1 DEPB shall be issued with single port of registration, which will be port from where exports have been effected.
Maintenance of Record 4.40.2 Each Custom House at ports shall maintain a separate record of details of exports made under DEPB.
Credit under DEPB and Present Market Value 4.41 In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more, amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme would not exceed 50% of PMV of export product.

However PMV declaration shall not be applicable for products for which value cap exists irrespective of DEPB rate of product.
Utilisation of DEPB credit 4.42 Credit under DEPB shall be utilised for payment of customs duty on any item including capital goods, which is freely importable.
Application for DEPB 4.43 An application for grant of credit under DEPB may be made to RA concerned in ANF 4G alongwith prescribed documents. Agency commission shall be allowed for DEPB entitlement upto 12.5% of FOB value only. FOB value in free foreign exchange shall be converted into Indian rupees as per exchange rate for exports, notified by Ministry of Finance, as applicable on the date of order of Let Export” by Customs.
4.43A In respect of consignment exports wherein exporter has declared FOB value on a provisional basis, exporter shall be eligible for final assessment of such shipping bill based on actual FOB realised upon sale of such goods in freely convertible currency.
4.43B An application for grant of credit for supplies from DTA to SEZ can be made by DTA unit or SEZ unit. DTA unit may claim benefits either from RA or Development Commissioner concerned. In case claim have been filed with RA, RA while allowing benefits to the DTA unit will simultaneously endorse a copy of communication to concerned Development Commissioner alongwith details of export documents. In case DTA supplier prefers claim with Development Commissioner, the Development Commissioner will verify Denied Entity List (DEL) status of supplier from DGFT website before allowing DEPB benefits. SEZ unit will file application with Development Commissioner concerned in ANF 4G along with prescribed documents.
4.44 DEPB shall be issued with transferable endorsement after payment confirmation. In other cases, DEPB shall be initially issued with non-transferable endorsement and upon realization, can be endorsed as transferable.
Monitoring of Realisation 4.45 RA shall monitor earlier cases where DEPB has been granted prior to realisation of export proceeds so as to ensure that realisation takes place within prescribed time. Failing this, RA shall initiate action for recovery of an amount equivalent to DEPB credit with interest as notified. Recovered amount in such cases shall be deposited in head of account of Customs as stated in paragraph 4.29 above.
4.45.1 If export proceeds are not realised within the stipulated time period DEPB holder shall pay in cash an amount equivalent to duty free credit utilised on imports, against such exports with interest as notified from date of import till date of deposit. If amount realised in foreign exchange is less, then payable amount would be reduced proportionately.
Time Period 4.46 Application for obtaining credit shall be filed within a period of twelve months from the date of exports or the date of up linking of EDI shipping bill details in the DGFT website or within six months from the date of realisation or within three months from the date of printing / release of shipping bill, whichever is later, in respect of shipments for which claim has been filed. (This Para Amended by DGFT PUBLIC NOTICE NO.56(RE-2007)/2004-2009, DATED 1-10-2007.)
[Old -Application for obtaining credit shall be filed within a period of twelve months from date of exports or within six months from date of realization or within three months from date of printing / release of shipping bill, whichever is later, in respect of shipments for which claim have been filed.]
4.47 Wherever provisional shipment has been allowed by customs authorities, DEPB against such exports shall be issued only after release of shipping bill by Customs. In such cases, application for DEPB shall be filed within six months from date of release of such shipping bill or six months from date of realisation, whichever is later.
Frequency of Application 4.48 All shipping bills in any one application must relate to exports made from one Custom House only. There is no limit on number of shipping bills which can be filed through EDI mode in a single application.
Verification by Customs 4.49 In case of EDI shipping bills before 1.10.2005 and non-EDI shipping bills, RA shall ensure that while issuing DEPB, Shipping Bill No(s) and date(s), FOB value in Indian Rupees as per Shipping Bill(s) and description of export product are endorsed on DEPB. Before allowing imports against such DEPB, Customs shall verify that details of exports, as given on DEPB, are as per their records. However, in case of EDI shipping bills issued on or after 1-10-2005 from EDI ports which are being transmitted electronically by Customs to DGFT, DEPBs issued shall be sent to Customs at port of registration through an electronic message exchange system and DEPB shall be registered at port of registration electronically. No verification of shipping bills against which such DEPBs have been issued, will be required before allowing imports against these DEPBs.
Revalidation 4.50 No revalidation shall be granted beyond original period of validity of DEPB unless it expires in custody of Regional / Customs Authorities as per paragraph 2.13 of HBP v1.
Re-export of goods imported under DEPB Scheme 4.51 Goods imported under DEPB scheme, which are found defective or unfit for use, may be re-exported, as per guidelines given in paragraph 3.23.6 of HBP v1.
Issuance of DEPB and other duty credit certificates against lost EP copy of the Shipping Bills 4.52

