Foreign Trade Policy 2023, Chapter 4: Duty Exemption / Remission Schemes

4.00 Objective 4.02 Applicability of Policy & Procedures Schemes under this Chapter enable duty free import of Authorisation under this Chapter shall be issued in inputs for export production, including replenishment of accordance with the Policy and Procedures in force on the inputs or duty remission. date of issue of the Authorisation.

4.01 Schemes 4.03 Advance Authorisation (a) Duty Exemption Schemes. (a) Advance Authorisation is issued to allow duty free The Duty Exemption schemes consist of the following: import of input, which is physically incorporated in export product (making normal allowance for • Advance Authorisation (AA) (which will include wastage). In addition, fuel, oil, catalyst which is ``` Advance Authorisation for Annual Requirement). consumed / utilized in the process of production of ```text • Duty Free Import Authorisation (DFIA). export product, may also be allowed. (b) Duty Remission Scheme. (b) Advance Authorisation is issued for inputs in relation Duty Drawback (DBK) Scheme, administered by to resultant product, on the following basis: Department of Revenue. (i) As per Standard Input Output Norms (SION) (c) Scheme for Rebate on State and Central Taxes and notified (available in Hand Book of Procedures); Levies (RoSCTL), as notified by the Ministry of Textiles. OR (d) Schemes for Remission of Duties and Taxes on (ii) On the basis of self declaration as per paragraph Exported Products (RoDTEP) notified by Department 4.07 of Handbook of Procedures. ``` of Commerce and administered by Department of Revenue. 31 <!-- page break --> Foreign Trade Policy 2023 ```text OR Authority (brand rate), he shall follow Para 4.15 of (iii) Applicant-specific prior fixation of norm by the FTP regarding declarations to be made in application Norms Committee as per para 4.06 of Handbook for the authorisation and make export under claim for of Procedures. brand rate. In such cases the value addition shall be as per Para 4.08 of FTP. Minimum value addition shall OR be as per Para 4.09 of FTP. (iv) On the basis of Self Ratification Scheme in terms (vi) Authorisation, and the fabric imported, shall be of Para 4.06 of Foreign Trade Policy. subject to actual user condition. The same shall be non transferable even after completion of export

4.04 Advance Authorisation for Spices obligation. However fabric imported may be Duty free import of spices covered under Chapter-9 of ITC transferred for job work in terms of provisions of GST (HS) shall be permitted only for activities like crushing / Acts under intimation to the Customs authority at the grinding / sterilization / manufacture of oils or oleoresins. port of registration (excluding the units located in Authorisation shall not be available for simply cleaning, areas eligible for area based exemption from Central grading, re-packing, etc. Excise Duty). Invalidation of the Authorisation shall not be permitted. 4.04A Special Advance Authorisation (vii) The fabric imported shall be subject to pre-import Scheme for export of Articles of Apparel condition and it shall be physically incorporated in and Clothing accessories the export product (making normal allowance for wastage). Only Physical exports shall fulfill the export Duty free import of fabric under ‘Special Advance obligation. ``` Authorisation Scheme for export of Articles of Apparel and (viii) Provisions of paragraphs 4.02, 4.05(a), 4.13(i), Clothing Accessories’ shall be allowed, as per Customs 4.13(ii), 4.14, 4.15, 4.17, 4.19, 4.21(i), 4.21(ii), Notification issued for this scheme, for export of items 4.21(iii), 4.21(iv), 4.22, and 4.23 of Foreign Trade covered under Chapter 61 and 62 of ITC(HS) Classification Policy shall be applicable in so far as they are not of Export and Import, subject to the following terms and inconsistent with this scheme. conditions: ```text (i) The authorisation shall be issued based on Standard 4.05 Eligible Applicant / Export /Supply ``` Input Output Norms (SION) or prior fixation of norms (a) Advance Authorisation can be issued either to a by Norms Committee. manufacturer exporter or merchant exporter tied to ```text (ii) The authorisation may also be issued on the basis supporting manufacturer. ``` of self-declaration as per para 4.07 of HBP. In such (b) Advance Authorisation for pharmaceutical products cases, adhoc-norms shall be fixed within stipulated manufactured through Non-Infringing (NI) process time period of 90 days. (as indicated in paragraph 4.18 of Handbook of ```text (iii) The authorisation shall be issued for the import of Procedures) shall be issued to manufacturer exporter relevant fabrics including inter lining only as input. only. ``` No other input, packing material, fuel, oil and catalyst (c) Advance Authorisation shall be issued for: shall be allowed for import under this authorisation. (i) Physical export (including export to SEZ) (iv) Exporters shall be eligible for All Industry Rate of Duty ```text Drawback, for non fabric inputs, as determined by (ii) Intermediate supply; and/or Central Government for this scheme. For the purpose (iii) Supply of goods to the categories mentioned in of value addition norm of Para 4.08 of FTP, the value paragraph 7.02 (b), (c), (d), (e), (f) and (g) of this of any other input used on which benefit of Drawback FTP. is claimed or intended to be claimed shall be equal (iv) Supply of ‘stores’ on board of foreign going to 22% of the FOB value of export realised. Minimum vessel / aircraft, subject to condition that there is value addition shall be as per Para 4.09 of FTP. specific Standard Input Output Norms in respect (v) Where the exporter desires to claim drawback of item supplied. ``` determined and fixed by Jurisdictional Customs 32 <!-- page break --> Duty Exemption / Remission Schemes ```text

