duty exemption & remission scheme
TRANSCRIPT
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Advance Authorisation, Duty
Exemption Scheme &
Exporters
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Duty Exemption & Duty Remission Scheme
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FOREIGN TRADE POLICY CORRELATION WITH
Foreign Trade (D evelopment & R egulation) Ac t, 1992 Foreign Trade (R egulation) R ules, 1993
Customs Ac t, 1962
Customs Tariff Ac t, 1975
Foreign Exch ange Management Ac t, 1999
Exch ange Control R egulations
Industrial Policy R esolution, 1956
Industrial D evelopment & R egulation Act, 1951
Law of Weights & Measures
Central Ex cise
Miscellaneous
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COMPOS ITION OF FORE IGN TRADE POLICY
Notifications
General Provisions
Imports
Exports
EPCG
Duty Exemption S cheme
100% EOU
S pecial Economic Zone
Deemed Exports
Definitions
Miscellaneous
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DUTY EXEMPTION SCHEMECONCEPTS
Export
Import
Deemed export
Advance Authorization
Annual Advance Authorization
Intermediate Advance Authorization Duty Free Import Authorization
Duty Entitlement Passbook Scheme (D.E.P.B)
Duty Drawback
Assessable Value
Basic Duty
Additional Duty Special Additional Duty
Education Cess
Assessment
Advance Release Order
Back to back Letter of Credit
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Chapter 8 : DEEMED EXPORTS
³Deemed Exports´ refers to those
transactions in which the goods supplieddo not leave the country and thepayment for such supplies is received
either in Indian rupees or in free foreignexchange.
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DUTY DRAWBACK
Duty Drawback
Is a Reimbursement of
Import Duty Excise Duty
Paid on Inputs
Used in the Manufacture of ExportProducts
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BRAND RATE
A I R S.B.R
DBK I, II, III
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ADVANCE AUTHORISATION
Advance Authorization
Is a Facility
To Import Inputs
Used Required
In the Manufacture of Export Product
Without Payment of Import Duty
Subject to 15% Value Addition
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DUTY FREE IMPORT AUTHORIZATION
Duty Free Import Authorization
q
Is A Pre / Post Export Facility
q
To Import Inputs
q
Used In Manufacturer of Export product
qWithout Payment Of Import Duty
q
Subject To 20% Value Addition
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DUTY ENTITLEMENT PASSBOOKD.E.P.B
qIs Notional Credit Given
q
By Customs
q
As % of F.O.B. Value Of Exports
q
To Be Utilizedq
Against Payment Of Import Duty
q
For Any Product
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ADVANCE AUTHORISATION
Advance Authorization
Is a Facility
To Import Inputs
Used Required
In the Manufacture of Export Product
Without Payment of Import Duty
Subject to 15% Value Addition
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ADVANCE AUTHORIZATION SCHEME
Features
It is a Pre Export Incentive
The facility available to Merchant Exporter, Manufacturer Exporter.
The facility available to supporting Manufacturer and Co-Licensee
The Scheme provides Exemption from Basic, Additional Duty.
If any product attracts Antidumping Duty, the same too is not leviable.
15% Value Addition required.
Duty Free Import of Mandatory Spares upto 10% of CIF value of the
license permitted.
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Facility available for Free of Cost material and New Comers.
The facility of prior Exports available.
Records of Utilization of Materials to be maintained under
Appendix 23.
Initial validity period of Authorization is 24 months.
The entitlement under Advance Authorization for Annual
Requirement shall be upto 300% of the FOB value of Physical
Export and /or FOR value of Deemed Exports in preceding
licensing year or Rs. 1 Crore whichever is higher.
ADVANCE LICENCE AUTHORIZATIONSCHEME
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ADVANCE AUTHORISATION CORRELATION
DUTY DRAWBACK
EPCG SCHEME
DEEMED EXPORTS
FEMA ADVANCE INTERMEDIATE AUTHORISATION
ADVANCE RELEASE ORDER (ARO)
BACK TO BACK LETTER OF CREDIT
CUSTOMS
INDUSTRIAL POLICY
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Admissibility of Drawback
4.1.14 (FTP)
In case of an Advance Authorization,
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
Authorization.
