Upload File

foreign trade policy

40
1 16 FOREIGN TRADE POLICY New Foreign Trade Policy 2015-2020 has come into effect from April 1, 2015. The salient features of the new policy are discussed hereunder 1 : 16.1. Introduction Foreign Trade Policy is a set of guidelines or instructions issued by the Central Government in matters related to import and export of goods in India viz., foreign trade. In the era of globalization, foreign trade has become the lifeline of any economy. Its primary purpose is not merely to earn foreign exchange, but also to stimulate greater economic activity. International trade not only enables a nation to specialize in the goods which it can produce most cheaply and efficiently, but also to consume more than it would be able to produce with its own resources. International trade enlarges the potential markets for the goods of a particular economy. Legislation governing foreign trade: In India, Ministry of Commerce and Industry governs the affairs relating to the promotion and regulation of foreign trade. The main legislation concerning foreign trade is the Foreign Trade (Development and Regulation) Act, 1992 FT(D&R) Act. The FT(D&R) Act provides for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto. As per the provisions of the Act, the Government:- (i) may make provisions for facilitating and controlling foreign trade; (ii) may prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions; (iii) is authorised to formulate and announce an export and import policy and also amend the same from time to time, by notification in the Official Gazette; (iv) is also authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act, including formulation and implementation of the export-import policy. Foreign Trade Policy : In exercise of the powers conferred by the FT(D&R) Act , the Union Ministry of Commerce and Industry, Government of India generally announces the integrated Foreign Trade Policy (FTP) every five years with certain underlined objectives. The Foreign 1 Students are advised to read this Chapter on Foreign Trade Policy in place of Chapter 16 of Section C: Customs & FTP of Study Material on Paper 8: Indirect Tax Laws [November, 2014 Edition] © The Institute of Chartered Accountants of India

Upload: cool-anggel

Post on 17-Aug-2015

222 views

Category:

Documents


5 download

Report

DESCRIPTION

Foreign Trade Policy

TRANSCRIPT

1 16 FOREIGN TRADE POLICY NewForeignTradePolicy2015-2020hascomeintoeffectfromApril1,2015.Thesalient features of the new policy are discussed hereunder1: 16.1. Introduction Foreign Trade Policy is a set of guidelines or instructions issued by the Central Government in mattersrelatedtoimportandexportofgoodsinIndiaviz.,foreigntrade.Intheeraof globalization, foreign trade has become the lifeline of any economy.Its primary purpose is not merely to earn foreign exchange, but also to stimulate greater economic activity.International tradenot onlyenables anation to specialize in thegoodswhich it can produce most cheaply andefficiently,butalsotoconsumemorethanitwouldbeabletoproducewithitsown resources.Internationaltradeenlargesthepotentialmarketsforthegoodsofaparticular economy.Legislationgoverningforeigntrade:InIndia,MinistryofCommerceandIndustrygoverns theaffairsrelatingtothepromotionandregulationofforeigntrade.Themainlegislation concerningforeigntradeistheForeignTrade(DevelopmentandRegulation)Act,1992 FT(D&R) Act.The FT(D&R) Act provides for the development and regulation of foreign trade byfacilitatingimportsinto,andaugmentingexportsfrom,Indiaandformattersconnected therewith or incidental thereto.As per the provisions of the Act, the Government:-(i)may make provisions for facilitating and controlling foreign trade;(ii)mayprohibit,restrictandregulateexportsandimports,inallorspecifiedcasesaswell as subject them to exemptions;(iii)is authorised to formulate and announce an export and import policy and also amend the same from time to time, by notification in the Official Gazette;(iv)is also authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act, including formulation and implementation of the export-import policy. ForeignTradePolicy:InexerciseofthepowersconferredbytheFT(D&R)Act,theUnion MinistryofCommerceandIndustry,GovernmentofIndiagenerallyannouncestheintegrated Foreign Trade Policy (FTP) every five years with certain underlined objectives.The Foreign