4.06 Self-Ratification Scheme (v) There are no insolvency, bankruptcy or liquidation proceedings taken against the ``` (i) Where there is no SION/valid Adhoc Norms for an status holder in the current year and last export product or where SION has been notified three FYs. but exporter intends to use additional inputs in the ```text manufacturing process, eligible exporter can apply for c) If status holder is unable to obtain the AEO an Advance Authorisation under this scheme on self certification within 120 days from date of declaration and self ratification basis. The expression application under this scheme para, the exporter “additional inputs” refers not to additionality in terms agrees that the facility under this para shall stand of quantity/value of an input specified in a norm, but withdrawn and he (status holder) will be bound to another additional input. Say, if the inputs specified to approach the concerned Norms Committee of in the norm are X1 and X2 only, then input Y would DGFT for fixation of norms and to abide by the represent an additional input. RA may issue Advance decision of the said Committee. Authorisations and such cases need not be referred d) In case of situation as at (c) above, no further to Norms Committees for ratification of norms. authorisation under this scheme para will be Application under this scheme shall be made along issued. with a Certificate from Chartered Engineer in the e) The DGFT may deny authorisation under this prescribed format. scheme para to two star and above status holder (ii) A Certificate from a Chartered Engineer who has been based on its risk management principles. not been penalised in the last five years under FT(D&R) f) Status holder shall be audited by the DGFT as Act 1992,Customs Act 1962, Central Excise Act 1944, laid down in the Handbook of Procedures. GST Acts and allied acts and rules made there under (vi) The scheme shall not be available for the following shall only be accepted for grant of Authorisation under export products: ``` this scheme. a) All items covered under Chapter-1 to 24 and ```text (iii) Detailed procedure for administering the scheme shall Chapter-71of ITC(HS) Classification; ``` be prescribed in the Handbook of Procedures. b) Biotechnology items and related products; and (iv) An exporter (manufacturer or merchant), who holds c) SCOMET items. AEO Certificate under Common Accreditation ```text Programme of CBEC is eligible to opt for this scheme. (vii) The scheme shall not be available for the following inputs: (v) A status holder who is a manufacturer cum actual user and holds valid 2-star or above status under A. All vegetable / edible oils classified under para 1.25 of FTP and who has already submitted its Chapter-15 and all types of oilseeds classified application for grant of AEO on CBIC’s AEO portal under Chapter-12 of ITC (HS)book; is also eligible to apply for this scheme subject to B. All types of cereals classified under Chapter–10 following conditions:- of ITC (HS) book; a) Status holder submits copy of numbered and C. Horn, hoof and any other organ of animal; dated acknowledgement of its application for D. Wild animal products, organs and waste grant of AEO. thereof; b) Status holder undertakes to the DGFT that – E. Honey; (i) Their application for grant of AEO F. All items with basic customs duty of 30% or more; certification has not yet been rejected; G. All types of fruits/ nuts/ vegetables classified (ii) There is no case of infringement of Customs under Chapter-7 and Chapter-8 of ITC (HS) and allied laws against the status holder in book; the current year and last three FYs. H. Items covered under heading 2515, 2516, (iii) Status holder has not been issued show 3301, 3302, 3303, 6801 and 6802 of ITC(HS) cause notice by Customs or GST authorities Classification; in the current year and last three FYs. I. Items covered under Chapter 50 to 63 of ITC(HS) (iv) Status holder has positive net current assets. classification. 33 ``` <!