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DUTY FREE IMPORT AUTHORIZATION
Duty Free Import Authorization
q
Is A Pre / Post Export Facility
q
To Import Inputs
q
Used In Manufacturer of Export product
qWithout Payment Of Import Duty
q
Subject To 20% Value Addition
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DUTY FREE IMPORT AUTHORIZATIONFeatures
It is a P r e / Post Export Ince nt ive .
It per mits Dut y Free Import of Inputs use d in t he Ma nu f a cture of Export
Pr odu ct .
The Be ne fit is a va ila ble only a ga inst e xport of t hose pr odu cts where
SION are Fixe d.
It re qu ires a minimu m Va lue Addit ion of 20%.
Af ter f u lfillme nt of Export obligat ion, re quest for tra ns f era bilit y ca n be ma de t o t he Re giona l Aut hor it y.
No CENVAT Cre dit Fa cilit y s ha ll be a va ila ble for inputs e it her importe d
or pr ocure d indige nous ly a ga inst t he Aut hor izat ion.
The Dra wba ck s ha ll be a va ila ble in res pe ct of a ny Dut y pa id mater ia l.
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DUTY ENTITLEMENT PASSBOOKD.E.P.B
qIs Notional Credit Given
q
By Customs
q
As % of F.O.B. Value Of Exports
q
To Be Utilizedq
Against Payment Of Import Duty
q
For Any Product
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Features
It is a post export incentive
The minimum value addition required is 25%.
It is not subject to ¶Actual User Condition·.
No duplicate of DEPB can be issued if original is lost.
DEPB can be issued only against export of those items
where input /output norms have been notified.
The DEPB shall be valid for a period of 24 months from the
Date of Issue.
DUTY ENTITLEMENT PASSBOOK
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CUSTOMS
AND ADVANCE AUTHORISATION
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ORGANIZATION CHART
Minister of Finance
Secretary Finance
Secretary Revenue Secretary Expenditure
CBDT Central Board of Excise & Customs
Central Excise Customs
AppraisingPreventive
Air Sea AppealsLand
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STRUCTURE OF CUSTOMS DEPARTMENTMinister of Finance
Secretary Revenue
Central Board of Excise & Customs
Commissionerates of Customs
Mumbai Kolkatta Chennai Bangalore Delhi, etc.
Principal Commissioner of Customs
Commissioner
Imp Prev.AppealsExp Cofe. Admn.
Asst. Commissioner
Appraiser Staff
Addl./ Jt. Commissioner /Dy. Commissioner
Ad j..
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STRUCTURE OF CUSTOMS
TARIFFCustoms Tariff Act, 1975
Gen. Rules of Int.
(Rule 1 to 6)
Gen.Exemption(No. 1 to 132)
1st SCH Annex.
(I to XXV)
SCH - II
Sections (XXI)
Chapters
Ch. 1 to 98
Notes:1. Each section is preceded by ³Section Notes´
2. Each chapter is preceded by ³Chapter Notes´
3. Each chapter is divided into ³Headings´ & ³Sub-Headings´
4. Customs Tariff Classifications are eight digit numbers.
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IMPORT DUTIES
In India Import Duties are levied pursuant to the Provisions contained
under Customs Tariff Act, 1976
Following are the types of import duties applicable:
a) Basic Import DutyThis is levied under Sec 2 of Customs Tariff Act, 1975.
b) Additional Duty / Countervailing Duty
This is levied under Sec 3 of Customs Tariff Act, 1975. It is
equivalent to the Central Excise Duty leviable on like goods
manufactured in India.
c) Special Additional Duty.
c) Education Cess.
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ASSESSABLE VALUE
All Import Duties are levied based on Assessable Value
Assessable Value is the sum total of the following:
CIF Value of Import Consignment
Local Agency Commission if paid in India
Loading by Customs
1% - ´Landing Chargesµ
Other pre-importation cost
Note: All Pre Importation Costs are included for Assessable
Value purpose and all Post Importation Costs are excluded.