1StudentsareadvisedtoreadthisChapteronForeignTradePolicyinplaceofChapter16ofSection C: Customs & FTP of Study Material on Paper 8: Indirect Tax Laws [November, 2014 Edition] The Institute of Chartered Accountants of India2 TradePolicywasearliercalledasExportImportpolicyi.e.,EXIMPolicy.However,export import policy is now referred to as Foreign Trade Policy (FTP) of the country as it covers areas much beyond export and import.This policy is updated every year, in addition to changes that are made throughout the year.TheFTP,ingeneral,aimsatdevelopingexportpotential,improvingexportperformance, encouragingforeign trade and creatingfavorablebalanceof paymentsposition.Thepolicies aredrivenbyfactorslikeexportledgrowth,improvingefficiencyandcompetitivenessofthe Indian industries, ease of doing business etc. Salient Features of an FTP: The following are some of the key attributes of the FTP: Export-Import of goods and services is generally free unless specifically regulated by the provisions of the Policy or any other law for the time being in force. Exportandimportgoodsarebroadlycategorizedas(a)Free(b)Restricted(c) Prohibited.Somegoodsarefreeforimportandexportbutcanbeimported/exportedonlythrough State Trading Enterprises (STE). Therearerestrictionsonexportsandimportsforvariousstrategic,health,defence, environment,andotherreasons.Ifthegoodsarerestrictedforimport/exportbutnot prohibited, the Government can give a permission/license for specific reasons. Exports are promoted through various promotional schemes. Goodsandservicesaretobeexportedandnottaxes.Hence,thetaxesonexportsare either exempted or adjusted or refunded on both outputs and inputs, through schemes of Duty Exemption, Duty Refund (Drawbacks and Rebates). Capital goods can be imported at NIL duty for the purpose of exports under the scheme of EPCG. Forunitsundertakingtoexportalltheirproduction,therearespecialschemessothat they can avoid taxes at every stage under the scheme of EOU/SEZ. In certain cases imports get dutyexemption/concessionfor certain specialpurposes. In suchcases,toenabledomesticsupplierscompetewiththeinternationalsuppliers,the supplies of domestic suppliers are treated as deemed exports. Duty credit scrips Schemes are designed to promote exports of some specified goods to specified markets and to promote export of specified services. ForeignTradePolicy2015-2020-ThepresentForeignTradePolicy,whichwasannounced on 01.04.2015, is an integrated policy for the period between 01.04.2015 and 31.03.2020. Guiding principles: The guiding principles of FTP 2015-2020 are as follows Generationofemploymentandincreasingvalueadditionincountry,inkeepingwith Make in India vision. The Institute of Chartered Accountants of India3 Focusonimprovingeaseofdoingbusinessandtradefacilitationbysimplifying procedures and extensive use of e-governance move towards paperless working.Encouraging e-commerce exports of specified products. Steps to encourage manufacture and export by SEZ, EOU, STP, EHTP and BTP. Duty credit scrips to (a) encourage exports of specified products to specified markets (b) export of services. Special efforts to resolve quality complaints and trade disputes. The various measures taken in said direction include: The number of mandatory documents required for exports and imports of goods from/into India have been reduced to 3 each (discussed in detail in subsequent pages).The facility of 24 X 7 Customs clearance for specified imports has been made available at the 18specifiedseaports.Thefacilityof24X7Customsclearanceforspecifiedimportshas also been made available at the 17 specified air cargo complexes. Singlewindowschemehasbeenintroducedtoenableimporterandexportertolodgetheir clearance documents at a single point thereby providing a common platform to trade to meet requirements of all regulatory agencies involved in exim trade.Tofacilitateprocessingofshippingbillsbeforeactualshipment,prioronlinefilingfacilityfor shippingbillshasbeenprovidedbytheCustoms-7daysforairshipments&ICDsand14 days for shipments by sea.DGFT under the EDI initiatives has provided the facility of on line filing of applications to obtain Importer Exporter Code and various authorizations /scrips. Exports from and imports in India, need a lot of regulatory requirements to be complied with at various stages.Yet if properly planned,exports and imports canutilize alot benefitsthatare availableundervariousprovisionsoftheFTP.Thepolicynotonlyprescribestheguidelines as to which goods and services can be imported/exported and the relevant procedures thereto but also provides a lot of benefits if properly planned.SchemeslikeDutyExemptionSchemes,EPCGSchemes,DeemedExports,etc.,benefit exporters,importersandevendefineddomesticbusinessestherebyassistingallbusinesses toreducecostsateverystageinthevaluechain.Inaddition,exporterscanavailother benefits under promotional schemes. Administration of the FTP:The FTP is formulated, controlled and supervised by the office of the Director General of Foreign Trade (DGFT), an attached office of the Ministry of Commerce &Industry,GovernmentofIndia.DGFThasseveralofficesinvariouspartsofthecountry which work on the basis of the policy formed by the headquarters at Delhi. DGFT issues authorization (earlier called as licence) for import/export.Authorization means apermissionintermsoftheFT(D&R)Acttoimportorexport.ItalsograntsImporter The Institute of Chartered Accountants of India4 ExporterCode(IEC)Numbertoimportersandexporters.ImportandExportwithoutIEC number is not permitted, unless specifically exempted.DecisionofDGFTisfinalandbindinginrespectofinterpretationofanyprovisionofforeign trade policy, classification of any item in ITC(HS), content scope or issue of any authorization issued under the FTP. Otherauthoritiesinvolved:ThoughtheFTPisformulatedbyDGFT,itisadministeredin close coordination with other agencies.Other important authorities dealing with FTP are: (1)CentralBoardofExciseandCustoms(CBEC):CBECcomesunderMinistryof FinanceanditstwoDepartmentsnamely,CustomsandCentralExcisefacilitatein implementing the provisions of the FTP.CustomsDepartmentisresponsibleforclearanceofexportandimportgoodsaftertheir valuationandexamination.CustomsauthoritiesfollowthepolicyformedbytheDGFT whileclearingthegoods.Sincethereisacentralexcisedutyonalmostallthe manufacturedproducts,CentralExciseauthoritiesneedtobeinvolvedforallmattersof exports, where goods have to be cleared without duty.Central Excise Department works asCustomsDepartmentsatvariousrequiredplaces,andhasacrucialroleinthe procedural aspects.(2)Reserve Bank of India (RBI): RBI is the nodal bank in the country which formulates the policiesrelatedtomanagementofmoney,includingpaymentsandreceiptsofforeign exchange.It also monitors the receipt and payments for exports and imports. RBI works under the Ministry of Finance. (3)StateVATDepartments:SinceVATispayableondomesticgoodsbutnotonexport goods,formalitieswithStateVATdepartmentsassumeimportanceinensuringtaxfree exports.Contents of Foreign Trade Policy: The contents of the FTP 2015-2020 are as follows(i)FTP2015-2020:having9Chaptersgivingbasicpolicy.Thishasbeennotifiedbythe CentralGovernmenton01.04.2015.ThepolicyisamendednormallyinAprileveryyear and also during the year. (ii)Handbook of Procedures 2015-2020: (HBP 2015-2020) containing 9 chapters, covering proceduralaspectsofpolicy.ThishasbeennotifiedbyDirectorGeneralofForeign Trade on 01.04.2015. It is amended from time to time as per requirements. (iii)Appendices and Aayat Niryat Forms (AANF): containing various appendices and forms relating to import and export. (iv)StandardInput-OutputNorms:StandardInput-OutputNorms(SION)ofvarious productsarenotifiedfromtimetotime..BasedonSION,exportersareprovidedthe The Institute of Chartered Accountants of India5 facilitytomakeduty-freeimportofinputsrequiredformanufactureofexportproducts under the Duty Exemption Schemes like Advance Authorisation and DFIA. (v)ITC(HS)ClassificationofExportsandImportItems:TheExportImportPolicy regardingimportorexportofaspecificitemisgivenintheIndianTradeClassification CodebasedonHarmonizedSystemofCoding[ITC(HS)].ITC-HSCodingwasadopted inIndiaforimport-exportoperations.IndiancustomuseseightdigitITC-HSCodesto suit the national trade requirements. ITC-HS codes are divided into two schedules. ITC(HS) Import Schedule I describe the rulesandguidelinesrelatedtoimportpolicieswhereasScheduleIIdescribetherules andregulationrelatedtoexportpolicies.Presently,mostofthegoodscanbeimported withoutanyauthorization.ScheduleIIcontainsveryfewproducts,whereexportis prohibited or restricted. Excluding those items, export of all other goods is free.Any changes or formulation or addition of new codes in ITC-HS Codes are carried out by DGFT (Directorate General of Foreign Trade).ForeignTradePolicyvisavistaxlaws:TheForeignTradePolicyiscloselyknitwiththe Customs and Excise laws of India.However, the policy provisionsper-se do not override tax laws.TheexemptionsextendedbyFTParegiveneffecttobyissueofnotificationsunder respective tax laws (e.g., Customs Tariff Act).Thus, actual benefit of the exemption depends onthelanguageofexemptionnotificationsissuedbytheCBEC.Inmostofthecasesthe exemptionnotificationsrefertopolicyprovisionsfordetailedconditions.MinistryofFinance/ Tax Authorities cannot question the decision of authorities under the Ministry of Commerce (so far as the issue of authorization etc. is concerned). FTP,HandbookofproceduresunderFTP,CentralExciseActandCustomsActand notificationsissuedhereunderformanintegratedschemeofindirecttaxation.Allthese statueshavetobereadasawholeandnotinisolation,sincetheyareseriesofstatues relating to same subject matter. ScopeofFTP:TheFTPcoversthepoliciesandregulationswithrespecttothefollowing matters: (i)Legal framework and trade facilitation Chapter 1 (ii)Policy for regulating import and export of goods and services Chapter 2 (iii)Export Promotional Measures Export from India Scheme Chapter 3 (iv)DutyRemissionandDutyExemptionSchemeforpromotionofexportsAAandDFIA and duty drawback Chapter 4 (v)Export promotion Capital Goods (EPCG) Scheme Chapter 5 (vi)ExportOrientedUndertakings(EOU)/ElectronicHardwareTechnologyPark(EHTP)/ Software Technology Park (STP) and Bio Technology Parks (BTU) Schemes Chapter 6 (vii)Deemed Exports Chapter 7 The Institute of Chartered Accountants of India6 (viii)Quality Complaints and Trade Disputes Chapter 8 (ix)Definitions Chapter 9 ProvisionsrelatingtoSpecialEconomicZone(SEZ)arecontainedinaseparateActandare not part of FTP. However, provisions of SEZ are closely related to Foreign Trade Policy. HandbookofProcedures(HBP2015-2020)has9correspondingchapterswhichmainlydeal with procedural aspects of the foreign trade policy. SpecialFocusInitiatives:TheFTPprovidescertainspecialfocusinitiativesforMarket Diversification, Technological Upgradation, Support to status holders, Agriculture, Handlooms, Handicraft,Gems&Jewellery,Leather,Marine,ElectronicsandITHardwareManufacturing Industries,Greenproducts,ExportsofproductsfromNorth-East,SportsGoodsandToys sectors wherein the Government of India shall make concerted efforts to promote exports. Board of Trade: Board of Trade (BOT) has been constituted to advise Government on Policy measures for increasing exports, review export performance, review policy and procedures for importsandexportsandexamineissuesrelevantforpromotionofIndiasforeigntrade. Commerce&IndustryMinisterwillbetheChairmanoftheBOT.Governmentshallalso nominateupto25persons,ofwhomatleast10willbeexpertsintradepolicy.Inaddition, ChairmenofrecognizedExportPromotionCouncils(EPCs)andPresidentorSecretary-GeneralsofNationalChambersofCommercewillbeex-officiomembers.BOTwillmeetat least once every quarter. Trade facilitationthrough EDIinitiatives:DGFT has put in place a robust EDI system for the purposeofexportfacilitationandgoodgovernance.DGFThassetupasecuredEDImessage exchangesystemforvariousdocumentationrelatedactivitiesincludingimportandexport authorizationsestablishedwithotheradministrativedepartments,namely,Customs,Banksand EPCs.ThishasreducedthephysicalinterfaceofexportersandimporterswiththeGovernment Departmentsandisasignificantmeasureinthedirectionofreductionoftransactioncost.The endeavourofDGFThasbeentoenlargethescopeofEDItoachievehigherlevelofintegration with partner departments. E-BRC(ElectronicBankRealisationCertificate) hasenabledDGFT tocapturedetailsofrealisationofexportproceedsdirectlyfromthebanksthroughsecured electronic mode. Further, an online complaint registration and monitoring system allows users to register complaint and receive status/ reply online. DGCI&SCommercialTradeData:DGCI&ShasputinplaceaDataSuppressionPolicy.Transactionleveldatawouldnotbemadepublicallyavailabletoprotectprivacy.DGCI&S tradedatashallbemadeavailableataggregatelevelwithaminimumpossibletimelagina query based structured format on commercial criteria.16.2Provisions regarding imports and exportsA.GENERAL PROVISIONS APPLICABLE TO IMPORT AND EXPORT OF GOODS 1.Exportsandimportsarefreeunlessregulated:ExportsandImportsshallbefree, exceptwhereregulatedbyFTPoranyotherlawinforce.Theitemwiseexportand The Institute of Chartered Accountants of India7 import policy shall be specified in ITC(HS) notified by DGFT from time to time. These are classifiedas(a)Free(b)Restricted(c)Prohibited(d)ExclusivetradingthroughState Trading Enterprise (STEs). 2.Compliancewithlaws:Everyexporter orimportershallcomplywiththeprovisionsofthe FT (D&R) Act, the rules and orders made there-under, the FTP and terms and conditions of anyauthorizationgranted to him. All imported goods shall also be subject to domestic laws, rules,orders,regulations,technicalspecifications,environmentalandsafetynormsas applicable to domestically produced goods unless specifically exempted.3.Interpretationofpolicy:Ifanyquestionordoubtarisesinrespectofinterpretationof anyprovision,said question or doubtshallbereferredtoDGFTwhosedecisionthereon shall be final and binding.4.Procedure: DGFT may specify procedure to be followed by an exporter or importer or by anylicencingoranyothercompetentauthorityforthepurposeofimplementing provisionsofForeignTradeAct,therulesandtheordersmadethere-underandFTP. SuchproceduresshallbepublishedinHandBookofProceduresbymeansofaPublic Notice, and may, in like manner, be amended from time to time.5.ExemptionfromPolicy/Procedure:DGFTmaypasssuchordersorgrantsuch relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverseimpactontrade.DGFTmay,inpublicinterest,exemptanypersonorclassor category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit.6.PrinciplesofRestriction:DGFTmay,throughanotification,adoptandenforceany measure necessary for:(a)Protection of:- (i)public morals.