-- page break --> Foreign Trade Policy 2023 ```text J. Acetic Anhydride, Ephedrine and in manufacturing process or excess quantity of inputs Pseudoephedrine; than consumed, demand and recovery actions will K. Vitamins; be initiated in addition to initiation of action against the authorisation holder, manufacturer and Chartered ``` L. Biotechnology items and related products; Engineer in terms of Foreign Trade Development and ```text M. Insecticides, Rodenticides, Fungicides, Herbicides, Regulation Act 1992 and/or Customs Act 1962, as Anti sprouting products, and plant growth amended and rules made there under. ``` regulators, disinfectants and similar products of (xiii) In cases where Chartered Engineer has not exercised all forms, types and grades; due diligence or has willfully become party to mis- ```text N. Waste/Scrap of all types; and declaration action will be initiated under against such O. Second hand goods. person under FT(D&R) Act 1992, as amended and (viii) Inputs imported shall be subject to pre import condition rules made there under. In addition, such cases shall and they shall be physically incorporated in the export also be referred to ‘The Institute of Engineers India’ product (making normal allowance for wastage). In for taking action as warranted under the bylaws of the case of local procurement under invalidation/ARO, institute. the inputs shall be procured prior to manufacture of (xiv) All the provisions applicable for Advance Authorisation export item and shall be physically incorporated in the Scheme shall be applicable to this scheme also in so export product. far they are not inconsistent with this scheme. (ix) Wherever value of by-products and recoverable wastage generated during manufacturing process is 4.07 Advance Authorisation for Annual more than 5% of CIF value, corresponding quantity Requirement and Eligibility Condition ``` of main input shall be reduced from the entitlement (i) Advance Authorisation for Annual Requirement shall to the extent that value of disallowed quantity is equal only be issued for items notified in Standard Input to the value of by-products and recoverable wastage Output Norms (SION). And it shall not be available in generated during manufacturing process. case of adhoc norms under paragraph 4.03 (b) (ii) of ```text (x) Concerned Norms Committee may conduct audit FTP. ``` of the manufacturer. The frequency and manner (ii) Advance Authorisation for Annual Requirement shall of audit shall be prescribed by DGFT in Handbook also not be available in respect of SION where any of Procedures. The manufacturer shall be required item of input appears in Appendix 4-J. to provide the necessary facility to verify the books ```text of account/other documents as required, give (iii) Exporters having past export performance (in at least information and assistance for timely completion of the preceding two financial years) shall be entitled for audit. Non-availability of production and consumption Advance Authorisation for Annual requirement. documents/data shall be treated as misdeclaration (iv) Entitlement in terms of CIF value of imports shall be and indulgence in fraudulent activities and shall be upto 300% of the FOB value of physical export and / penalised under FT(D&R) Act, as amended and rules or FOR value of deemed export in preceding financial made there under. year or Rs 1 Crore, whichever is higher. (xi) Concerned Norms Committee may initiate special audit, considering the nature and complexity of 4.08 Value Addition the case and revenue of government, if he is of the Value Addition for the purpose of this Chapter (except for opinion at any stage of scrutiny/enquiry/investigation Gems and Jewellery sector for which value addition is that the norms have not been claimed correctly or the prescribed in paragraph 4.37 of FTP) shall be:- excess benefit has been availed. Special audit can be conducted even if the manufacturer has already been A–B VA = x100, where audited before. B ``` (xii) If the audit results in detection of mis-declaration and/ A =FOB value of export realized/FOR value of supply or instances of claiming of inputs which are not used received. 34 <!-- page break --> Duty Exemption / Remission Schemes ```text B =CIF value of inputs covered by Authorisation, plus x. All items with a basic custom duty of more than value of any other input used on which benefit of DBK 30%. is claimed or intended to be claimed. (b) For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no