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ADJUDICATION
STEPS
1) QUER Y MEMO
2) REPLY TO QUER Y MEMO
3) PERSONAL HEARING4) DECISION
NOTE
Conclude the reply with following 2 standard phrases:
a) We do not want Show Cause Notice
b) We are desirous of being heard in person.
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SUBMISSIONS
CONTENTS
PART A - FACTS OF THE CASE
PART B ± GROUNDS
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NOTIFICATION No.
93/2004-CUSTOMS DATED 10-09-2004
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REDUCTION IN EXPORT DOCUMENTATION²ABOLITION OF VARIOUS
DECLARATIONS²REG.
[M.F. (DR), CIRCULAR NO. 34/2005-CUS., (F. NO. 609/132/2004-
DBK), DT.5.8.2005] .
The undersigned is directed to invite your attention to the above
mentioned subject and to say that in the wake of representations
from thetrade and industry that the present export documentation procedure
is
complex and cumbersome and that under the system the exporters
are
required to submit a large number of documents and declarations to
the
Customs, causing delays and adding to the transaction cost, the
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The Sub-Committee was a multi disciplinary group and
consisted of representatives from the Customs, DGFT, RBI,
Federation of Indian Export Organizations (FIEO) and Delhi
Exporters Association. After a careful scrutiny of the export
documentation requirements under EDI system, the Sub-
Committee has found that the documents required for customs
purposes are only five viz. commercial invoice, packing list,
ARE-1, self declaration form and declarations pertaining to
various export promotion schemes. These documents are
essential documents containing vital information required for
various purposes by various agencies. The Sub-Committee has,
therefore recommended that these documents can not be
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2.1. Exports under Drawback Scheme
The declarations being abolished are those relating to availing /non-availing of the
rebate of duty under Rules 18 & 19 of the Central Excise Rules, the goods
manufactured /not manufactured and exported against an Advance License, the goods
not manufactured or exported after availing of the facility under DEPB scheme, the
present market value of goods, the export value of goods being not less than the total
value of imported materials used in the manufacture of such goods, the market price
of export goods being not less than the drawback amount being claimed, the drawbackbeing claimed is more than 1% of FOB value /less than 1% of the FOB value but more
than Rs. 500 against the shipping bill, the payment of duties in respect of containers,
packing materials or other materials used in the manufacture and packing of export
products j and the goods being exported under bond or claim for rebate of duty. The
above declarations are presently listed at SI. Nos.3, 4, 5, 9, 10, 11, j 12, & 14 of
Appendix-III and SI. No. 2 of Appendix IV as prescribed vide I this office letter No.
609/99/2002-DBK dated 29.5.2002.
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2.2. Exports under DEPB Scheme
The declarations being abolished are those relating to not claiming
the benefits-under Engineering Products Export (Replenishment of Iron and Steel Intermediates) Scheme and duty drawback, of
conversion of DEPB Shipping Bill into Drawback /DEEC Shipping Bill
and of credit in \ respect of additional duty debited from DEPB, the
fact of goods being; exported under DEPB Scheme, the present
market value of goods, DEPB benefits being claimed not exceeding
50% of the present market value of export goods, usage of
preservatives in export products and export products having beenobtained from aqua culture sources. The above
declarations are presently listed at SI. Nos. 2-7, 11, 12, 14 & 15 of
Annexure-F as DEPB declaration.
2 3 E t d DEEC/ DFRC S h
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2.3. Export under DEEC/ DFRC Scheme
The declarations being abolished are those relating to export goods corresponding to
the goods specified in DEEC License and availing /non-availing of benefits under Rule
191-A and 191-B of the Central! Excise Rules, 1944. The said declarations arepresently listed at SI. Nos. l(a) & l(c) of the Annexure-II of the shipping bill.