(ii)human, animal or plant life or health.(iii)patents, trademarks and copyrights and the prevention of deceptive practices.(iv)national treasures of artistic, historic or archaeological value(v)trade of fissionable material or material from which they are derived (b)Prevention of traffic in arms, ammunition and implements of war and use of prison labour.(c)Conservation of exhaustible natural resources.7.Export/importofrestrictedgoods/services:Anygoods/services,exportorimportof whichisrestrictedunderITC(HS)maybeexportedorimportedonlyinaccordancewith an Authorization or in terms of a public notice/notification issued in this regard. The Institute of Chartered Accountants of India8 8. TermsandConditionsofanauthorization:EveryAuthorizationshallbevalidfor prescribedperiodofvalidityandshall,interalia,includethefollowingtermsand conditions (as applicable) in addition to such other conditions as may be specified:(a) Quantity, description and value of goods;(b) Actual User condition;(c) Export obligation;(d) Minimum Value Addition to be achieved;(e) Minimum export/ import price; and(f)Bank Guarantee/ Legal Undertaking/ Bond with Customs Authority/ RA. 9. Authorizationnotaright:NopersonmayclaimanAuthorizationasarightandDGFT orRAshallhavepowertorefusetograntorrenewthesameinaccordancewith provisions of FT(D&R) Act, rules made there under and FTP.10.Penalty: If an authorization holder violates any condition of such authorization or fails to fulfill export obligation, he shall be liable for action in accordance with FT (D&R) Act, the Rules and Orders made there under, FTP and any other law for time being in force.11.StateTradingEnterprises(STEs):STEsaregovernmentalandnon-governmental enterprises, including marketingboards,whichdealwith goodsforexportand/orimport.Any goods, import or export of which is governed through exclusive or special privileges granted to State Trading Enterprises [STE(s)], may be imported or exported by STE(s) as perconditionsspecifiedinITC(HS).DGFTmay,however,grantanauthorizationtoany other person to import or export any of these goods. 12.Importer-Exporter Code (IEC): It is a unique 10 digit code issued by DGFT to a person.IECismandatorytoexportanygoodsoutofIndiaortoimportanygoodsintoIndia unless specificallyexempt. PermanentAccountNumber(PAN)is pre-requisite forgrant of an IEC. Only one IEC can be issued against a single PAN.Anapplication forIECisto be mademanuallytothe nearestRA(RegionalAuthority)of DGFToralternatively, it canbe filedonline,inFormANF2A and shallbeaccompanied by prescribed documents. In case of STPI/ EHTP/ BTP units, the Regional Offices of the DGFThavingjurisdictionoverthedistrictinwhichtheRegistered/HeadOfficeofthe STPI unit is located shall issue or amend the IECs. 13.Trade with neighbouring countries: DGFT may issue instructions or frame schemes as mayberequiredtopromotetradeandstrengtheneconomictieswithneighbouring countries.14.Transitfacility:TransitofgoodsthroughIndiafrom/ortocountriesadjacenttoIndia shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with international conventions. The Institute of Chartered Accountants of India9 15.Mandatory documents for export/import of goods from/into India:(a)Mandatory documents required for export of goods from India:1.Bill of Lading/Airway Bill/Lorry Receipt/Railway Receipt/Postal Receipt2.Commercial Invoice cum Packing List*3.Shipping Bill/Bill of Export(b)Mandatory documents required for import of goods into India1.Bill of Lading/Airway Bill/Lorry Receipt/Railway Receipt/Postal Receipt2.Commercial Invoice cum Packing List*3.Bill of Entry *Note:AsperCBECCircularNo.01/15-Customsdated12/01/2015,separate Commercial Invoice and Packing List would also be accepted.B.PROVISIONS RELATING TO IMPORT OF GOODS 1.Actualusercondition:Goodswhichareimportablewithoutanyrestriction,maybe importedbyanyperson.However,ifsuchimportsrequireanAuthorization,actualuser alonemayimportsuchgoodsunless actualuserconditionisspecifically dispensedwith by DGFT.2.Secondhandgoods:Importofsecondhandcapitalgoods,includingrefurbished/re-conditionedsparesshallbeallowedfreely.However,secondhandpersonalcomputers/ laptops,photocopiermachines,airconditioners,dieselgeneratingsetswillonlybe allowedagainstauthorisation.Secondhand(used)goods,[exceptsecondhandcapital goods], shall be restricted for imports and may be imported only against Authorization.3.Removal of scrap/ waste from SEZ: Any waste or scrap or remnant including any form ofmetallicwaste&scrapgeneratedduringmanufacturingorprocessingactivitiesofan SEZUnit/Developer/Co-developershallbeallowedtobedisposedinDTA(Domestic Tariff Area) freely, subject to payment of applicable customs duty.4.Importofgiftsandsamples:Importofgiftsshallbepermittedwheresuchgoodsare otherwise freely importable under ITC(HS). In other cases, a Customs Clearance Permit (CCP) shall be required from DGFT. Further, import of samples shall be governed by the prescribedprocedures.Authorisationforimportofsamplesisrequiredonlyincaseof vegetableseeds,beesandnewdrugs.Samplesofteaupto`2,000(CIF)per consignmentwillbeallowedwithoutauthorization.Samplesupto`3,00,000canbe imported by all exporters without duty. 5.Passenger Baggage: (a)Bonafidehouseholdgoodsandpersonaleffectsmaybeimportedaspartof passengerbaggageasperlimits,termsandconditionsthereofintheBaggage Rules, 1998. The Institute of Chartered Accountants of India10 (b)Samples of such items that are otherwise freely importable underFTP may also be imported as part of passenger baggage without an Authorization.(c)Exporters coming from abroad are also allowed to import drawings, patterns, labels, pricetags,buttons,belts, trimming andembellishments requiredfor export,aspart of their passenger baggage without an Authorization.Note:BaggageprovisionshavebeendiscussedindetailinChapter-7-Importation, Exportation and Transportation of Goods. 6.Re-importofgoodsrepairedabroad:Capitalgoods,equipments,components,parts and accessories, whether imported or indigenous, except those restricted under ITC(HS) maybesentabroadforrepairs,testing,qualityimprovementorupgradationor standardization of technology and re-imported without an Authorization.7.Import of goods used in projects abroad:After completion of projects abroad, project contractorsmayimport,withoutanAuthorization,goodsincludingcapitalgoodsusedin the project provided they have been used for at least one year. 8.Saleonhighseas:SaleofgoodsonhighseasforimportintoIndiamaybemade subject to FTP or any other law in force.9.Import under lease financing: It is freely permitted. Permission of Regional Authority is not required for import of capital goods under lease financing. However, RBI approval is required in some cases. 10.Clearanceofgoodsfromcustoms:Goodsalreadyimported/shipped/arrived,in advance,butnotclearedfromcustomsmayalsobeclearedagainstanAuthorization issuedsubsequently.However,thisfacilitywillnotbeavailabletorestricteditemsor items traded through STEs. 11.Execution of BG/ LUT: Whenever goods are imported duty free or otherwise specifically stated,importershallexecuteprescribedLUT(LetterofUndertaking)/BG(Bank Guarantee)/BondwithCustomsAuthoritybeforeclearanceofgoods.Incaseof indigenoussourcing,AuthorizationholdershallfurnishLUT/BG/BondtoRAconcerned beforesourcingmaterialfromindigenoussupplier/nominatedagencyasperthe prescribed procedures.12.Private/publicbondedwarehousesforimports:Private/publicbondedwarehouses maybesetup inDTA(DomesticTariffArea)asperterms andconditionsof notification issuedbyDoR.Anypersonmayimportgoods,exceptprohibiteditems,armsand ammunition,hazardouswasteandchemicalsandwarehousetheminsuchbonded warehouses.Suchgoodsmaybeclearedforhomeconsumptionagainstauthorisation, whenever required. Customs duty as applicable shall be paid at the time of clearance of suchgoods.Ifsuchgoodsarenot clearedfor home consumptionwithin aperiodof one yearorsuchextendedperiodasthecustomauthoritiesmaypermit,importerofsuch goods shall re-export the goods. The Institute of Chartered Accountants of India11 C.PROVISIONS RELATING TO EXPORT OF GOODS 1.Free exports: All goods may be exported without any restriction except to the extent that suchexportisregulatedbyITC(HS)oranyotherprovisionofFTPoranyotherlawfor thetimebeinginforce.DGFTmayhowever,specifythroughapublicnoticesuchterms and conditions according to which any goods, not included in ITC(HS), may be exported without an Authorization.2.Exportofsamples:Exportofsamplesandfreeofchargegoodsshallbegovernedby prescribedprocedures.Exportofbonafidetradeandtechnicalsamplesoffreely exportable item shall be allowed without any limit. In case of restricted items, application should be made to DGFT. Such samples can be exported as part of passenger baggage without an Authorisation. 3.Exportofpassengerbaggage:Bonafidepersonalbaggagemaybeexportedeither alongwithpassengeror,ifunaccompanied,withinoneyearbeforeorafterpassengers departure from India. However, items mentioned as restricted in ITC(HS) shall require an Authorization. GovernmentofIndia officialsproceeding abroadonofficial postings shall, however,bepermittedtocarryalongwiththeirpersonalbaggage,fooditems(free, restrictedorprohibited)strictlyfortheirpersonalconsumption.Samplesofsuchitems thatareotherwisefreelyexportableunderFTPmayalsobeexportedaspartof passenger baggage without an Authorisation. 4.Exportofgifts:Goods,includingedibleitems,ofvaluenotexceeding`5,00,000ina licensingyear,maybeexportedasagift.However,itemsmentionedasrestrictedfor exports in ITC(HS) shall not be exported as a gift, without an Authorization. For export of samples/gifts/spares/replacementgoods(otherthanSCOMETitems)inexcessof ceiling/period, application can be made to DGFT in form ANF-2Q. 5.Exportofspares:Warrantyspares(whetherindigenousorimported)ofplant, equipment,machinery,automobilesoranyothergoods,[exceptthoserestrictedunder ITC(HS)]maybeexportedalongwithmainequipmentorsubsequently,butwithin contracted warranty period of such goods subject to approval of RBI.6.Thirdpartyexports:Third-partyexportsmeansexportsmadebyanexporteror manufacturer on behalf of another exporter(s). In such cases, export documents such as shippingbillsshall indicatenameof both manufacturing exporter/manufacturer andthird partyexporter(s).BRC,GR declaration, export order andinvoiceshouldbeinthe name of third party exporter. Such third party exports shall be allowed under FTP.7.Export of imported goods:Goods imported, in accordance with FTP, may be exported in same or substantially the same form without an Authorization, provided that an item to be imported or exported is not restricted for import or export in ITC(HS).Exports of such goods imported against payment in freely convertible currency would be permitted provided export proceeds are realized in freely convertible currency.However, The Institute of Chartered Accountants of India12 export of such goods to notified countries will be permitted in Indian rupees subject to at least 15% value addition. Such exports shall not be eligible for any export incentives. 8.Exportofreplacementgoods:Goodsorpartsthereofonbeingexportedandfound defective/ damaged may be replaced free of charge by the exporter and such goods shall beallowedclearancebycustomsauthorities,providedthatreplacementgoodsarenot mentioned as restricted items for exports in ITC(HS).9.Exportofrepairedgoods:Goodsorpartsexportedandfounddefective,damagedor otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shallbeallowedclearancewithoutanAuthorizationandinaccordancewithcustoms notification.However,re-exportofsuchdefectiveparts/sparesbytheCompanies/firmsandOriginal EquipmentManufacturersshallnotbemandatoryiftheyareimportedexclusivelyfor undertaking root cause analysis, testing and evaluation purpose. 10.PrivateBondedWarehousesforexports:Privatebondedwarehouses,whichareset up exclusively for exports shall be entitled to procure goods from domestic manufacturers withoutpaymentofduty.Suppliesmadebyadomesticsuppliertosuchnotified warehousesshallbetreatedasphysicalexportsprovidedpaymentsaremadeinfree foreign exchange.11.Denominationofexportcontracts:Allexportcontractsandinvoicesshallbe denominatedeitherinfreelyconvertiblecurrencyorIndianrupeesbutexportproceeds shallberealisedinfreelyconvertiblecurrency.However,exportproceedsagainst specific exports may also be realized in rupees, provided it is through a freely convertible Vostroaccountofanonresidentbanksituatedinanycountryotherthanamember countryofAsianClearingUnion(ACU)orNepalorBhutan.Additionally,rupeepayment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account.Freeforeignexchangeremittedbybuyertohisnon-residentbank(afterdeductingthe bank service charges) on account of this transaction would be taken as export realization underexportpromotionschemesofFTP.Contractsforwhichpaymentsarereceived throughACUshallbedenominatedinACUDollar.CentralGovernmentmayrelax provisionsinthisregardinappropriatecases.Exportcontractsandinvoicescanbe denominated in Indian rupees against EXIM Bank/ Government of India line of credit.12.Non-realisationofexportproceeds:Ifanexporterfailstorealiseexportproceeds withintimespecifiedbyRBI,heshall,withoutprejudicetoanyliabilityorpenaltyunder anylaw in force, beliable toactioninaccordance with provisions of FT(D&R) Act, rules and orders made thereunder and provisions of FTP.13.Free movement of export goods: Consignments of items meant for exports shall not be withheld/ delayed for any reason by any agency of Central/ State Government. In case of The Institute of Chartered Accountants of India13 anydoubt,authoritiesconcernedmayaskforanundertakingfromexporterandrelease such consignment.14.Noseizureofexportrelatedstock:Noseizureofstockshallbemadebyanyagency soastodisruptmanufacturingactivityanddeliveryscheduleofexports.Inexceptional cases,concernedagencymayseizethestockonbasisofprimafacieevidenceof seriousirregularity.However,suchseizureshouldbeliftedwithin7daysunlessthe irregularities are substantiated.D.Personal hearing by DGFT for Grievance Redressal:GovernmentiscommittedtoeasyandspeedyredressalofgrievancesfromTradeandIndustry.As a last resort to redress grievances of Foreign Trade players, DGFT may provide an opportunity forPersonalhearingbeforePolicyRelaxationCommittee(PRC)subjecttofulfillmentofcertain conditions.ExportPromotionCouncils:BasicobjectiveofExportPromotionCouncils(EPCs)isto promote and develop Indian exports. Each Council is responsible for promotion of a particular group of products, projects and services. Registration-cum-MembershipCertificate(RCMC):Anyperson,applyingforan Authorization to import/ export, or any other benefit or concession under FTP shall be required tofurnishonDGFTswebsiteintheImporterExporterprofile,RCMCgrantedbycompetent authority.Forinstance,CertificateofRegistrationasExporterofSpices(CRES)issuedby Spices Board shall be treated as RCMC for the purposes under this Policy.16.3Export Promotion Schemes Exports of a country play an important role in the economy.Government always endeavors to encourage exports by introducing various export promotion schemes.Consequently, there are variouspromotionalmeasuresunderFTPandotherschemesoperatedunderMinistryof Commerce through various Export Promotion Councils.As per WTO, export incentives cannot be given to the exporters as such otherwise there would be no free competition. Hence, all the export promotion schemes in India are directed towards ensuring that the inputs as well as final products are made tax-free.