In case where EP copy of Shipping Bill has been lost, DEPB and other duty credit certificates, claim can be considered subject to submission of following documents:-

  1. A duplicate / certified copy of Shipping Bill issued by Customs authority in lieu original;
  2. An application fee equivalent to 2% of the DEPB or other duty credit entitlement in respect of lost Shipping Bills. However, no fee shall be charged when Shipping Bill is lost by Government agencies and a documentary proof to this effect is submitted;
  3. An affidavit by exporter about loss of Shipping Bills and an undertaking to surrender it immediately to concerned RA, if found subsequently; and
  4. An indemnity bond by exporter to the effect that he would indemnify Government for financial loss if any on account of DEPB or other duty credit certificate issued against lost Shipping Bills.

Customs authority, before allowing clearance, shall ensure that no DEPB benefit has been availed against same shipping bill.

4.52.1 Claim against lost Shipping Bill shall be preferred within a period of six months from date of release of duplicate copy of shipping bill and any application received thereafter will be rejected. However, if a provisionally assessed DEPB shipping bill is lost, time period for filing an application for DEPB would be six months from the date of release of the finally assessed shipping bill.
Loss of Original Bank Certificate 4.53

In such cases where original Bank Realisation Certificate (BRC) has been lost, the DEPB claim can be considered subject to submission of following documents:

  1. A duplicate copy of BRC issued by bank authority in lieu of original loss;
  2. An application fee equivalent to 2% of the DEPB entitlement in respect of lost BRC;
  3. An affidavit by exporter about loss of BRC and an undertaking to surrender it immediately to RA, if found subsequently;
  4. An indemnity bond by exporter to the effect that he would indemnify Government for financial loss, if any, on account of DEPB issued against lost BRC.

Claim against lost BRC shall be preferred within a period of six months from date of realisation and application received thereafter will be rejected.

In such cases, where both documents have been lost, exporter shall follow procedure laid down in paragraph 4.52 and 4.53. Time period for such application shall be as per paragraph 4.52 and 4.53, whichever is later.


DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME


Duty Free Import Authorisation (DFIA) Scheme 4.54 Policy relating to the Duty Free Import Authorisation (DFIA) Scheme is prescribed in Chapter 4 of FTP.
Application 4.55 An application in ANF 4H along with documents therein, shall be submitted to RA concerned.
4.55.1 Guidelines as in paragraph 4.4.1 and 4.4.3 above would be adhered to.
4.55.2 Deleted
4.55.3 However in respect of following items, exporter shall be required to give declaration with regard to technical characteristics, quality and specification in shipping bill. RA while issuing DFIA shall mention technical characteristics, quality and specification in respect of such inputs:

Alloy steel including Stainless Steel, Copper Alloy, Synthetic Rubber, Bearings, Solvent, Perfumes/ Essential Oil/ Aromatic Chemicals, Surfactants, Relevant Fabrics, Marble, Articles made of polypropylene, Articles made of Paper and Paper Board, Insecticides, Lead Ingots, Zinc Ingots, Citric Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped / Stranded Mat, Roving Woven Surfacing Mat), Relevant Synthetic Resin (unsaturated polyester resin, Epoxy Resin, Vinyl Ester Resin, Hydroxy Ethyl Cellulose), Lining Material.
4.55.4 Deleted
DFIA for applicants with multiple units 4.56 Transfer of any duty free material imported or procured against actual user DFIA shall be governed by provisions of paragraph 4.5 above.
DFIA for Free of Cost 4.57 Procedure would be as per paragraph 4.6 above and 4.2.7 in and Paid Material FTP.
Financial Powers 4.58 Financial powers shall be as per paragraph 4.8 above.
Description of a DFIA 4.59 A DFIA shall specify details as per paragraph 4.11 above.
Exports in Anticipation of DFIA 4.60 Exports / supplies made from date of EDI generated file number for a DFIA, may be accepted on similar lines as in paragraph 4.12, 4.12.1 & 4.12.2 above.
4.60.1 Deleted
4.60.2 Deleted
Port of Registration 4.61 Provision of paragraph 4.19 above shall be applicable in case of DFIA.
Acceptance of BG / LUT 4.62 Provision of paragraph 4.18 above shall be applicable.
Enhancement / Reduction in the Value of DFIA 4.63 Provision of paragraph 4.21 above shall be applicable.
Export Obligation period (EOP) and its extension 4.64 Export obligation fulfillment period and its extension shall be governed as per paragraph 4.22 above. However, any extension beyond 36 months from the authorisation issue date shall not be allowed.
Revalidation of DFIA 4.65 Facility of revalidation shall be available to DFIA holder as per paragraph 4.23 above.
Re-export of goods imported under DFIA Scheme 4.66 Goods imported against transferable DFIA, which are found defective or unfit for use, may be re-exported, as per DoR guidelines. In such cases 95% of CIF value debited against DFIA for export of such goods, shall be generated by concerned Commissioner of Customs as an Authorisation, containing amount generated and the details of original DFIA.

Based on the certificate, a fresh DFIA shall be issued by concerned RA. Fresh DFIA, so issued, shall have same port of registration and shall be valid for a period equivalent to balance period available on date of import of such defective / unfit goods.
Monitoring of Export Obligation 4.67 Provision of paragraph 4.24 above shall apply.
Fulfillment of Export Obligation and maintenance of proper accounts of imports 4.68 Provision of paragraph 4.25 shall apply.(This first Sentences  amended by  DGFT PUBLIC NOTICE NO.:30 (RE-2007)/2004-2009 Dated : 26.07.2007 ).  [Old - Provision of paragraph 4.24 above shall apply.] Original DFIA holder shall maintain a true and proper account of consumption and utilisation of duty free imported /domestically procured goods against each authorisation as prescribed in Appendix 23. These records are required to be sent to concerned RA along with request for bond waiver / redemption / discharge of export obligation/ transferability. Such records should be preserved for a period of at least three years from date of redemption.
4.69 Deleted.
Redemption 4.70 Provision of paragraph 4.26 above shall apply.
Regularisation of Bonafide default 4.71 Cases of bonafide default in fulfillment of export obligation may be regularised by as prescribed in paragraph 4.28 above.
Transferability of DFIA 4.72 Once export obligation is fulfilled and required documents as stipulated in Paragraph 4.68 above have been furnished, RA shall make authorisation transferable subject to conditions stipulated for this scheme including an endorsement on the authorisation itself as to liability of additional customs duty / excise duty in respect of imported / indigenously procured inputs, as the case may be, which have already been imported under Actual User DFIA and are sought to be transferred after fulfillment of E.O. DFIA holder shall deposit additional customs duty / excise duty alongwith applicable interest as per Customs Notification in relevant Head of Account of Customs Revenue i.e., “Major Head 0037 – Customs and Minor Head 001 – Import Duties” in prescribed T.R. Challan and furnish a documentary evidence to RA alongwith the application for endorsement of transferability.