4.09 Minimum Value Addition Authorisation shall be issued by Regional Authority (i) Minimum value addition required to be achieved under paragraph 4.07 of Handbook of Procedures under Advance Authorisation is 15%. and applicants shall be required to apply under paragraph 4.06 of Hand Book of Procedures to the ``` (ii) Export Products where value addition could be less Norms Committee. than 15% are given in Appendix 4D. ```text (c) Where export and/or import of biotechnology items ``` (iii) Minimum value addition for Gems & Jewellery and related products are involved, Authorisation under Sector is given in paragraph 4.60 of Handbook of paragraph 4.07 of Handbook of Procedures shall Procedures. be issued by Regional Authority only on submission ```text (iv) In case of Tea, minimum value addition shall be 50%. of a “No Objection Certificate” from Department of (v) In case of spices, minimum value addition shall be Biotechnology. ``` 25%. 4.12 Accounting of Input 4.10 Import of Mandatory Spares ```text (i) Wherever SION permits use of either (a) a generic Import of mandatory spares which are required to be input or (b) alternative input, unless the name of exported / supplied with the resultant product shall be the specific input together with quantity [which has permitted duty free to the extent of 10% of CIF value of been used in manufacturing the export product] gets Authorisation. indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, within quantity specified

4.11 Ineligible categories of import on Self and match the description in the relevant bill of entry, Declaration basis the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (a) Import of following products shall not be permissible (or to be used) in the Authorisation must match exactly on self-declaration basis: with the name/description endorsed in the shipping i. All vegetable / edible oils classified under bill. Chapter- 15 and all types of oilseeds classified (ii) In addition, if in any SION, a single quantity has been under Chapter- 12 of ITC (HS) book; indicated against a number of inputs (more than one ii. All types of cereals classified under Chapter–10 input), then quantities of such inputs to be permitted of ITC (HS) book; for import shall be in proportion to the quantity of iii. All Spices other than light black pepper (light these inputs actually used/consumed in production, berries) having a basic customs duty of more than within overall quantity against such group of inputs. 30%, classified under Chapter-9 and 12 of ITC Proportion of these inputs actually used/consumed in (HS)book; production of export product shall be clearly indicated in shipping bills. iv. All types of fruits/ vegetables having a basic customs duty of more than 30%, classified under (iii) At the time of discharge of export obligation (issue Chapter-7 and Chapter-8 of ITC(HS) book; of EODC) or at the time of redemption, Regional Authority shall allow only those inputs which have v. Horn, Hoof and any other organ of animal; been specifically indicated in the shipping bill together vi. Honey; with quantity. vii. Rough Marble Blocks/Slabs; (iv) The above provisions will also be applicable for viii. Rough Granite; supplies to SEZs and supplies made under Deemed ix. Vitamins except for use in pharmaceutical exports. Details as given above will have to be industry; and indicated in the relevant Bill of Export, ARE-3, Central 35 ``` <!-- page break --> Foreign Trade Policy 2023 ```text Excise certified Invoice / import document / Tax Invoice ii. In case where CENVAT/input tax credit facility on input for export prescribed under the GST rules. has been availed for the exported goods, even after completion of export obligation, the goods imported

4.13 Pre-import condition in certain cases against such Advance Authorisation shall be utilized only in the manufacture of dutiable goods whether i. DGFT may, by Notification, impose pre-import within the same factory or outside (by a supporting ``` condition for inputs under this Chapter. manufacturer). For this, the Authorisation holder shall ```text ii. Import items subject to pre-import condition are listed produce a certificate from Chartered Accountant at in Appendix 4-J or will be as indicated in Standard the time of filing application for Export Obligation Input Output Norms (SION). Discharge Certificate to Regional Authority concerned. An AEO having valid certificate has the option to