(1)DUTY EXEMPTION & REMISSION SCHEMES The Duty Exemption and Remission Schemes are the most important schemes in the Foreign TradePolicy,becausetheyaremostwidelyutilizedandarelargelycompatiblewiththe provisions of the Agreement on Subsidies and Countervailing Measures (ASCM) of the WTO. The Institute of Chartered Accountants of India(A)Dutyexemptionschemeinputs duty free for export production.1.Advance Authorization Scheme 2.Duty Free Import Authorization Scheme (DFIA) (B)Dutyremissionschemeservicesusedintheexportproductiseitherreplenishedorremitted. (DBK) Scheme is designed for this purpose.Duty remission is also granted under central excise law, through CENVAT cre2002. 1.ADVANCE AUTHORIZATION SCHEMEUnder advance authorization scheme, can be imported without payment of customs duty. The goodsimportedareexemptfrom basic customs duty,additional customs duty, educationcess,antiTheconditionsfordutyfreeimportsagainstphysicalexportsareprovidedin notification issued undeAdvanceAuthorisationshallbe Authorisation.AdvanceAuthorisationforDeemedExportshallbecocontracteddurationofprojectexecutionor12monthsfromthedateofissAuthorisation, whichever is more.PeriodoffulfillmentofexportobligationunderAdvanceAuthorizationis18months from the date of issue of Authorization or as notified by DGFT.Advance Authorization Scheme Duty Free Import Authorization Scheme (DFIA)Duty exemption schemes14 Dutyexemptionschemes:Underdutyexemptionschemes,exportercanimportthe inputs duty free for export production.The two duty exemption schemes are as follows:Advance Authorization SchemeDuty Free Import Authorization Scheme (DFIA)schemes:Underdutyremissionscheme,dutyoninputsandinput servicesusedintheexportproductiseitherreplenishedorremitted. is designed for this purpose.Duty remission is also granted under central excise law, through CENVAT credit scheme and rules 18 and 19 of Central Excise Rules, Duty exemption schemes ADVANCE AUTHORIZATION SCHEME Under advance authorization scheme, INPUTS which are used in the export productcan be imported without payment of customs duty.importedareexemptfrom basic customs duty,additional customs duty, educationcess,anti-dumpingdutyandsafeguardduty,unlessotherwisespecifiedTheconditionsfordutyfreeimportsagainstphysicalexportsareprovidedin notification issued under the Customs law. AdvanceAuthorisationshallbevalidfor12monthsfromthedateofissueof Authorisation.AdvanceAuthorisationforDeemedExportshallbecocontracteddurationofprojectexecutionor12monthsfromthedateofissAuthorisation, whichever is more. PeriodoffulfillmentofexportobligationunderAdvanceAuthorizationis18months from the date of issue of Authorization or as notified by DGFT. Advance Authorization Scheme Duty Free Import Authorization Scheme (DFIA)Duty Drawback (DBK) SchemeDuty remission schemes under Central Excise LawDuty remission schemes Underdutyexemptionschemes,exportercanimportthe The two duty exemption schemes are as follows:- erdutyremissionscheme,dutyoninputsandinput servicesusedintheexportproductiseitherreplenishedorremitted.DutyDrawback is designed for this purpose.Duty remission is also granted under central dit scheme and rules 18 and 19 of Central Excise Rules, which are used in the export product importedareexemptfrom basic customs duty,additional customs duty, ,unlessotherwisespecified.Theconditionsfordutyfreeimportsagainstphysicalexportsareprovidedin 12monthsfromthedateofissueofsuch Authorisation.AdvanceAuthorisationforDeemedExportshallbeco-terminuswith contracteddurationofprojectexecutionor12monthsfromthedateofissueof PeriodoffulfillmentofexportobligationunderAdvanceAuthorizationis18months Duty Drawback (DBK) SchemeDuty remission schemes under Central Excise The Institute of Chartered Accountants of India15 Exportsproceedsshallberealizedinfreelyconvertiblecurrencyexceptotherwise specified. (i)AdvanceAuthorisationonbasisofSION:AdvanceAuthorizationisissuedfor inputsinrelationtotheresultantproductonthebasisofSION.IfSIONfora particularitemisnotfixed,AdvanceAuthorisationcanbeissuedbyRAbasedon self declaration by applicant, except certain specified products. StandardInputOutputNorms(SION)arestandardnormswhichdefinethe amount of input(s)requiredtomanufacture unit of outputfor export purpose.SION is notified by DGFT on basis of recommendation of Norms Committee. (ii)Items which can be imported duty free against advance authorization:Inputs,whicharephysicallyincorporatedinexportproduct(makingnormal allowance for wastage).Fuel, oil, catalysts which are consumed/utilised to obtain export product.Mandatoryspareswhicharerequiredtobeexported/suppliedwithresultant product permitted upto 10% of CIF value of Authorization.Specifiedspicesonlywhenusedforactivitieslikecrushing/grinding /sterilization/manufactureofoilsoroleoresinsandnotforsimplycleaning, grading, re-packing etc.However,itemsreservedforimportsbySTEs cannotbeimportedagainstadvance authorization. (iii)Actual user condition for Advance Authorisation: Advance Authorization and/ or materialsimportedthereunderwillbewithactualusercondition.Itwillnotbe transferableevenaftercompletionofexportobligation.However,Authorization holderwillhaveanoptiontodisposeoffproductmanufacturedoutofdutyfree inputs once export obligation is completed. IncasewhereCENVATcreditfacilityoninputshasbeenavailedfortheexported goods,evenaftercompletionofexportobligation,thegoodsimportedagainst AdvanceAuthorizationshallbeutilizedonlyinthemanufactureofdutiablegoods whether within the same factory or outside (by a supporting manufacturer).Waste/scrap arising out of manufacturing process, as allowed, can be disposed off on payment of applicable duty even before fulfillment of export obligation. (iv)Who are eligible for advance authorization: Advance Authorization can be issued eithertoamanufacturerexporterormerchantexportertiedtosupporting manufacturer(s).Such Authorization can also be issued for: (1)Physical exports The Institute of Chartered Accountants of India16 (2)Intermediate supply (3)Supplies made to specified categories of deemed exports (4)Supplyofstoresonboardofforeigngoingvessel/aircraftprovidedthereis specific SION in respect of items supplied. (v)Domesticsourcingofinputs:Holderofadvanceauthorizationhasanoptionto procurethematerials/inputsfromindigenousmanufacturer/STEinlieuofdirect importagainstAdvanceReleaseOrder(ARO)/Invalidationletter/BacktoBack Inland Letter of Credit. However, Advance Authorisation holder may obtain supplies from EOU/EHTP/BTP/STP/SEZ units, without obtaining ARO or Invalidation letter. (vi)Conditionsforredeemingauthorisation:Itisnecessarytoestablishthatinputs actuallyusedinmanufactureoftheexportproductshouldonlybeimportedunder theauthorizationandinputsactuallyimportedmustbeusedintheexportproduct, forredeemingtheAuthorisation.Thename/descriptionoftheinputinthe Authorisationmustmatchexactlywiththename/descriptionendorsedinthe shipping bill.Further,quantityofinputtobeallowedunderAdvanceAuthorisationshallbein proportiontothequantityofinputactuallyused/consumedinproduction.Ifgoods are imported against advance authorization but export obligation is not fulfilled, duty and interest is payable. Aforesaid provisions will also be applicable for supplies to SEZs and supplies made under deemed exports. (vii)AnnualAdvanceauthorization:AdvanceAuthorizationcanbeissuedforannual requirement also. Such authorization shall be issued for items specified in SION and is not available on self-declaration basis. Exporters having past export performance (in at least preceding two financial years) shall be entitled for Advance Authorization for Annual Requirement.Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physicalexportand/orFORvalueofdeemedexportinprecedingfinancialyearor` 1 crore, whichever is higher.(viii) Valueaddition(VA):willbecalculatedasfollows(exceptforgemandjewellery sector)VA = [(A-B) x 100]/B A = FOB value of export realised/FOR value of supply received. B=CIF value of inputs coveredbyauthorisation plusanyother importedmaterials usedonwhichbenefitofdutydrawback(DBK)isclaimedorintendedtobe claimed. The Institute of Chartered Accountants of India17 Ifsomeitemsaresuppliedfreeofcostbyforeignbuyer,itsnotionalvaluewillbe added in the CIF value of import and FOB value of export for purpose of calculating valueaddition.ExportstoSEZUnits/suppliestoDevelopers/Co-developers, irrespective of currency of realization, would also be covered. MinimumvalueadditionrequiredtobeachievedunderAdvanceAuthorizationis 15%,exceptforphysicalexportsforwhichpaymentsarenotreceivedinfreely convertiblecurrencyandsomeotherspecifiedexportproducts.Fortea,minimum value addition required shall be 50%.(ix)Admissibility of drawback: Drawback as per rate determined and fixed by Central Exciseauthorityshallbeavailablefordutypaidinputs(bothimportedand indigenous) used in the export product.2.DUTY FREE IMPORT AUTHORIZATION (DFIA) SCHEME ProvisionsapplicabletoAdvancedAuthorisationarebroadlyapplicableincaseof DFIA.However,theseAuthorizationsshallbeissuedonlyforproductsforwhich StandardInputandOutputNorms(SION)havebeennotified.DutyFreeImport Authorisation (DFIA) is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed.ThegoodsimportedareexemptONLYfrombasiccustomsduty.Additional customs duty/excise duty, being not exempt, shall be adjusted as CENVAT credit as per DoR rules. DFIAshallbeissuedonpostexportbasisforproductsforwhichSIONhavebeen notified.Separate DFIA shall be issued for each SION and each port. TheapplicantshallfileanonlineapplicationtoRAconcernedbeforestarting exportsunderDFIA.Exportshallbecompletedwithin12monthsfromthedateof online filing of application and generation of file number.While doing export/supply, applicant shall indicate file number on the export documents.After completion of exports and realization of export proceeds, request for issuance of transferable DFIA may be made to concerned RA within a period of: (a)12 months from the date of export or (b)6months(oradditionaltimeallowedbyRBIforrealization)fromthedateof realization of export proceeds,whichever is later. RA shall issue transferable DFIA with a validity of 12 months from the date of issue. Exportsproceedsshallberealizedinfreelyconvertiblecurrencyexceptotherwise specified. The Institute of Chartered Accountants of India18 (i)No DFIA for Actual ser condition inputs: No DFIA shall be issued for an export product where SION prescribes Actual User condition for any input. (ii)Domesticsourcingofinputs:HolderofDFIAhasanoptiontoprocurethe materials/inputsfromindigenousmanufacturer/STEinlieuofdirectimportagainst AdvanceReleaseOrder(ARO)/Invalidationletter/BacktoBackInlandLetterof Credit.However,DFIAholdermayobtainsuppliesfromEOU/EHTP/BTP/STP/SEZ units, without obtaining ARO or Invalidation letter. (iii)Conditionsforredeemingauthorisation:Itisnecessarytoestablishthatinputs actuallyusedinmanufactureoftheexportproductshouldonlybeimportedunder theauthorizationandinputsactuallyimportedmustbeusedintheexportproduct, for redeeming the DFIA. The name/description of the input in the DFIA must match exactly with the name/description endorsed in the shipping bill.Further,quantityofinputtobeallowedunderDFIAshallbeinproportiontothe quantity of input actually used/ consumed in production.Ifgoodsareimportedagainstadvanceauthorizationbutexportobligationisnot fulfilled, duty and interest is payable. Aforesaid provisions will also be applicable for supplies to SEZs and supplies made under deemed exports. (iv)Valueaddition(VA):willbecalculatedasfollows(exceptforgemandjewellery sector)VA = [(A-B) x 100]/B A = FOB value of export realised/FOR value of supply received. B=CIF value of inputs coveredbyauthorisation plusanyother importedmaterials usedonwhichbenefitofdutydrawback(DBK)isclaimedorintendedtobe claimed. Ifsomeitemsaresuppliedfreeofcostbyforeignbuyer,itsnotionalvaluewillbe added in the CIF value of import and FOB value of export for purpose of calculating valueaddition.ExportstoSEZUnits/suppliestoDevelopers/Co-developers, irrespective of currency of realization, would also be covered. MinimumvalueadditionrequiredtobeachievedunderDFIAis20%,exceptfor physical exports for which payments are not received in freely convertible currency. (v)Admissibility of drawback: Drawback as per rate determined and fixed by Central Exciseauthorityshallbeavailablefordutypaidinputs,whetherimportedor indigenous, used in the export product. The Institute of Chartered Accountants of India19 Duty remission schemes 1.DUTY DRAWBACK (DBK) SCHEME Atpresent,thisschemeisusedtoallowrebateofduties(centralexcise,customsand servicetax)paidoninputsandinputservicesusedforexportedfinalproduct.This scheme has been discussed in detail in Chapter-11-Duty Drawback. 