However, restricted items endorsed in authorisation shall be allowed to be transferred only against a separate authorisation / permission issued as per FTP and the procedure laid there under.
(The Above Para Amended by DGFT PUBLIC NOTICE NO.:26(RE-2007)/2004-2009 Dated 23.07.2007.)
[Old-Once export obligation is fulfilled and required documents as stipulated in paragraph 4.68 above have been furnished, RA shall make authorisation transferable subject to conditions stipulated for this scheme. However, restricted item endorsed in authorisation shall be allowed to be transferred only against a separate authorisation / permission issued as per FTP and the procedure laid thereunder.]
GEMS AND JEWELLERY 4A Policy relating to Gem Replenishment Authorisation, and scheme for gold / silver / platinum jewellery is given in paragraph 4A of FTP.
Replenishment Authorisation 4A.1 An application for REP Authorisation may be made in ANF 4I alongwith documents prescribed therein to RA concerned as in Appendix 1A.
4A.1.1 Application shall be filed within six months following the month during which the export proceeds are realised. For export proceeds realised during month , a consolidated application for entire month shall be filed.
4A.1.2 Deleted
4A.1.3 In case where payment is received in advance and exports take place subsequently, application for REP Authorisation shall be filed within six months following the month during which exports are made.
4A.1.4 For purpose of clarity, it is again reiterated that the month in which the export has been made in case of advance payment and the month in which export proceeds have been realised in part or full after making of exports, shall be excluded while calculating period of six months for filing of application for REP Authorisation.
Wastage Norms 4A.2 Wastage or manufacturing loss on gold / silver / platinum jewellery and articles thereof is as follows:

Item of exports Percentage of wastage by weight with reference toGold / Platinum / Silver content in export item
. Gold/ Platinum Silver
a) Plain jewellery and articles andornaments like Mangalsutra containing gold and black beads / imitation stones, cubic zirconia, diamonds, precious, semi-precious stones. 3.5% 4.5%
b) Studded jewellery and articlesthereof 9.0% 10%
c) Mountings and findings manufactured(by non-mechanised process)indigeneously 3.5% 4.5%
d) Any jewellery / articles manufacturedby a fully mechanised process and unstudded. 1.25% 1.25%
e) Mountings, whether imported orindigenously procured / manufactured, used in studded jewellery 2.5% 2.5%
f) Gold / silver / platinum medallionsand coins (excluding coins of nature of legal tender) 0.25% 0.25%
g) Findings and mountings manufacturedby mechanized process 1.25% 1.25%

Value Addition 4A.2.1 Under scheme for export of jewellery, value addition shall be calculated as per paragraph 4A.6 of FTP. Minimum value addition shall be:

S.No. Item of Export Minimum Value Addition
a) Plain gold / platinum / silver jewellery and Articlesand ornaments like Mangalsutra containing goldand black beads / imitation stones, except in studded form of jewellery. 4%
b) All types of Studded gold / platinum / silver Jewelleryand articles thereof. 6.5%
c) Any jewellery / articles manufactured by fullymechanised process 2%
d) Gold / silver / platinum medallions & coins (excludingcoins of nature of legal tender) 2%
e) Gold / silver / platinum findings / mountingsmanufactured by mechanised process 3%