4.14 Details of Duties exempted produce self declaration to this effect. Imports under Advance Authorisation are exempted from iii. Waste / Scrap arising out of manufacturing process, as payment of Basic Customs Duty, Additional Customs Duty, allowed, can be disposed off on payment of applicable Education Cess, Anti- dumping Duty, Countervailing Duty, duty even before fulfillment of export obligation. Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable. Import against supplies covered under 4.17 Validity Period for Import and its paragraph 7.02 (c) & (f) of FTP will not be exempted from Extension ``` payment of applicable Anti-dumping Duty, Countervailing Validity period for import under Advance Authorisation Duty, Safeguard Duty and Transition Product Specific shall be as prescribed in Handbook of Procedures. Safeguard Duty, if any. However, imports under Advance Authorisation for physical as well as deemed exports ```text are also exempt from whole of the Integrated Tax and 4.18 Importability / Exportability of items Compensation Cess leviable under sub-section (7) and that are Prohibited/ Restricted / STE sub-section (9) respectively, of section 3 of the Customs i. No export or import of an item shall be allowed Tariff Act, 1975 (51 of 1975). under Advance Authorisation / DFIA if the item is prohibited for exports or imports respectively. Export

4.15 Admissibility of Drawback of a prohibited item may be allowed under Advance Authorisation provided it is separately so notified, ``` Drawback as per rate determined and fixed by Customs subject to the conditions given therein. authority in terms of DoR Rules shall be available for ```text duty paid imported or indigenous inputs (not specified in ii. Items reserved for imports by STEs cannot be imported the norms) used in the export product. For this purpose, against Advance Authorisation / DFIA. However, applicant shall indicate clearly details of duty paid input in those items can be procured from STEs against ARO the application for Advance Authorisation. As per details or Invalidation letter. STEs are also allowed to sell mentioned in the application, Regional Authority shall goods on High Sea Sale basis to holders of Advance also clearly endorse details of such duty paid inputs in the Authorisation / DFIA holder. STEs are also permitted to condition sheet of the Advance Authorisation. issue “No Objection Certificate (NOC)” for import by Advance Authorisation / DFIA holder and may charge a reasonable fee subject to a maximum of ₹5000

4.16 Actual User Condition for Advance from the applicant. ``` Authorisation iii. Items reserved for export by STE can be exported under ```text i. Advance Authorisation and / or material imported Advance Authorisation / DFIA only after obtaining a under Advance Authorisation shall be subject to ‘Actual ‘No Objection Certificate’ from the concerned STE. User’ condition. The same shall not be transferable iv. Import of restricted items shall be allowed under even after completion of export obligation. However, Advance Authorisation/DFIA unless specifically Authorisation holder will have option to dispose of disallowed. product manufactured out of duty free input once v. Export of restricted / SCOMET items however, shall be ``` export obligation is completed. 36 <!-- page break --> Duty Exemption / Remission Schemes ```text subject to all conditionalities or requirements of export ii. Export to SEZ Units shall be taken into account for authorisation or permission, as may be required, discharge of export obligation provided payment is under Schedule 2 of ITC (HS). realised from Foreign Currency Account of the SEZ unit.

4.19 Free of Cost Supply by Foreign Buyer iii. Export to SEZ Developers / Co-developers can also be Advance Authorisation shall also be available where some taken into account for discharge of export obligation or all inputs are supplied free of cost to exporter by foreign even if payment is realised in Indian Rupees. buyer. In such cases, notional value of free of cost input iv. Authorisation holder needs to file Bill of Export for shall be added in the CIF value of import and FOB value export to SEZ unit/ developer / co-developer in of export for the purpose of computation of value addition. accordance with the procedures given in SEZ Rules, However, realization of export proceeds will be equivalent 2006. ``` to an amount excluding notional value of such input. 4.22 Export Obligation Period and its ```text