3. Non EDI Stations
It is clarified that a few declarations viz. the goods manufactured /not manufactured
and exported against an Advance License, the goods not manufactured or exportedafter availing the facility under the DEPB scheme (SI. Nos. 4 and 5 of Appendix III as
prescribed by this office letter supra), not claiming the benefits under duty drawback
for exports under DEPB (SI. No. 4 of Annexure F as DEPB declaration) and the
declaration about export goods corresponding to the goods specified in DEEC License
(SI. No. l(a) of the Annexure-II of the shipping bill) for exports under DEEC/DFRC
license, although abolished in respect of exports under EDI,will continue to be filed at
non-EDI stations until such time that these stations are brought under EDI. Barring
these exceptions all declarations are abolished for exports under schemes indicated in
paragraph 3 above.
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4. It is further clarified that the declaration dealing with no change in the
manufacturing formula and quantum per unit imported material (SI. No.
2 of Appendix III as prescribed by this office letter supra) is required to
be given only for fixation of brand rate of duty drawback under Rule 6 or
7 of the Drawback Rules, 1995 and, therefore, exporters need not givethis declaration for exports under claim of All Industry Rate of Duty
drawback.
5. A suitable Draft Notice and Standing Order may be issued for the
guidance of trade and staff. Difficulties faced, if any, in implementation
of the circular may be brought to the notice of the Board at an early
date.
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CASE LAWS
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2006(137) ECR 0299 (Tri-Mumbai)
2006 (111) ECC 0299
Manu / C M / 0299 /2006
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALWEST ZONAL BENCH AT MUMBAI
M/s Galaxy Surfactants Ltd. and Sadanand Shetty
V/sCommissioner of Customs (EP), Mumbai
APPLICATION NO:C/S/1429 And 1471,1430 And 1470/06, 1431 And.01469/06 And Appeal No. C / 518 And 528 ,519 And 527, 520 And 526/ 06
DECIDED ON : 24.07.2006
PRIOR HISTORY: Arising out of Order in original No.(1) 06/06/CAC/CC/NRNdated 19th January,2006,passed by Commissioner of Customs (EP), Mumbai
Judges
Archana Wadhwa Member( judicial) and K.K. Agarwal, Member (Technical)
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Demand ² Use of imported input ² violation of condition No. (vii) of notification No.30/97- Transfer of Impugned goods to
another unit-As also the same use in manufacture of
finished products sold in domestic market-Held ,export
obligation fulfilled ²As long as export obligation has been met it is immaterial
whether goods were first used for domestic clearances and
exports were made later on or vice versa ² As also said
material used in appellant's own unit ² No violation of condition No. (vii) of notification No. 30/97 ² Appeal allowed
² Stay petition disposed of
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2005 (127) ECR 271 BOMBAYIN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.V.INDUSTRIES
V/SUNION OF INDIA
Held:
EXIM ± Show Cause Notice ± Issuance ± Advance License-
Petitioner Importing Raw Material under DEEC Scheme ±Deletion of value restrictions from License ± Inadvertent lapseon part of DGFT ± On the basis of deletion, Petitioner madeimports believing that there were no value restrictions- Deletionof the condition even if a Bona fide error or misconstruction of
import policy, the Petitioner cannot be made to suffer ±Issuance of Show Cause Notice unjustified - Show CauseNotice quashed an set aside ± Respondents not entitled to takeimpugned action ± Classification does not apply to the case qualicense and import.
Ref: Cen & C:18th
October 2005 (127) p.g.271-274
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2005 (127) ECR 358 (Tri. ± Chennai)
In the Customs, Excise and Service Tax Appellate Tribunal
South Zonal Bench
CC, ChennaiV/s
Sharda Castings Ltd. & Anr.
Held:
Valuation (Customs) ± Advance License- Transaction Value ± Enhancement ± Department demanded enhancement onthe basis of the custom recorded price of scrap imported andcleared through the same port ± practice of loading of price of imported goods without reference to quantity, place and time
of import has to be rejected when it is contrary to statutoryprovisions ± Transaction value has to be discarded on validgrounds ± Impugned order upheld.
Ref: Cen & C:18th October 2005 (127) p.g 358- 359
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2007 (149) ECR 0026 (Tri.- Chennai)
2007 (123) ECC 0026
MANU / CE / 0026 / 2007
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,SOUTH ZONAL BENCH, CHENNAI
Seshasayee Paper and Boards Ltd.
v.