2.DUTY REMISSION SCHEMES IN CENTRAL EXCISE LAW Dutyremission/exemptionisalsograntedundercentralexciselaw,throughCENVAT creditschemeandrules18and19ofCentralExciseRules,2002.Theseschemesare discussed in Section A: Central Excise. (2)REWARD SCHEMES Rewardschemesaretheschemeswhichentitletheexporterstodutycreditscripssubjectto variousconditions.Thesescripscanbeusedforpaymentofcustomsdutiesonimportof inputs/goodsincludingnotifiedcapitalgoods,paymentofexcisedutiesondomestic procurementofinputs/goodsincludingcapitalgoods,paymentofservicetaxonprocurement of services. These scrips are transferable, i.e. they can be sold in market, if the holder of duty credit scrip does notintendtoimportgoodsagainstthescrips.Goodsimportedunderthescriparealsofreely transferable.Following are two schemes for exports of merchandise and services:(i)Merchandise Exports from India Scheme (MEIS) (ii)Service Exports from India Scheme (SEIS) 1.MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS) TheobjectiveofMEISschemeistocompensateinfrastructuralinefficienciesandassociated costsinvolvedinexportofgoods/products,whichareproduced/manufacturedinIndia, especiallygoodshavinghighexportintensity,employmentpotentialandtherebyenhancing Indias export competitiveness. (i)Rewardunderthescheme:UnderMEIS,exportsofnotifiedgoods/productstonotified markets shall be eligible for reward at the specified rate(s).Unless otherwise specified, the basis of calculation of reward would be: (i)on realised FOB value of exports in free foreign exchange,or (ii)on FOB value of exports as given in the Shipping Bills in free foreign exchange,whichever is less. (ii)IneligiblecategoriesunderMEIS:Someexportscategories/sectorsineligibleforDuty Credit Scrip entitlement under MEIS are listed below: The Institute of Chartered Accountants of India(1)EOUs / EHTPs / BTPs/ STPs who are availing d(2)Supplies made from DTA units to SEZ units (3)Exports through transtrans-shipped through India(4)Deemed Exports(5)SEZ/EOU/EHTP/BPT/FTWZ produ(6)Export products which are subject to Minim(7)Ores and concentrates of a(8)Cereals of all types(9)Sugar of all types and all forms unless specifically notified.(10)Crude/petroleumoilandcrude/formulations (11)Exportofmilkandmilkproductsnotified.(iii)Export of goods throughcourierhandicraftitems, handloom products, books/periodicals, leatherfootwear,toys and tailor made fashiongarmentsvalue upto ` 25,000 per consignment shall be entitled for rewards under MEIS.2.SERVICE EXPORTS FROM INDIA SCHEME (SEIS)TheobjectiveofSEISschemeistoscheme applies to export of services made on or after 01.04.2015.(i)Eligibleserviceproviders: services)locatedinIndiashallbeeligibleforrewardtheminimumnetfreeforeignexfinancial year is: individual service providers and sole proprietorship other service providers 20 EOUs / EHTPs / BTPs/ STPs who are availing direct tax benefits / exemptionSupplies made from DTA units to SEZ unitsExports through trans-shipment, i.e., exports that are originating in third country but shipped through India Deemed Exports SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units roducts which are subject to Minimum export price or export dutyOres and concentrates of all types and in all formations Cereals of all types gar of all types and all forms unless specifically notified. Crude/petroleumoilandcrude/primaryandbaseproductsof Exportofmilkandmilkproductsandmeatandmeatproductsunlessspecifically Export of goods throughcourier/foreign post offices usinge-commerceitems, handloom products, books/periodicals, leatherfootwear,toys and tailor made fashiongarmentsthroughcourierorforeignpostofficeusinge-commerce 000 per consignment shall be entitled for rewards under MEIS.EXPORTS FROM INDIA SCHEME (SEIS) EISschemeistoencourageexportofnotifiedservicesfromIndia.The scheme applies to export of services made on or after 01.04.2015. serviceproviders:Aserviceprovider(withactiveIECatthetimeofrendering locatedinIndia,providingnotifiedservicesrenderedinthespecifiedmanner* rewardatthenotifiedrate(s)on netforeignexchangeearned minimumnetfreeforeignexchangeearningsofsuchserviceprovider US $ 10,000 US $ 15,000irect tax benefits / exemption exports that are originating in third country but um export price or export duty primaryandbaseproductsofalltypesandall unlessspecifically ommerce:Exports of items, handloom products, books/periodicals, leatherfootwear,toys and tailor commerceofFOB 000 per consignment shall be entitled for rewards under MEIS. encourageexportofnotifiedservicesfromIndia.The (withactiveIECatthetimeofrendering providingnotifiedservicesrenderedinthespecifiedmanner* on netforeignexchangeearned provided ofsuchserviceproviderinpreceding The Institute of Chartered Accountants of India21 *SpecifiedmannerissupplyofaservicefromIndiatoanyothercountry;(Mode1- Crossbordertrade)andsupplyofaservicefromIndiatoserviceconsumer(s)ofany other country in India; (Mode 2-Consumption abroad).PaymentinIndianRupeesforservicechargesearnedonspecifiedservices,shallbe treatedasreceiptindeemedforeignexchangeasperguidelinesofReserveBankof India. The list of such services and the notified rates of rewards are as under:Sl NoSECTORSAdmissible rate 1.BUSINESS SERVICESA.Professional services Legalservices,Accounting,auditingandbookkeeping services,Taxationservices,Architecturalservices, Engineeringservices,Integratedengineeringservices, Urbanplanningandlandscapearchitecturalservices, Medical and dental services, Veterinary services, Services providedbymidwives,nurses,physiotherapistsand paramedical personnel 5% B.Research and development services R&D services on natural sciences, R&D services on social sciences and humanities, Interdisciplinary R&D services 5% C.Rental/Leasing services without operators Relatingtoships,Relatingtoaircraft,Relatingtoother transportequipment,Relatingtoothermachineryand equipment 5% D.Other business services Advertisingservices,Marketresearchandpublicopinion pollingservicesManagementconsultingservice,Services relatedtomanagementconsulting,Technicaltestingand analysisservices,Servicesincidentaltoagricultural, huntingandforestry,Servicesincidentaltofishing, Servicesincidentaltomining,Servicesincidentalto manufacturing,Servicesincidentaltoenergydistribution, Placement and supplyservices of personnel, Investigation andsecurity,Relatedscientificandtechnicalconsulting services,Maintenanceandrepairofequipment(not includingmaritimevessels,aircraftorothertransport equipment),Building-cleaningservices,Photographic services,Packagingservices,Printing,publishingand Convention services 3% The Institute of Chartered Accountants of India22 2.COMMUNICATION SERVICES Audiovisual servicesMotionpictureandvideotapeproductionanddistribution service,Motionpictureprojectionservice,Radioand televisionservices,Radioandtelevisiontransmission services, Sound recording. 5% 3.CONSTRUCTIONANDRELATEDENGINEERING SERVICES GeneralConstructionworkforbuilding,General ConstructionworkforCivilEngineering,Installationand assembly work, Building completion and finishing work 5% 4.EDUCATIONAL SERVICES (Please refer Note 1) Primary education services, Secondary education services, Higher education services, Adult education 5% 5.ENVIRONMENTAL SERVICES Sewage services, Refuse disposal services, Sanitation and similar services 5% 6.HEALTH-RELATED AND SOCIAL SERVICES Hospital services 5% 7.TOURISM AND TRAVEL-RELATED SERVICES A.Hotels and Restaurants (including catering) a.Hotel 3% b.Restaurants (including catering)3% B.Travel agencies and tour operators services5% C.Tourist guides services5% 8.RECREATIONAL,CULTURALANDSPORTING SERVICES (other than audiovisual services) Entertainmentservices(includingtheatre,livebandsand circusservices),Newsagencyservices,Libraries, archives,museumsandotherculturalservices,Sporting and other recreational services 5% 9.TRANSPORT SERVICES (Please refer Note 2) A.Maritime Transport Services Passengertransportation*,Freighttransportation*,Rental ofvesselswithcrew*,Maintenanceandrepairofvessels, Pushingandtowingservices,Supportingservicesfor maritime transport 5% The Institute of Chartered Accountants of India23 B.Air transport services Rentalofaircraftwithcrew,Maintenanceandrepairof aircraft, Airport Operations and ground handling 5% C.Road Transport Services Passengertransportation,Freighttransportation,Rentalof Commercialvehicleswithoperator,Maintenanceand repair of road transport equipment, Supporting services for road transport services 5% D.Services Auxiliary To All Modes of Transport.Cargo-handling services, Storage and warehouse services, Freight transport agency services 5% Notes:(1)Under education services, SEIS shall not be available on Capitation fee.(2)*Operations from India by Indian Flag Carriers only is allowed under Maritime transport services.1.Net Foreign exchange earnings=GrossEarningsofForeignExchangeMinusTotalexpenses/payment/ remittances of Foreign Exchange by the IEC holder, relating to service sector in the financial year. 2.Services include all tradable services covered under General Agreement on Trade in Services (GATS) and earning foreign exchange. 3.Service Provider means a person providing:(i)SupplyofaservicefromIndiatoanyothercountry;(Mode1-Crossborder trade)(ii)Supply of a service from India to service consumer(s) of any other country in India; (Mode 2- Consumption abroad)(iii)SupplyofaservicefromIndiathroughcommercialpresenceinanyother country. (Mode 3 Commercial Presence)(iv)Supply of a service from India through the presence of natural persons in any other country (Mode 4- Presence of natural persons). (ii)Ineligible categories under SEIS:(A)Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations,receipts of repayment of loans etc. and anyotherinflowofforeignexchange,unrelatedtorenderingofservice,wouldbe ineligible. The Institute of Chartered Accountants of India24 (B)Followingshallnotbetakenintoaccountforcalculationofentitlementunderthe scheme: (1)Foreign Exchange remittances A.Related to Financial Services Sector:Raising of all types of foreign currency Loans Export proceeds realization of clients IssuanceofForeignEquitythroughADRs/GDRsorothersimilar instruments Issuance of foreign currency Bonds Sale of securities and other financial instruments Other receivables not connected with services rendered by financial institutions. B.Earnedthroughcontract/regularemploymentabroad(e.g.labour remittances) (2) Payments for services received from EEFC Account (3) ForeignexchangeturnoverbyHealthcareInstitutionslikeequityparticipation, donations etc.(4) ForeignexchangeturnoverbyEducationalInstitutionslikeequityparticipation, donations etc.(5) ExportturnoverrelatingtoservicesofunitsoperatingunderSEZ/EOU/EHTP/ STPI/ BTP Schemes or supplies of services made to such units (6) Clubbing of turnover of services rendered by SEZ/ EOU/ EHTP/ STPI/ BTP units with turnover of DTA Service Providers (7) Exports of Goods (8) ForeignExchangeearningsforservicesprovidedbyAirlines,Shippinglines service providers plying from any foreign country X to any foreign country Y routes not touching India at all (9) Service providers in Telecom Sector Common Provisions for Exports from India Schemes (MEIS and SEIS) (i)CENVAT/ Drawback:AdditionalCustomsduty/exciseduty/ServiceTaxpaidincashorthroughdebit underDutyCreditscripshallbeadjustedasCENVATCreditorDutyDrawbackas per DoR rules or notifications. The Institute of Chartered Accountants of IndiaBasicCustomdutypaidincashorthroughdebitunderDutyCreditscripshallbe adjusted for Duty Drawback as per DoR rules or notifications. Duty credit scrip shall be permitted to be utilized for payment of duty in case of import of capital goods under lease financing.(ii)Transferofexportperformance: another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shallbecountedinexportperformance/turnoverofapplicantonlyifexportproceedsfrom overseas are realized in applicants bank account aFIRC. However,MEISrewardscanbeclaimedeitherbythesupportingmanufacturer(alongwith disclaimerfromthecompany/firmwhohasrealizedtheforeignexchangedirectlyfrom overseas)orbythecompany/firm overseas. (iii)Incentives of MEIS & SEIS3.STATUS HOLDER StatusHoldersarebusinessleaderswhohaveexcelledininternationaltradeandhave successfully contributed to countrys foreign trade.All exporters of goods, services and technology havinganimport-exportcode(IEC)numbershallbeeligibleforrecognitionasastatusholder. Status recognition depends upon export performanceAnapplicantshallbecategorizedasstatusholderuponachievingexportperformance current and previous two financial years **Pointswhichmeritconsiderationwhilecomputingexportperformanceforgrantof status: (a)Export performance will be counted on the basis of FOB value of export earnings in free foreign exchange.Status categoryOne Star Export House Two Star Export House Three Star Export House Four Star Export House Five Star Export House 25 BasicCustomdutypaidincashorthroughdebitunderDutyCreditscripshallbe adjusted for Duty Drawback as per DoR rules or notifications.Duty credit scrip shall be permitted to be utilized for payment of duty in case of import of lease financing. Transferofexportperformance:TransferofexportperformancefromoneIECholderto another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shallbecountedinexportperformance/turnoverofapplicantonlyifexportproceedsfrom overseas are realized in applicants bank account and this shall be evidenced from e However,MEISrewardscanbeclaimedeitherbythesupportingmanufacturer(alongwith disclaimerfromthecompany/firmwhohasrealizedtheforeignexchangedirectlyfrom overseas)orbythecompany/firmwhohasrealizedtheforeignexchangedirectlyfrom MEIS & SEIS are available to units located in SEZs also. StatusHoldersarebusinessleaderswhohaveexcelledininternationaltradeandhave contributed to countrys foreign trade.All exporters of goods, services and technology exportcode(IEC)numbershallbeeligibleforrecognitionasastatusholder. Status recognition depends upon export performance**.allbecategorizedasstatusholderuponachievingexportperformance current and previous two financial years, as indicated below: **Pointswhichmeritconsiderationwhilecomputingexportperformanceforgrantof xport performance will be counted on the basis of FOB value of export earnings in free Status categoryOne Star Export House Two Star Export House Three Star Export House Four Star Export House Five Star Export House Export Performance [FOB/ FOR (as converted) Value ( in million) ]3251005002,000BasicCustomdutypaidincashorthroughdebitunderDutyCreditscripshallbe Duty credit scrip shall be permitted to be utilized for payment of duty in case of import of oneIECholderto another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shallbecountedinexportperformance/turnoverofapplicantonlyifexportproceedsfrom nd this shall be evidenced from e - BRC / However,MEISrewardscanbeclaimedeitherbythesupportingmanufacturer(alongwith disclaimerfromthecompany/firmwhohasrealizedtheforeignexchangedirectlyfrom whohasrealizedtheforeignexchangedirectlyfrom StatusHoldersarebusinessleaderswhohaveexcelledininternationaltradeandhave contributed to countrys foreign trade.All exporters of goods, services and technology exportcode(IEC)numbershallbeeligibleforrecognitionasastatusholder. allbecategorizedasstatusholderuponachievingexportperformanceduring **Pointswhichmeritconsiderationwhilecomputingexportperformanceforgrantof xport performance will be counted on the basis of FOB value of export earnings in free Export Performance [FOB/ FOR (as converted) Value ( in US $ The Institute of Chartered Accountants of India26 (b)For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at the exchange rate notified by CBEC, as applicable on 1st April of each Financial Year.