4.20 Domestic Sourcing of Inputs Extension i. Holder of an Advance Authorisation / Duty Free Import Period for fulfillment of export obligation and its extension Authorisation can procure inputs from indigenous under Advance Authorisation shall be as prescribed in supplier/ State Trading Enterprise/EOU/EHTP/BTP/ Handbook of Procedures. STP in lieu of direct import. Such procurement can be against Advance Release Order (ARO), or Invalidation 4.23 Re-import of exported goods under Letter. Duty Exemption/ Remission Scheme ii. When domestic supplier intends to obtain duty free Goods exported under Advance Authorisation/ Duty material for inputs through Advance Authorisation Free Import Authorisation may be re-imported in same for supplying resultant product to another Advance or substantially same form subject to such conditions as Authorisation / DFIA /EPCG Authorisation, Regional may be specified by Department of Revenue. Authorisation Authority shall issue Invalidation Letter. holder shall also inform about such re- importation to the iii. Regional Authority shall issue Advance Release Order Regional Authority which had issued the Authorisation if the domesticsupplier intends to seek refund of duties within one month from date of re-import. ``` exempted through Deemed Exports mechanism as per provisions under Chapter-7 of FTP. DUTY FREE IMPORT ```text iv. Regional Authority may issue Advance Release Order or Invalidation Letter at the time of issue of AUTHORISATION SCHEME (DFIA) Authorisation simultaneously or subsequently. 4.24 DFIA Scheme v. Advance Authorisation holder under DTA can procure (a) Duty Free Import Authorisation is issued to allow duty ``` inputs from / SEZ units against Certificate of supply free import of inputs. In addition, import of oil and till EDI message system between SEZ and Customs is catalyst which is consumed/ utilised in the process of enabled. production of export product, may also be allowed. ```text vi. Validity of Advance Release Order / Invalidation Letter (b) Provisions of paragraphs 4.12, 4.18, 4.20, 4.21 and ``` shall be co- terminous with validity of Authorisation. 4.23 of FTP shall be applicable to DFIA also. ```text

4.21 Currency for Realisation of Export (c) Import of Tyre under DFIA scheme is not allowed. ``` Proceeds. 4.25 Duties Exempted ```text i. Export proceeds shall be realized in freely convertible currency or in Indian Rupees as per para 2.53 of i. Duty Free Import Authorisation shall be exempted only FTP, except otherwise specified. Provisions regarding from payment of Basic Customs Duty (BCD). realisation and non-realisation of export proceeds are ii. Drawback as per rate determined and fixed by given in paragraph 2.52, 2.53 and 2.54 of FTP. Customs authority shall be available for duty paid 37 ``` <!-- page break --> Foreign Trade Policy 2023 ```text inputs, whether imported or indigenous, used in the used in manufacturing the export product] should be export product. However, in case such drawback is indicated / endorsed in the relevant Shipping Bill/ Bill claimed for inputs not specified in SION, the applicant of Export / Tax invoice for supply prescribed under GST should have indicated clearly details of such duty paid rules. Only such inputs may be permitted for import in inputs also in the application for Duty Free Import the authorisation in proportion to the quantity of these Authorisation, and as per the details mentioned in the inputs actually used/consumed in production, within application, the Regional Authority should also have overall quantity against such generic input/alternative clearly endorsed details of such duty paid inputs in the input. condition sheet of the Duty Free Import Authorisation. (v) In addition, if in any SION, a single quantity has been indicated against a number of inputs (more than one

4.26 Eligibility input), then quantities of such inputs to be permitted i. Duty Free Import Authorisation shall be issued on for import shall be in proportion to the quantity of these post exportbasis for products for which Standard Input inputs actually used/consumed in production and Output Norms have been notified. declared in Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules within overall ii. Merchant Exporter shall be required to mention name quantity against such group of inputs. Proportion of ``` and address of supporting manufacturer of the export these inputs actually used/consumed in production of product on the export document viz. Shipping Bill/ Bill export product shall be clearly indicated in Shipping of Export / Tax Invoice for export prescribed under the Bill / Bill of Export / Tax invoice for supply prescribed GST rules. under GST rules. ```text iii. Application is to be filed with concerned Regional (vi) Separate DFIA shall be issued for each SION. Authority before effecting export under Duty Free Import Authorisation. (vii) Exports under DFIA shall be made from any port listed in Para 4.35 of Handbook of Procedures. However, iv. No Duty Free Import Authorisation shall be issued for separate application shall be made for EDI and non- ``` an input which is subjected to pre-import condition EDI ports. In case export is made from a non-EDI port, or where SION prescribes ‘Actual User’ condition or separate application shall be made for each non-EDI Appendix-4J prescribes pre import condition for such port. an input. (viii) Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further 4.27 Minimum Value Addition revalidation shall be granted by Regional Authority. Minimum value addition of 20% shall be required to be ```text achieved. 4.29 Sensitive Items under Duty Free Import Authorisation