CCE, Salem
APPEAL NO: E/ 799/2006
DECIDED ON: 01.08.2007
PRIOR HISTORY : Arising out of Order-in-Original No: 6/2006 (Commissioner)dated 28th July, 2006 passed by the Commissioner of Central Excise Salem
Judges
P.G. Chacko, Member (Judicial) and P. Karthikeyan, Member (Technical)
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Excise ± CENVAT ± Basic Customs Duty (BCD) ±Countervailing duty (CVD) ± DEPB license ± Rule 9(1) of
the CENVAT Credit Rules, 2004 ± Notification No. 96/04 ±Cus ± Board¶s Circular No. 59/2004 ± Cus. Dated21.10.2004 ± Appellants were manufacturers of paper andpaper boards for which they imported some of the inputson payment of Basic Customs Duty and countervailing duty
± payment of said duties were made by way of debits inDEPB License ± Respondent objected to availment of credit on two grounds ± that if a credit could be availedonly on an amount of duty paid in cash & such availmentwas not permissible in the absence of a documentspecified under Rule 9(1)- Issue ± Whether the importer was entitled to take CENVAT credit of the amount debitedin DEPB towards payment of CVD and whether suchavailment was permissible in the absence of a documentspecified under Rule 9(1)
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Held, credit cannot be denied on grounds that
duty was not paid in cash ± this tantamount to
flouting condition (vi) of Notification No. 96/04 ±Cus. As also Board¶s Circulars in clarifications
thereof ± The credits in question are of the
amounts of debits recorded in the Bills of Entry
and certified by the proper officer ± It is not indispute that a Bill of Entry is one of the
documents specified under Rule 9(1) of the CCR
2004 for the purpose of availment of CENVAT
credit ± Therefore, appellants are entitled toCENVAT credit of the amounts debited in DEPB
as certified in the Bills of Entry ± Appeal allowed.
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CONCLUSION
DO·S & DON·T S
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DO·S & DON·T S
FOR ADVANCE AUTHORISATION
Is a preferred Export Incentive where Import content in Export Product is higher.
The quantity of inputs involved is substantial.
If it is proposed to combine Advance Autho. with Deemed Exports, the quantities to be
sourced locally must be substantial.
While deciding on Advance Autho., local purchase price must be compared with CIF
value of Import + Basic Import Duty.
At every stage transaction cost of operating under the scheme should be compared
with other Export Incentive schemes.
There should be good internal systems to track and preserve the relevant documents
from application stage to the stage of redemption.[
It is preferable if imports are effected after Export under Advance Authorisation
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ADVANCE AUTHORISATION VS
ANNUAL ADVANCE AUTHORISATION
Annual Advance Autho. is preferable where the number of Advance Authos. in a
licensing year ranges from 5 to 10 Authos.
The transaction cost under Annual Advance Autho. is lower as compared to Advance
Authorization.
Annual Advance Autho. is preferable where flow of order is continuous and product of
export involved is same.
The Annual Advance Autho. is preferable where product of export and import are
standardized.
Advance Autho. is suitable where Export orders are on an ad- hoc basis.
The option of applying for Advance Autho. under self declaration basis is not available
under Annual Advance Authorization.
The flexibility in operation is more under Advance Autho. than Annual Advance
Authorization.
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Advance Authorization Vs. DBK
Advance Autho. is preferable where Import content is inexcess of 25% of value of FOB value of exports
Advance Autho. is preferable where FOB value of exports ishigh
DBK is preferable where indigenous content of inputs if highin export product
DBK is preferable where FOB value of exports is lower
DBK is preferable where All Industry Rate of Drawback is
fixed. Advance Autho. is preferable where product of export is non
standardized
Advance Authorization is preferable where SION is fixed.
In case of Deemed export, DBK is preferable where product
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2.42
FREE MOVEMENT OF EXPORT GOODS
Consignment of items meant for exports
shall not be withheld / delayed for any
reason by any agency of the Central / State
Government. In case of doubt the
authorities concerned may ask for anundertaking from the exporter.