4A.2.2 Entitlement of quantity of gold / silver / platinum against the export shall be quantity of gold / silver / platinum in item of export plus admissible wastage / manufacturing loss.
Loss of Gem and Jewellery 4A.3 Consignments of gem and jewellery items exported out of country and lost in transit after exports, where foreign exchange against such exports has been realised or insurance claims settled, will also be eligible for REP Authorisation.
Gem & Jewellery Replenishment uthorisations 4A.4 Gem REP Authorisations shall be valid for import of precious stones, semi-precious and synthetic stones and pearls. In addition, Authorisation shall also be valid for import of empty jewellery boxes upto 5% of value of Authorisation within its overall CIF value. Gem REP Authorisations issued against export of studded gold / silver / platinum jewellery articles, shall also be valid for import of cut and polished precious / semi-precious stones other than emerald upto 10% of CIF value of Authorisation within its overall CIF value.
4A.4.1 Gem REP Authorisation are available as per scale given in Appendix 12B.
Filing of Application 4A.4.2
  1. An application for Gem Rep Authorisation may be given to RA concerned as given in Appendix 1A in the form given in Appendix 22-F alongwith prescribed documents.
  2. In case E.P Copy of Shipping Bill and Customs attested invoice is submitted to nominated agencies, exporter shall furnish a self certified photo copy of same along with a certificate from nominated agencies certifying carat / value of studdings in case of studded jewellery and excess value addition achieved in case of plain jewellery and articles.
  3. Provision of paragraph 4A.1.1 to 4A.1.4 will also be applicable for Gem Rep Authorisations.
Agency Commission 4A.5 Exporter availing scheme of gold / silver / platinum jewellery are allowed to pay agency commission. Value addition shall be calculated after deducting agency commission. Wherever such agency commission is paid, value addition shall be correspondingly increased by percentage of agency commission.
Endorsement on shipping Bill and Invoice 4A.6 During export of jewellery, shipping bill and invoice presented to customs authorities shall contain description of item, its purity, weight of gold / silver / platinum content, wastage claimed thereon, total weight of gold / silver / platinum content plus wastage claimed and its equivalent quantity in terms of 0.995/0.999 fineness for gold/ silver and in terms of 0.9999 fineness for platinum and its value, fob value of exports and value addition achieved. If purity of gold / silver / platinum used is same in respect of all or some of items made out from each of these metals for export, exporter may give total weight of gold/silver/ platinum and other details of such similar items which are of same purity. In case of studded items, shipping bill shall also contain description, weight and value of precious / semi-precious stones / diamonds / pearls used in manufacture, and weight / value of any other precious metal used for alloying gold / silver.
Conditions of Exports 4A.7 Exports shall be allowed by customs authorities provided endorsement made on shipping bill and invoice are correct and value addition achieved is not below minimum prescribed in FTP.
Proof of Exports 4A.8

Exporter has to furnish the proof of exports, wherever required for export of gold / silver / platinum jewellery and articles thereof, by furnishing following documents:

  1. E.P copy of the shipping bill;
  2. Customs attested invoice;
  3. Bank certificate of export as in Appendix 22A showing that documents have been sent for negotiation / collection; and
  4. A declaration on following lines:

    I / We declare that outstanding realisation of export proceeds beyond 180 days does not exceed 10% of average exports of preceding three licensing years. I/We further declare that no export proceeds are outstanding beyond one year or such extended period for which RBI permission has been obtained.”

In case of Personal carriage of jewellery by foreign buyer, following documents should be submitted by the exporter/seller as proof of exports for claiming export entitlements:

  1. Copy of shipping bill filed by Indian Seller;
  2. A copy of Currency Declaration Form filed by Foreign Buyer with Customs at the time of his arrival; and
  3. Foreign Exchange Encashment Certificate from Bank.

    In addition to this, Personal Carriage on Documents Against Acceptance (DA) / Cash On Delivery (COD) basis is also allowed. Exporter will have to furnish following documents as proof of exports for claiming export entitlements:
    1. Copy of Shipping Bill filed by Indian Seller; and
    2. Bank Certificate of Export and Realisation

Instructions issued by Customs Department in this regard should be followed mutatis mutandis.

Conversion of Purity / Fineness 4A.9

For conversion of quantity of gold / silver / platinum in terms of equivalent quantity in terms of fineness, following formula shall be used:

  1. Where items of gold has been exported in terms of carats, quantity of gold shall be multiplied by number of carat of gold exported, divided by 24 and thereafter again divided by 0.995 / 0.999 / 0.900 to arrive at equivalent quantity of gold in terms of fineness of 0.995 / 0.999 / 0.900 respectively; and
  2. Wherever purity of item of export is expressed in terms of fineness, the quantity of gold/silver/platinum shall be multiplied by fineness of gold/silver/platinum exported and thereafter divided by 0.995 / 0.999 / 0.900 to arrive at equivalent quantity of gold / silver / platinum in terms of 0.995 / 0.999 / 0.900 fineness respectively’.
Release of Gold / Silver / Platinum by Nominated Agencies 4A.10 Gold / silver / platinum shall be released to exporter of jewellery by nominated agencies/RBI authorised banks in multiples of 10 gms or in Ten Tola Bars in respect of golds. However, silver shall be released to exporters in multiples of 1 Kg only. Any balance of gold / silver / platinum shall be available to exporter along with his future entitlement. Gold / silver shall be released by the nominated agencies in terms of 0.995 fineness or more and platinum in terms of 0.900 fineness or more.
Terms of payment 4A.11 Export of gold / silver / platinum jewellery and articles thereof shall be against irrevocable letter of credit, payment of cash on delivery basis, Documents Against Acceptance (DA) basis or advance payment in foreign exchange.
Port of Export 4A.12 Exports under schemes of gold / silver / platinum jewellery and articles thereof shall be allowed by airfreight and Foreign Post Office through the Customs House at Mumbai, Calcutta, Chennai, Cochin, Delhi, Jaipur, Bangalore, Kochi, Coimbatore, Ahmedabad, Dabolin Airport, Goa and Hyderabad. Export by courier shall also be allowed through Custom Houses at Mumbai, Calcutta, Chennai, Cochin, Coimbatore, Delhi, Jaipur, Bangalore, Ahmedabad and Hyderabad upto FOB value of Rs.20 lakhs per consignment.
Export by Post 4A.13