4.28 Validity &Transferability of DFIA (a) In respect of following inputs, exporter shall be (i) Applicant shall file online application to Regional required to provide declaration with regard to Authority concerned before starting export under DFIA. technical characteristics, quality and specification in (ii) Export shall be completed within 12 months from the Shipping Bill: date of online filing of application and generation of “Alloy steel including Stainless Steel, Copper Alloy, file number. Synthetic Rubber, Bearings, Solvent, Perfumes / Essential (iii) While doing export/supply, applicant shall indicate file Oil/ Aromatic Chemicals, Surfactants, Relevant number on the export /supply documents viz. Shipping Fabrics, Marble, Articles made of Polypropylene, Bill / Bill of Export / Tax invoice for supply prescribed Articles made of Paper and Paper Board, Insecticides, under GST rules. Lead Ingots, Zinc Ingots, Citric Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped / Stranded (iv) In terms of Para 4.12 of FTP, Wherever SION permits Mat, Roving Woven Surfacing Mat), Relevant Synthetic ``` use of either (a) a generic input or (b) alternative input, the specific input together with quantity [which has been 38 <!-- page break --> Duty Exemption / Remission Schemes ```text Resin (unsaturated Polyester Resin, Epoxy Resin, Vinyl and articles including medallions and coins (excluding Ester Resin, Hydroxy Ethyl Cellulose), Lining Material”. legal tender coins and any engineering goods) containing more than 50% platinum by weight. (b) While issuing Duty Free Import Authorisation, Regional Authority shall mention technical characteristics, quality and specification in respect of above inputs in 4.32 Schemes the Authorisation. The schemes are as follows: (i) Advance Procurement/ Replenishment of Precious SCHEMES FOR EXPORTERS OF Metals from Nominated Agencies; GEMS AND JEWELLERY (ii) Replenishment Authorisation for Gems; (iii) Replenishment Authorisation for Consumables; ```

4.30 Import of Input (iv) Advance Authorisation for Precious Metals. Exporters of Gems and Jewellery can import / procure duty ```text free (excluding Integrated Tax and Compensation Cess 4.33 Advance Procurement/ leviable under Section 3(7) and 3(9) of Customs Tariff Act) Replenishment of Precious Metals from input for manufacture of export product. Nominated Agencies (i) Exporter of gold / silver / platinum jewellery and ```

4.31 Items of Export articles thereof including mountings and findings may ```text (i) “Gold jewellery, including partly processed jewellery, obtain gold/ silver / platinum as an input for export and articles including medallions and coins (excluding product from Nominated Agency, in advance or as legal tender coins), whether plain or studded, replenishment after export in accordance with the containing gold of 8 carats and above up to a procedure specified in this behalf. maximum limit of 22 carats. Replenishment of gold/silver/platinum will be subject Gold religious idols (only gods and goddess) of 8 to Customs notification No. 57/2000-Customs dated carats and above (up to 24 carats) subject to the 08.05.2000, as amended. following conditions: (ii) The export would be subject to wastage norms and i) Exports would be subject to 100% examination by minimum value addition as prescribed in paragraph the Approved Government Valuer. 4.59 and 4.60 respectively in the Handbook of ii) Foreign remittance has to be realized within a Procedures. period of 3 months from the date of export. iii) Exporters must submit confirmed export order 4.34 Replenishment Authorisation for before effecting export. Gems iv) Distinction must be made between a religious (i) Exporter may obtain Replenishment Authorisation for idol and simply moulded gold article/idol. Gems from Regional Authority in accordance with v) Exports may be allowed only be actual procedure specified in Handbook of Procedures as manufactures of such idols. per the replenishment rate prescribed in Appendix 4F. Replenishment Authorisation for Gems shall be freely ``` The findings like posts, push backs, locks which help in transferable. collating the jewellery pieces together, containing gold ```text of 3 carats and above up to a maximum limit of 22 (ii) Replenishment Authorisation for Gems may be issued carats. against export including that made against supply by Nominated Agency (paragraph 4.40 of FTP) and ``` (ii) Silver jewellery including partly processed jewellery, against supply by foreign buyer (paragraph 4.44 of silverware, silver strips and articles including FTP). medallions and coins (excluding legal tender coins ```text and any engineering goods) containing more than (iii) In the case of studded gold/silver/platinum jewellery 50% silver by weight; and articles thereof, the value of Gem Replenishment Authorisation shall be on the remaining FOB value ``` (iii) Platinum jewellery including partly processed jewellery of exports after deducting the value of gold/ silver/ 39 <!-- page break --> Foreign Trade Policy 2023 ```text platinum including admissible wastage. The scale (d) Advance Authorisation Scheme is not available where of replenishment and the item of import will be as the item of export is ‘Gold Medallions and Coins’ prescribed in Appendix 4G. or ‘Gold jewellery/articles manufactured by fully mechanized process’.