(c)For granting status, export performance is necessary in at least 2 out of 3 years. (d)For calculating exportperformanceforgrantofOneStarExportHouseStatus category, exports by IEC holders under the following categories shall be granted double weightage: (i)Micro, Small & Medium Enterprises (MSME) (ii)Manufacturing units having ISO/BIS (iii)Units located in North Eastern States and Jammu & Kashmir(iv)Units located in Agri Export Zones. (e)Export performance of one IEC holder shall not be permitted to be transferred to another IECholder.Hence,calculationofexportsperformancebasedondisclaimershallnotbe allowed.(f)Exports made on re-export basis shall not be counted for recognition.(g)Exportofitemsunderauthorization,includingSCOMETitems,wouldbeincludedfor calculation of export performance. Privileges of Status Holders: Status holders are granted certain benefits like:(a) Authorisationandcustomclearancesforbothimportsandexportsonself-declaration basis.(b) Fixation of Input Output Norms (SION) on priority i.e. within 60 days.(c) Exemptionfromcompulsorynegotiationofdocumentsthroughbanks.Theremittance receipts, however, would continue to be received through banking channels. (d) Exemption from furnishing of Bank Guarantee in Schemes under FTP.(e) Two Star Export Houses and above are permitted to establish export warehouses. (f)ThreeStarandaboveExportHouseshallbeentitledtogetbenefitofAccreditedClients Programme (ACP) as per the guidelines of CBEC. (g)Status holders shall be entitled to export freely exportable items on free of cost basis for exportpromotionsubjecttoanannuallimitof`10lakhor2%ofaverageannualexport realization during preceding 3 licensing years, whichever is higher. (3)EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG)Export Promotion Capital Goods Scheme (EPCG) permits exporters to import capital goods for pre-production,productionandpost-productionatzerocustomsdutyorprocurethem indigenouslywithoutpayingdutyintheprescribedmanner.Inreturn,exporterisunderan obligation to fulfill the export obligation.ImportunderEPCGschemeshallbesubjecttoanexportobligationequivalentto6timesof dutysavedoncapitalgoodstobefulfilledin6yearsreckonedfromthedateofissueof authorization.Authorisationshallbevalidfor18monthsfromthedateofissueof The Institute of Chartered Accountants of India27 Authorisation.ImportofcapitalgoodsshallbesubjecttoActualUserconditiontillexport obligationiscompleted.Afterexportobligationiscompleted,capitalgoodscanbesoldor transferred. (i)Eligible exporters: Following are eligible for EPCG scheme: Manufacturer exporters with or without supporting manufacturer(s), Merchant exporters tied to supporting manufacturer(s), and ServiceprovidersincludingserviceprovidersdesignatedasCommonService Provider (CSP) subject to prescribed conditions. (ii)Eligible and ineligible capital goods: Eligible capital goods includeIneligible capital goods include CapitalGoodsincludingcapital goods in CKD/SKD condition Second hand capital goods Computer software systemsAnycapitalgoods(includingcaptiveplantsand Power Generator Sets of any kind) for: Export of electrical energy (power)Supplyofelectricalenergy(power)under deemed exportsUse of power (energy) in their own unit, andSupply/exportofelectricitytransmission servicesSpares,moulds,dies,jigs,fixtures, tools&refractoriesforinitiallining and spare refractoriesCatalystsforinitialchargeplusone subsequent charge CapitalgoodsforProjectImports notified by CBEC (iii)ExportObligation:Exportobligationmeansobligationtoexportproduct(s)coveredby Authorisation/permissionintermsofquantityorvalueorboth,asmaybe prescribed/specifiedbyRegionalorcompetentauthority.Exportobligationconsistsof average export obligation and specific export obligation. Specific export obligation (Specific EO)under EPCG scheme is equivalent to 6 times ofdutysavedoncapitalgoodsimportedunderEPCGscheme,tobefulfilledin6years reckoned from Authorization issue-date. Specific EO is over and above the Average EO. Note:Incasecountervailingduty(CVD)ispaidincashonimportsunderEPCG, incidenceofCVDwouldnotbetakenforcomputationofnetdutysaved,provided CENVAT is not availed.Averageexportobligation(AverageEO)underEPCGschemeistheaveragelevelof exports made by the applicant in the preceding 3 licensing years for the same and similar products.IthastobeachievedwithintheoverallEOperiod(includingextendedperiod unless otherwise specified). The Institute of Chartered Accountants of India28 Conditions applicable to the fulfilment of the Export Obligation (EO):(a)EOshallbefulfilledbytheauthorisationholderthroughexportofgoodswhichare manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted. (b)Incaseofindigeneoussourcingofcapitalgoods,specificEOshallbe25%less thantheEOmentionedabove,i.e.EOwillbe4.5times(75%of6times)ofduty saved on such goods procured. (c)ShipmentsunderAdvanceAuthorisation,DFIA,Drawbackscheme,orreward schemes; would also be counted for fulfilment of EO under EPCG Scheme. (d)EO can also be fulfilled by the supply of Information Technology Agreement (ITA-1) items to DTA, provided realization is in free foreign exchange. (e)Bothphysicalexportsaswellasspecifieddeemedexportsshallalsobecounted towards fulfilment of export obligation. (iv)Incentives for early fulfillment of export obligation IncaseswhereAuthorizationholderhasfulfilled75%ormoreofspecificexport obligation and 100% of Average Export Obligation till date, if any, in half or less than half theoriginalexportobligationperiodspecified,remainingexportobligationshallbe condoned and the Authorization redeemed. (v)Post Export EPCG Duty Credit Scrip(s) Underthisscheme,capitalgoodsareimportedonfullpaymentofapplicabledutiesin cash.Later,basiccustomsdutypaidonCapitalGoodsisremittedintheformoffreely transferable duty credit scrip(s) [similar to the Reward schemes discussed earlier].Salient features of the schemes are as follows:- SpecificEOshallbe85%oftheapplicablespecificEOstipulatedunderEPCG scheme.Average EO remains unchanged. Duty remission shall be in proportion to the EO fulfilled.These Duty Credit Scrip(s) can be utilized in the similar manner as the scrips issued under reward schemes can be utilised. (4)EOU, EHTP, STP & BTP SCHEMES UnitsunderExportOrientedUnit(EOU)Scheme,ElectronicsHardwareTechnologyPark (EHTP)Scheme,SoftwareTechnologyPark(STP)SchemeorBio-TechnologyPark(BTP) Schemeexporttheirentireproductionofgoodsandservices(exceptpermissiblesalesin DTA).They can import inputs and capital goods without payment of customs duty. STP/EHTP/BTP schemes are similar to EOU schemes and provisions are more/ less identical. EOUschemeisadministeredbyMinistryofCommerceandIndustry,whileSTP/EHTP/BTP schemes are administered by their respective administrative ministries. The Institute of Chartered Accountants of India29 SoftwareTechnologyPark(STP)issetupfordevelopmentofsoftwareexports.Electronic HardwareTechnologyPark(EHTP)areforexportofelectronicshardwareandsoftware.STP/EHTPSchemeisadministeredbyMinistryofInformationTechnology.BioTechnology Park (BTP) is established on the recommendation of Department of Biotechnology. (I)ELIGIBILITY Suchunitsmaybesetupformanufactureofgoods,includingrepair,re-making, reconditioning,re-engineering,renderingofservices,developmentofsoftware, agriculture.Trading units are not covered under these schemes. Onlyprojectshavingaminimuminvestmentof`1croreinplant&machineryshallbe consideredforestablishmentasEOUs.However,thisshallnotapplytounitsinEHTP/ STP/BTP,Handicrafts/Agriculture/Floriculture/Aquaculture/AnimalHusbandry/ InformationTechnologyServices,BrassHardwareandHandmadejewellerysectors. BoardofApprovalsmayalsoallowestablishmentofEOUswithalowerinvestment criteria.(II)PROCEDURE FOR SETTING UP NEW EOU, EHTP, STP AND BTP (a)ApprovalforsettingupofunitsunderEOUschemeshallbegrantedbytheUnits ApprovalCommitteewithin15daysasperprescribedcriteria.Inothercases,approval may be granted by Board of Approval set up for this purpose. (b)On approval, concerned authority will issue a Letter of Permission (LoP)/ Letter of Intent (LoI)whichwillhaveinitialvalidityof2years(extendableby2yearsandfurther extension, if necessary, by BoA), by which time unit should have commenced production.(III)NET FOREIGN EXCHANGE EARNINGS EOU/ EHTP/ STP/ BTP unit must be a positive net foreign exchange earner.However, a higher value addition is specified for some sectors.HowtocomputeNFEearnings?:NFEEarningsshallbecalculatedcumulativelyin blocks of 5 years, starting from commencement of production.In case unit is not able to achieve NFE due to: (i)prohibition/restrictionimposedonexportofanyproduct,5yearsblockperiodmay be extended suitably by BoA. (ii)adversemarketconditionoranygroundsofgenuinehardshiphavingadverse impact on functioning of the unit, 5 year block is extendable upto 1 year. WhomonitorsNFE?:PerformanceofEOU/EHTP/STP/BTPunitsshallbemonitoredby Units Approval Committee as per prescribed guidelines. The Institute of Chartered Accountants of India30 WhichsuppliestoDTAcanbecountedforpositiveNFE?:Followingsupplieseffected from EOU/ EHTP/ STP/ BTP units to DTA (Domestic Tariff Area) will be counted for fulfillment of positive NFE:(a)SuppliesinDTAtoholdersofAdvanceAuthorisation/AdvanceAuthorisationforannual requirement/DFIAunderdutyexemption/remissionscheme/EPCGschemesubjectto certain exceptions. (b)Supplies affected in DTA against foreign exchange remittance received from overseas.(c)SuppliestootherEOU/EHTP/STP/BTP/SEZunits,providedthatsuchgoodsare permissible for procurement in terms of relevant provisions of FTP.(d)Supplies made to bonded warehouses set up under FTP and/ or under section 65 of Customs Act and free trade and warehousing zones, where payment is received in foreign exchange.(e) Suppliesofgoodsandservicestosuchorganizationswhichareentitledfordutyfree import of such items in terms of general exemption notification issued by MoF.(f) SuppliesofInformationTechnologyAgreement(ITA-1)itemsandnotifiedzeroduty telecom/ electronics items.(g) Suppliesofitemsliketags,labels,printedbags,stickers,belts,buttonsorhangersto DTA unit for export.(IV)ENTITLEMENTS TO UNITS UNDER EOU, EHTP, STP AND BTP SCHEMES(a)Entitlements for supplies from DTASupplies from DTA to EOU/ EHTP/ STP/ BTP units will be regarded as deemed exports andDTA suppliershallbeeligibleforrelevant entitlements for deemedexports, besides discharge of export obligation, if any, on the supplier.Notwithstandingtheabove,EOU/EHTP/STP/BTPunitsshall,onproductionofa suitabledisclaimerfromDTAsupplier,beeligibleforobtainingentitlementsspecified under the provisions relating to deemed exports in FTP. For claiming deemed export duty drawback,theyshallgetbrandratesfixedbyDCwhereverAllIndustryRatesof Drawback are not available.In addition, EOU / EHTP / STP / BTP units shall be entitled to following:-ReimbursementofCentralSalesTax (CST)ongoodsmanufacturedinIndia. Interest @ 6% p.a. will be payable on delay refund of CST, if the case is not settled within 30 days of receipt of complete application.Exemption frompayment of CentralExciseDutyon goods procuredfromDTA ongoods manufactured in India.Reimbursementofdutypaidonfuelprocuredfromdomesticoilcompanies/Depotsof domestic oil Public Sector Undertakings as per drawback rate notified by DGFT from time to time. Reimbursement of additional duty of excise levied on fuel under the Finance Acts The Institute of Chartered Accountants of India31 would also be admissible.CENVAT credit on service tax paid.(b)Other EntitlementsExemption from industrial licensing for manufacture of items reserved for SSI sector. Export proceeds will be realized within 9 months. Units will be allowed to retain 100% of its export earnings in the EEFC account. Unitwillnotberequiredtofurnishbankguaranteeatthetimeofimportorgoingforjob work in DTA, subject to fulfillment of required conditions. 100% FDI investment permitted through automatic route similar to SEZ units.UnitsshallpaydutyonthegoodsproducedormanufacturedandclearedintoDTAon monthly basis in the manner prescribed in the Central Excise Rules. (V)EXPORT AND IMPORT OF GOODS Export : Following exports are permitted: all kinds of goods and services except items that are prohibited in ITC(HS), SpecialChemicals, Organisms, Materials,Equipment andTechnologies (SCOMET) subject to fulfillment of the conditions indicated in ITC (HS). Import : Following imports are permitted: *Exportpromotionmaterialuptoamaximumvaluelimitof1.5%ofFOBvalueof previous years exports.*Alltypesofgoods,includingcapitalgoods,requiredforitsactivities,fromDTA/ bonded warehouses in DTA/ International exhibition held in India, without payment of duty subjecttoActualUsercondition, providedsuchgoodsarenot prohibited items of import. *Goodsincludingcapitalgoods(onaselfcertificationbasis)requiredforapproved activity, free of cost or on loan/ lease from clients, subject to Actual User condition.*CertainspecifiedgoodsfromDTA,withoutpaymentofduty,forcreatingacentral facility.*Second hand capital goods, without any age limit, duty free.Procurement and export of spares/ components, upto 5% of FOB value of exports, may be allowed to same consignee/ buyer of the export article, subject to the condition that it shall not count for NFE and direct tax benefits. The Institute of Chartered Accountants of India32 (VI)LEASING OF CAPITAL GOODS An EOU/ EHTP/ STP/ BTP unit may: sourcecapitalgoodsfromadomestic/foreignleasingcompanywithoutpaymentof excise/ customs duty, on the basis of a firm contract between parties.sellcapitalgoodsandleasebackthesamefromaNonBankingFinancialCompany (NBFC) subject to fulfillment of specified conditions. (VII)INTER UNIT TRANSFER TransferofmanufacturedgoodsfromoneEOU/EHTP/STP/BTPunittoanotherEOU/ EHTP/STP/BTPunitisallowedwithpriorintimationtoconcernedDCandCustoms authorities, following procedure of in-bond movement of goods.TransferofmanufacturedgoodsshallalsobeallowedfromEOU/EHTP/STP/BTPunit to a SEZ developer or unit following procedure prescribed in SEZ Rules, 2006.Capital goods may be transferred or given on loan to other EOU/ EHTP/ STP/ BTP/ SEZ units, with prior intimation to concerned DC and Customs authorities.Note: Goods supplied by one unit of EOU/ EHTP/ STP/ BTP to another unit shall be treated as imported goods for second unit for payment of duty, on DTA sale by second unit.