Policy for export of gems and jewellery parcel by post is in paragraph 4A.17 of FTP. At the time of exports, exporter shall submit following documents:

  1. Shipping bills or invoice presented at foreign Post Office;
  2. Certificate from nominated agencies indicating price at which gold / silver / platinum was booked or given on outright sale basis or loan basis;
  3. Three copies of invoice.
4A.14 Deleted
Export Against Supply By Foreign Buyer 4A.15 Before clearance of each consignment of import supplied by foreign buyer, nominated agency shall execute a bond with Customs, undertaking to export within stipulated period in contract, gold / silver / platinum jewellery or articles equivalent to entire import quantity of gold / silver / platinum, mountings and findings etc excluding admissible wastage.

In case of direct supply of gold / silver / platinum, alloys, findings and mountings of gold / silver / platinum and plain semi-finished gold / silver / platinum jewellery to status holder / exporter, Status Holder / exporter shall furnish a Bank Guarantee / LUT, as per Customs Rules and regualtions to Customs equivalent to Customs Duty leviable on imported gold / silver / platinum, alloys, findings and mountings of gold / silver / platinum and plain semi- finished gold/ silver / platinum jewellery etc.

BG / LUT, executed with Customs shall be valid for one year. In case of direct supply to Status Holder / exporter, exports shall be completed within 90 days. In case of non-fulfillment of EO / non-achievement of stipulated value addition, Customs Department shall proceed to recover custom duty alongwith interest which may include enforcement of BG / LUT. Besides importer will be liable to penal action under Customs Act
4A.15.1 Nominated agency / Status Holder / exporter shall be liable to pay customs duty leviable on that quantity which is proved to have been not exported.
4A.15.2 Goods shall be cleared through Customs by nominated agency Status Holder / exporter. Even where export order is received by an Associate, goods shall be cleared through Customs by nominated agency only and not Associate. Associate shall, in such cases, authorise nominated agency to act as its agent to file Bill of Entry and shipping bill.
4A.15.3

At time of export, shipping bill presented to Customs shall also contain the following:

  1. Name and address of associate / Status Holder / exporter;
  2. An endorsement by nominated agency that export is made against an order received by concerned associate, its date of registration with nominated agency. In case of exports by Status Holder / exporter, a Self Declaration shall be provided to this effect;
  3. Name of Customs House through which gold / silver / platinum / plain semi-finished gold / silver / platinum jewellery was imported and corresponding Bill of Entry No. and date and date of import.
4A.15.4 Each shipping bill shall be valid for exports only through Customs House located at the place where office of nominated agency / Status Holder / exporter concerned is situated. It shall be valid for shipment for a period of seven days including the date on which endorsement was made by nominated agency in case of exports through nominated agency. If exports cannot be made within this period, exporter shall file a fresh shipping bill.
4A.15.5

At the time of export, exporter shall submit following documents:

  1. Shipping bill with two extra copies where exports are made from a Customs House other than Customs House through which corresponding import of gold / silver / platinum / plain semi-finished gold / silver / platinum jewellery was effected. In other cases, shipping bill with an extra copy;
  2. Three copies of invoice;
  3. Certificate from nominated agency indicating quantity and value of items supplied by foreign buyer.
4A.15.6 Customs authorities shall return two copies of shipping bill and connected invoice duly attested. One copy shall be sent to person who presented documents and the other copy shall be sent by Customs to office of nominated agency / Status holder / exporter.
4A.15.7 In case of exports through nominated agency, exporter shall submit proof of exports to nominated agency within 15 days of exports, who shall, after verifying documents, release admissible quantity of the gold / silver / platinum etc. to exporter.
4A.15.8 Exporter may also obtain, in advance, gold / silver / platinum etc. supplied by foreign buyer by furnishing a BG / LUT for an amount equal to international price of such items plus customs duty payable thereon. BG / LUT shall be redeemed only when the exporter has furnished proof of exports to nominated agency and accounted for the use of items supplied in advance in export product.
4A.15.9 For redemption of bond / BG / LUT executed with Customs, nominated agency / Status Holder / exporter shall furnish a statement indicating items, its quantity and value supplied by foreign buyer, corresponding Bill of Entry number and date, number of each of shipping bills against which corresponding exports was made.
Maintenance of Accounts 4A.16 Nominated agency shall maintain complete account, consignment- wise, of the gold, silver, platinum, mountings, findings / plain semi- finished gold / silver / platinum jewellery etc. imported for execution of each export order, exports effected and quantity of gold, silver, platinum mountings, findings etc. released against such exports. For direct exports, similar accounts shall also be maintained by Status Holder. Such accounts shall be maintained for a minimum period of three years from date of exports.
Export Through Exhibitions / Export Promotion Tours / Export of Branded Jewellery 4A.17 Nominated agencies shall produce to Customs Authorities letter in original or its certified copy, containing Government’s approval for holding exhibition / export of branded jewellery. Any other person shall produce to Asst. Commissioner, customs letter in original or its certified copy containing GJEPC’s approval for holding exhibitions / export promotion tour / export of branded jewellery.

In case of re-import, such items, on arrival, shall be verified alongwith export documents before clearance.
4A.18
  1. Exports under this scheme shall be subject to following conditions for following modes of export:
    1. Export of Gems and Jewellery for holding / participating in overseas exhibition.

      Exports under this scheme shall be subject to the following conditions:

      Items not sold abroad shall be re-imported within 60 days of close of exhibition. However in case exporter is participating in more than one exhibition within 45 days of close of first exhibition, then 60 days shall be counted from date of close of last exhibition. In case of personal carriage of gems and jewellery for holding /participating in overseas exhibitions, value of such gems and jewellery shall not exceed US $ 2 million. Gold / silver / platinum content on items sold in such exhibitions may be imported as replenishment.

      Exporter shall take replenishment from nominated agency within 120 days from the close of the exhibition gold / silver / platinum for replenishment content against items sold abroad in exhibition.
    2. Personal Carriage of gems & jewellery or export through airfreight / post parcel route for Export Promotion Tours /photo shoots / fashion shows overseas.

      Personal carriage / export through airfreight / post parcel route of gold / silver / platinum jewellery, cut and polished diamonds, precious, semi- precious stones, beads and articles as samples upto US$ 100,000 for export promotion tours / photo shoots / fashion shows and temporary display / sale abroad is also permitted with approval of Gem & Jewellery & Jewellery EPC subject to the condition that promoter would bring back jewellery / goods or repatriate sale proceeds within 45 days from date of departure through normal banking channel. In case of personal carriage for export promotion tours, exporter shall declare personal carriage of such samples to Customs while leaving country and obtain necessary endorsement on Export Certificate issued by Jewellery Appraiser of Customs. In such cases exporter shall book with nominated agency, within 120 days after export promotion tour or expiry of stipulated period of 45 days, whichever is earlier, gold / silver / platinum for replenishment content against items sold abroad.
    3. Export of branded jewellery.