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2.42.1 : NO SEIZURE OF STOCK
No Seizure of Stock shall be made by any agency
so as to disrupt the manufacturing activity and
delivery schedule of Export goods. In
exceptional case, the concerned agency may
seize the stock on the basis of Prima Facie
evidence. However, such Seizure should be lifted
within 7 days
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2.44REGISTRATION ± CUM ± MEMBERSHIP
CERTIFICATE
Any person applying for 1. A Authorization / Certificate / Permission to Import /
Export, [except items listed as Restricted Items in
ITC(HS)] or
2. Any other benefit or concession under this Policy shall
be required to furnish registration ² cum ² membership
certificate (RCMC) granted by the competent authority
in accordance with the procedure specified in
Handbook Vol.1unless specifically exempted under the
Policy.
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ORGANISATIONS WEBSITE
Foreign Exchange
Dealers Association of
India
www.fedai.org.in
Department of Commerce & Industry www.commerce.nic.in
Foreign Trade Policy www.dgftcom.nic.in
List Of Export
Promotion Council In
India
www.indianexportersindex.
com
List Of Export
Promotion Council,
Boards etc
http://cyberjournalist.org.in/
linkst.html
USEFUL WEBSITES
W ld T d t
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World Trade
Organizationwww.wto.org
Foreign Exchange
Management Actwww.femaonline.com
Reserve Bank Of India www.rbi.org.in
Federation of Indian
Chamber of Commerce &
Industry
www.ficci.com
Asian Clearing Union ±
ACUwww.asainclearingunion.org
Informative Site www.ieport.com
Country Profiles-Good
Informative Site
http://www.indianindustry.com/
country-profiles/south-africa.html
www.legallyindia.comLegal Aspects
SAARC d i
8/8/2019 Duty Exemption & Remission Scheme
http://slidepdf.com/reader/full/duty-exemption-remission-scheme 56/59
SAARC www.sdc.gov.in
International
Chamber of Commercewww.iccwbo.org
Central Board
of
Excise and Customs
http://www.cbec.gov.in
Zonal joint
Directorate General
of Foreign Trade
http://zjdgft.tn.nic.in
Indian Trade PromotionOrganization.
http://www.indiatradefair.com/index.html
Market Development
Assistant ± MDA- for
SSI Unit
http://www.laghuudyog.
com/sido/SSIMDA.Htm
Department of htt // i
8/8/2019 Duty Exemption & Remission Scheme
http://slidepdf.com/reader/full/duty-exemption-remission-scheme 57/59
Department of
Commerce ± Export
Import Data bank
http://www.commerce.nic.
in/eidb/ecomg.asp
Federation of IndianExport Organization
www.fieo.com
International Chamber
Of
Commerce ±India
www.iccindiaonline.org
World Trade Centre www.wtcmumbai.org
Department of
Scientific & Industrial
Research
Informative Site
http://dsir.nic.in/advt/dsirad1.htm
www.eximkey.com
8/8/2019 Duty Exemption & Remission Scheme
http://slidepdf.com/reader/full/duty-exemption-remission-scheme 58/59
LIST OF BOOKS RECOMMENDED
Set of Foreign Trade Policy Books ± By R. K Jain
Customs Tariff ± By R. K Jain
Customs Law Manual ± By R. K Jain
Export ± What, Where & How ± By Parasram Exports Do It Yourself ± By M. I Mahajan
Drawback Schedule ± Current Publication
DEPB Schedule ± Current Publication
Master Circular on Imports Master Circular on Exports
Customs Law Guide ± By R. Gururaj
8/8/2019 Duty Exemption & Remission Scheme
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S.M. ChaturvediS.M. Chaturvedi
Legal Legal ² ² Corporate Advisor Corporate Advisor
201,Siddhi Kanchan Vinayak Apts,201,Siddhi Kanchan Vinayak Apts,
(Opp. Mantri Venture) , Bangur Nagar , (Opp. Mantri Venture) , Bangur Nagar ,
Goregaon (W) ,MumbaiGoregaon (W) ,Mumbai-- 400 090400 090
Tel Tel -- 091091--022022--65249155, 65249155,
Mobile Mobile -- 98202841609820284160