(VIII) SALE OF UNUTILIZED MATERIAL IncaseanEOU/EHTP/STP/BTPunitisunabletoutilizegoods(includingcapital goods) and services, imported or procured from DTA, it may betransferred to another EOU/ EHTP/ STP/ BTP/ SEZ unit; ordisposedoffinDTAwithapprovalofCustomsauthoritiesonpaymentof applicable duties and submission of import authorization; orexported.SuchtransferfromEOU/EHTP/STP/BTPunittoanothersuchunitwouldbe treated as import for receiving unit.Incaseofcapitalgoods,benefitofdepreciation,asapplicable,willbeavailablein caseofdisposalinDTAonlywhentheunithasachievedpositiveNFEtakinginto consideration the depreciation allowed.No duty shall be payable in case capital goods, raw material, consumables, spares, goodsmanufactured,processedorpackaged,andscrap/waste/remnants/rejects aredestroyedwithinunitafterintimationtoCustomsauthoritiesordestroyed outside unit with permission of Customs authorities. Disposal of used packing material will be allowed on payment of duty on transaction value. The Institute of Chartered Accountants of India33 (IX)DTA SALE OFFINISHED PRODUCTS/ REJECTS/ WASTE/ SCRAP/ REMNANTS AND BY-PRODUCTS Entire production of EOU/ EHTP/ STP/ BTP units must be exported.However, following DTA sales are permissible: (1)Sale of goods in DTA: Units* may sell goods in DTAupto 50% of FOB value of exports (including sales made to SEZ unit from Foreign Exchange Account of such unit),subject to fulfilment of positive NFE,on payment of concessional duties.*other than gems and jewellery units However, sale at concessional duty is not permitted: (i)in respect of motor cars, alcoholic liquors, books, tea (except instant tea), pepper & pepper products, marble and other notified items or(ii)tounitsengagedinactivitiesofpackaging/labeling/segregation/refrigeration/ compacting/micronisation/pulverization/granulation/conversionofmonohydrate form of chemical to anhydrous form or vice-versa. An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviableatthetimeofimport,shallbepayableonthegoodsusedforthepurposeof manufacture or processing of the goods cleared into DTA from the unit. In case of units manufacturing and exporting more than one product, sale of any of theseproductsintoDTA,upto90%ofFOBvalueofexportofthespecificproductsis permitted,providedtotalDTAsalesdoesnotexceedtheoverallentitlementof50%of FOB value of exports for the unit.(2)ServicesprovidedinDTA:Forservices,saleinDTAshallalsobepermissibleupto 50% of FOB value of exports and/ or 50% of foreign exchange earned, where payment of such services is received in foreign exchange. (3) SaleofrejectsinDTA:Rejectswithinanoveralllimitof50%maybesoldinDTAon payment of applicable duties (concessional orotherwise), on priorintimation to Customs authorities. Such sales shall be counted against DTA sale entitlement.Saleofrejectsupto5%ofFOBvalueofexportsshallnotbesubjecttoachievementof NFE.(4) Saleofscrap/waste/remnants,arisingoutofproduction,inDTA:Scrap/waste/ remnantsarisingoutofproductionprocessorinconnectiontherewithmaybesoldin DTA,asperSIONnotifiedunderDutyExemptionScheme,onpaymentofconcessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap/waste/remnantsshallnotbesubjecttoachievementofpositiveNFE.Saleof The Institute of Chartered Accountants of India34 waste/scraps/remnantsbyunitsnotentitledtoDTAsaleorsalesbeyondDTAsales entitlement,shallbeonpaymentoffullduties.Scrap/waste/remnantsmayalsobe exported.In case scrap/ waste/ remnants are destroyed with permission of Customs authorities, no duties/ taxes payable on same. (5) Saleofby-productsinDTA:By-productsmayalsobesoldinDTAsubjectto achievementofpositiveNFE,onpaymentofapplicableduties,withintheoverall entitlement of 50% of FOB value of exports.Sale of by-products by units not entitled to DTA sales, or beyond entitlements shall also be permissible on payment of full duties. (6)Procurementofspares/components,upto2%ofthevalueofmanufacturedarticles, clearedintoDTA,duringtheprecedingyear,maybeallowedforsupplytothesame consignee / buyer for the purpose of after-sale-service. Notes:1.In case of DTA sale of goods manufactured by EOU/ EHTP/ STP/ BTP, where basic duty and CVD is nil, such goods may be considered as non-excisable for payment of duty.2.IncaseofnewEOUs,advanceDTAsalewillbeallowednotexceeding50%ofits estimated exports for first year (2 years for pharmaceutical units). (X)EXPORT THROUGH OTHER EXPORTERS AnEOU/EHTP/STP/BTPunitmayexportgoodsmanufactured/softwaredevelopedbyit throughanotherexporteroranyotherEOU/EHTP/STP/SEZunitsubjecttospecified conditions(XI)EXIT FROM EOU SCHEME With approval of DC, an EOU may opt out of scheme. Such exit shall be subject to payment of excise and customs duties and industrial policy in force.If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.(XII)CONVERSION Existing DTA units may also apply for conversion into an EOU/ EHTP/ STP/ BTP unit.Existing EHTP/STPunitsmay also applyforconversion/mergertoEOUunitandvice-versa.Insuch cases, units will remain in bond and avail exemptions in duties and taxes as applicable.(5)DEEMED EXPORTSDeemed Exports refer to those transactions in which goods manufactured in India are supplied tospecifiedprojectsortospecificcategoriesofconsumers.Indeemedexports,goods supplieddonotleavethecountryandpaymentforsuchsuppliesisreceivedeitherinIndian rupees or in free foreign exchange by the recipient of the goods.Theobjectiveofdeemedexportsistoensurethatthedomesticsuppliersarenotin disadvantageouspositionvis--visforeignsuppliersintermsofthefiscalconcessions.The The Institute of Chartered Accountants of India35 underlying theory is that foreign exchange saved must be treated at par with foreign exchange earned by placing Indian manufacturers at par with foreign suppliers. Deemed exports broadly cover three areas.a. Suppliestodomesticentitieswhocanimporttheirrequirementsdutyfreeoratreduced rates of duty.b. Supplies to projects/ purposes that involve international competitive bidding.c. Supplies to infrastructure projects of national importance.(I)CATEGORIES OF SUPPLIES CONSIDERED AS DEEMED EXPORT Supply by manufacturerSupply by main/sub-contractors(s) SupplyofgoodsagainstAdvance Authorisation/AdvanceAuthorisation for Annual Requirement/ DFIA Supplyofgoodstoprojectsorturnkeycontracts financedbymultilateralorbilateralagencies/Funds notifiedbyDepartmentofEconomicAffairs(DEA), under International Competitive Bidding. Supplyofgoodstounitslocatedin EOU/ STP/BTP/EHTP Supplyofgoodstoanyprojectwhereimportis permittedatzerocustomsdutyaspercustoms NotificationNo.12/2012-Cusdated17.03.2012and supplyismadeagainstInternationalCompetitive Bidding. Supply of capital goods against EPCG authorisation Supplyofgoodstomegapowerprojectsagainst InternationalCompetitiveBidding(evenifcustoms dutyonimportsmadebysuchprojectisnotzero). TheICBproceduresshouldbefollowed.Supplieris eligibleforbenefitsasspecified.International CompetitiveBidding(ICB)isnotmandatoryfor megapowerprojectsifrequisitequantumofpower hasbeentiedupthroughtariffbasedcompetitive bidding or if project has been awarded through tariff based competitive bidding. Supplyof marinefreightcontainersby 100%EOUprovidedsaidcontainers are exported within 6 months SupplytogoodstoUNorinternationalorganisations for their official use or supplied to projects financed by them.Supplyofgoodstonuclearprojectsthrough competitivebidding(neednotbeinternational competitive bidding). The Institute of Chartered Accountants of India36 (II)BENEFITS FOR DEEMED EXPORTSDeemedexportsshallbeeligibleforany/alloffollowingbenefitsinrespectofmanufacture andsupplyofgoods,qualifyingasdeemedexports,subjecttospecifiedtermsand conditions:a. Advance Authorisation/ Advance Authorisation for Annual requirement/ DFIAb. Deemed Export Drawbackc.Refund of terminal excise duty if exemption is not available.(III)ELIGIBILITYFORREFUNDOFTERMINALEXCISEDUTY/DEEMEDEXPORT DRAWBACKRefundofTerminalExcisedutyorCentralExcisedutypaidoninputs/componentswillbe available only when CENVATcredit/ rebate of the same have not been availed by the recipient of such goods. Similarly, supplies will be eligible for deemed export drawback on Central Excise paidoninputsandservicetaxpaidoninputservices,providedCENVATcreditfacility/rebate has not been availed by the applicant.However, in such cases, basic customs duty paid can be claimed as brand rate of duty drawback. (IV)COMMON CONDITIONS FOR DEEMED EXPORT BENEFITS(i)Supplies shall be made directly to entities listed in the point (I) above. Third party supply shall not be eligible for benefits/exemption.(ii)Inallcases,suppliesshallbemadedirectlytothedesignatedProjects/Agencies/Units/ AdvanceAuthorisation/EPCGAuthorisationholder.Sub-contractorsmay,however, makesuppliestomaincontractorinsteadofsupplyingdirectlytodesignatedProjects/ Agencies.Paymentsinsuchcasesshallbemadetosub-contractorbymain-contractor and not by project Authority.(iii)SupplyofdomesticallymanufacturedgoodsbyanIndianSub-contractortoanyIndianor foreignmaincontractor,directlyatthedesignatedprojects/Agencyssite,shallalsobe eligiblefordeemedexportbenefitprovidednameofsub-contractorisindicatedeither originally or subsequently (but before the date of supply of such goods) in the main contract. In such cases payment shall be made directly to sub-contractor by the Project Authority.16.4 Special Economic Zone (SEZ) (a)Introduction ASpecialEconomicZone(SEZ)isageographicallyboundzonewheretheeconomic lawsinmattersrelatedtoexportandimportaremorebroadmindedandliberalas compared to other parts of the country.SEZ is considered to be a place outside India foralltaxpurposes.ItislikeaseparateislandwithintheterritoryofIndiaandis deemed to be outside the customs territory of India. SEZs are projected as duty free area for the purpose of trade, operations, duty, and tariffs.SEZunitsareself-containedandintegratedhavingtheirowninfrastructureandsupport The Institute of Chartered Accountants of India37 services.WithinSEZs,aunitmaybeset-upforthemanufactureofgoodsandother activitiesincludingprocessing,assembling,trading,repairing,reconditioning,makingof gold/ silver, platinum jewellery etc.Goods supplied to SEZs from DTA are treated as exports from India and goods supplied from the SEZ to the DTA are treated as imports into India.TheprovisionsrelatingtoSEZarecontainedinSpecialEconomicZoneAct,2005and SEZ Rules, 2006. StateGovernmentsareexpectedtoplayaveryactiveroleintheestablishmentofSEZ unit.Anyproposalfor settingupofSEZunitinthePrivate/Joint/StateSectorisrouted throughtheconcernedStategovernmentwhointurnforwardsthesametothe Department of Commerce with its recommendations for consideration.The main objectives of the SEZ Act are:(a) Export of goods and services without taxes(b) Generation of additional economic activity(c) Promotion of exports of goods and services (d) Promotion of investment from domestic and foreign sources (e) Creation of employment opportunities (f) Development of infrastructure facilities (g) Providing exemption from duties and taxes on procurement (h) Singlewindowclearance:Itisexpectedthatthiswilltriggeralargeflowofforeign and domestic investment in SEZs, in infrastructure and productive capacity, leading togenerationofadditionaleconomicactivityandcreationofemployment opportunities.The SEZ Rules provide for:(a) Simplifiedproceduresfordevelopment,operation,andmaintenanceoftheSpecial Economic Zones and for setting up units and conducting business in SEZs (b) Single window clearance for setting up of an SEZ (c) Single window clearance for setting up a unit in a Special Economic Zone(d) SingleWindowclearanceonmattersrelatingtoCentralaswellasState Governments (e) Simplified compliance procedures(f) Maintenance of documents with self-certification(g)Simplifiedcomplianceproceduresanddocumentationwithanemphasisonself certification The Institute of Chartered Accountants of India38 TheincentivesandfacilitiesofferedtotheunitsinSEZsforattractinginvestmentsinto the SEZs, including foreign investment are: (a) Dutyfreeimport/domesticprocurementofgoodsfordevelopment,operationand maintenance of SEZ units.(b) Exemption from Central Sales Tax.(c) Exemption from Service Tax.(d) Single window clearance for Central and State level approvals.(e) ExemptionfromStatesalestaxandotherleviesasextendedbytherespective State Governments.16.5Penalties IncaseanyexporterorimporterinthecountryviolatesanyprovisionoftheForeignTrade Policyorforthatmatteranyotherlawinforce,likeCentralExciseorCustomsorForeign Exchange,hisIECnumbercanbecancelledbytheofficeofDGFTandthereuponthat exporterorimporterwouldnotbeabletotransactanybusinessinexportorimport.The premiseswhereany violation of the provisionsof FTPhastakenplace oris expectedto take place can be searched and the suspicious material seized.Violationswouldcoversituationswhenimportorexporthasbeenmadebyunauthorized personswho arenotlegally allowedto carryout importorexportorwhenanypersoncarries out or admits to carry out any import or export in contravention of the basic FTP. 16.6Glossary (Acronyms) AcronymExplanation AA Advance Authorisation ACCAssistant Commissioner of Customs ANFAayaat Niryaat Form BGBank Guarantee BIFRBoard of Industrial and Financial Reconstruction BoABoard of Approval BRCBank Realisation Certificate BTPBiotechnology Park CBECCentral Board of Excise and Customs CCPCustoms Clearance Permit CEACentral Excise Authority CECChartered Engineer Certificate CIFCost, Insurance & Freight The Institute of Chartered Accountants of India39 CVDCountervailing Duty DCDevelopment Commissioner DFIADuty Free Import AuthorisationDGCI&SDirector General, Commercial Intelligence & Statistics.DGFTDirector General of Foreign Trade DoRDepartment of RevenueDTADomestic Tariff Area EDIElectronic Data Interchange EEFCExchange Earners Foreign Currency EFCExim Facilitation Committee EFTElectronic Fund Transfer EHExport House EHTPElectronic Hardware Technology Park EICExport Inspection Council EOExport Obligation EOPExport Obligation Period EOUExport Oriented Unit EPCExport Promotion Council EPCGExport Promotion Capital GoodsFDIForeign Direct Investment FIEOFederation of Indian Export Organisati