      Export of branded jewellery is also permitted with approval of Gem & Jewellery and Jewellery EPC for display / sale in permitted shops set up abroad or in showroom of their distributors / agents. Items not sold abroad within 180 days shall be re- imported within 45 days. Exporter shall book with nominated agency within 120 days after the end of stipulated period of 180 days, gold / silver / platinum for replenishment content against items sold abroad.
  2. Following documents shall be submitted for claiming such replenishment:
    1. Customs attested invoice;
    2. Copy of the approval letter issued by Government / GJEPC;
    3. Certificate from nominated agency / GJEPC as in Appendix 22F.
  3. In case of exhibitions organised by nominated agencies, gold / silver / platinum shall be imported as replenishment by nominated agencies within 60 days from close of exhibition.
4A.19 Nominated agencies shall maintain a complete account of exports made, goods sold abroad, goods re-imported, and metals purchased abroad and imported into India. Such account shall be maintained for a minimum period of three years from date of close of exhibition.
Export Against Supply By Nominated Agencies 4A.20

Exporter may obtain gold / silver / platinum on following basis:-

  1. Replenishment basis after completion of exports;
  2. Outright purchase basis in advance;
  3. Loan basis.
Replenishment Basis 4A.21 Exporter may apply to nominated agency for booking of precious metal gold / silver / platinum. Quantity of precious metal booked with nominated agency shall be equivalent to precious metal content in the export product and admissible wastage.
4A.21.1 Applicant shall at the time of booking deposit an earnest money for a minimum amount of 20% of notional price of precious metal, which shall be adjusted at actual sale.
4A.21.2 Exporter may also export jewellery on a notional rate based on certificate provided by Bank. Exporter must fix price within credit terms allowed to buyer and realise proceeds within the due date of the credit terms or 180 days, whichever is earlier. Exporter exporting on a notional basis under Replenishment Scheme must book the same quantity of gold with Nominated Agency on same rate that he may have booked with buyer. Nominated agencies shall purchase precious metal on behalf of exporter at the rate so fixed and thereafter issue a purchase certificate bearing a serial number to exporter indicating quantity of gold / silver / platinum and CIF value, in dollars including the Rupee equivalent. Price shall be actual price at which gold / silver / platinum is purchased by nominated agencies plus permitted service charges levied by nominated agencies shall be included with the price of gold / silver / platinum for value addition. Duplicate and triplicate copies of exporter’s application together with copies of purchase certificate for exporter shall be sent by nominated agencies to concerned Custom House as well as to the negotiating bank who will confirm realization at which gold has been purchased. Exporter exporting under notional rate will get replenishment only after proceeds are realised.
4A.21.3 Exports shall be effected within a period of 120 days from date of booking and drawal of precious metal shall be completed within a period of 150 days from date of booking or within 30 days from date of export whichever is later.
Outright Purchase Basis in Advance 4A.22 Exporter may obtain required quantity of precious metal in advance on outright purchase basis subject to furnishing of BG / LUT to nominated agencies for an amount as may be prescribed by nominated agency. On failure to effect exports within period prescribed, the nominated agencies shall enforce BG / LUT, as the case may be.
4A.22.1 Exports shall be effected within a maximum period of 90 days from date of outright purchase of precious metal.
Loan Basis 4A.23 Exporter may obtain required quantity of precious metal on loan basis subject to furnishing of BG / LUT, for customs duty to nominated agencies for an amount as may be prescribed by nominated agencies. On failure to effect exports within period prescribed, the nominated agencies shall enforce the BG / LUT.
4A.23.1 Exporter has to pay interest on gold taken on loan basis at the rate as may be specified.
4A.23.2 Export has to be completed within a maximum period of 90 days from date of release of gold on loan basis. No extension for fulfillment of EO shall be allowed.
4A.23.3 Exporter shall be permitted to export jewellery on the basis of a notional rate certificate to be issued by nominated agency / GJEPC. This rate will be based on prevailing Gold / USD rate and the USD / INR rate in notional rate certificate. Certificate issued by nominated agency / GJEPC should not be older than 7 working days of date of shipment.

Value addition will have to be achieved on rate as may be got fixed with buyer and Nominated Agency.

Exporter shall have flexibility to fix the price and repay Gold Loan within 180 days from date of export. This price shall be communicated to nominated agencies who will issue a certificate showing final confirmation of the rate to the bank negotiat