Chapter-3 Foreign Trade Policy

Implication of foreign trade policy

Foreign Trade Policy-Ppt

Foreign Trade Policy, 2009-14

Foreign Trade Policy 2009 14

Export policy & Foreign Trade Policy.. By Zeba

NATIONAL FOREIGN TRADE POLICY: Positioning Jamaica to ...€¦ · Foreign Trade Policy, Definition 11 Foreign Trade Policy, Purpose 13 Foreign Trade Policy, Historical Overview 14

Foreign Trade Policy 1

1 Foreign Trade Policy, 2009-14. 2 Outline Of Presentation India’s Foreign Trade Current Economic Crisis Foreign Trade Policy – Components and Schemes

Jordan’s Foreign Trade Policy

Foreign Trade Policy 2015-2020pharmexcil.com/uploadfile/ufiles/BDOIndiaLLPAD.pdf · Foreign Trade Policy 2015-2020 Alpa Dhanak Associate Director: Indirect Tax, ... • Foreign Trade

:FOREIGN TRADE FOREIGN TRADE POLICY - DG … ftp-a.pdf · © DG Education (P) Ltd [Foreign Trade & Foreign Trade Policy] 3. With reference to the provisions of Foreign Trade Policy

Foreign Trade Policy 260214

2 a Foreign Trade Policy

Foreign Trade Policy Project

India-China Foreign Trade Policy

Foreign Trade Policy 20oreign trade policy 2009-2014.pdf09-2014

Foreign Trade Policy in Inda

Foreign Trade Policy 2009-14

Foreign Trade, Export-Import Policy and Regional Trade ... · Foreign Trade, Export-Import Policy and ... 5.3.2 Salient Features 5.4 Modified EXIM Policy, ... Export-Import Policy,

Foreign Trade Policy March 2012

Foreign Trade Policy 2010-11

Foreign Trade Policy

FOREIGN TRADE POLICY - TECCI Trade Policy 2015-20.pdf · FOREIGN TRADE POLICY [1st April, 2015 – 31st March, 2020] GovernmentofIndiaMinistryof CommerceandIndustry Department ofCommerce

National foreign trade policy

FOREIGN TRADE POLICY - tecci.orgtecci.org/pdf/Foreign Trade Policy 2015-20.pdf · FOREIGN TRADE POLICY [1st April, 2015 – 31st March, 2020] GovernmentofIndiaMinistryof CommerceandIndustry

India Foreign Trade Policy,

Foreign Trade Policy 2009

Foreign Trade Policy of India

Foreign Trade Policy - CentaxOnline

Foreign Trade Policy Statement

Foreign Trade Policy 2010

FOREIGN TRADE POLICY IN INDIA

india's foreign trade policy

Foreign Trade Policy, Presentation