4.35 Replenishment Authorisation for Consumables 4.37 Value Addition (i) Replenishment Authorisation for duty free (excluding Minimum Value Addition norms for gems and jewellery Integrated Tax and Compensation Cess leviable under sector are given in paragraph 4.60 of Handbook of Section 3(7) and 3(9) of Customs Tariff Act) import Procedures. It would be calculated as under: of Consumables, Tools and other items namely, Tags and labels, Security censor on card, Staple wire, Poly A–B VA = x100, where bag (as notified by Customs) for Jewellery made out of B precious metals (other than Gold & Platinum) equal to A = FOB value of the export realised/ FOR value of supply 2% and for Cut and Polished Diamonds and Jewellery received. made out of Gold and Platinum equal to 1% of FOB value of exports of the preceding year, may be issued B= Value of inputs (including domestically procured) such on production of Chartered Accountant Certificate as gold/silver/platinum content in export product plus indicating the export performance. However, in case admissible wastage along with value of other items such as of Rhodium finished Silver jewellery, entitlement will gemstone etc. Wherever gold has been obtained on loan be 3% of FOB value of exports of such jewellery. This basis, value shall also include interest paid in free foreign ``` Authorisation shall be non- transferable and subject to exchange to foreign supplier. actual user condition. ```text (ii) Application for import of consumables as given 4.38 Wastage Norms above shall be filed online to the concerned Regional Wastage or manufacturing loss for gold/silver/platinum Authority in ANF 4H. jewellery shall be admissible as per paragraph 4.59 of Handbook of Procedures. ```

4.36 Advance Authorisation for Precious Metals 4.39 DFIA not available (a) Advance Authorisation shall be granted on pre-Duty Free Import Authorisation scheme shall not be import basis with ‘Actual User’ condition for duty free available for Gems and Jewellery sector. (excluding Integrated Tax and Compensation Cess leviable under Section 3(7) and 3(9) of Customs Tariff ```text Act) import of: 4.40 Nominated Agencies (i) Gold of fineness not less than 0.995 and (i) Exporters may obtain gold / silver / platinum from mountings, sockets, frames and findings of 8 Nominated Agency. Exporter in EOU and units in SEZ carats and above; would be governed by the respective provisions of (ii) Silver of fineness not less than 0.995 and Chapter-6 of FTP / SEZ Rules, respectively. mountings, sockets, frames and findings (ii) Nominated Agencies are The Handicraft and containing more than 50% silver by weight; Handlooms Exports Corporation of India Ltd, MSTC (iii) Platinum of fineness not less than 0.900 Ltd., and Diamond India Limited. and mountings, sockets, frames and findings (iii) Reserve Bank of India can authorize any bank as containing more than 50% platinum by weight. Nominated Agency. (b) Advance Authorisation shall carry an export obligation (iv) Procedure for import of precious metal by Nominated which shall be fulfilled as per procedure indicated in Agencies shall be as per the provisions laid down in Chapter 4 of Handbook of Procedures. HBP. The procedure for import of precious metals by (c) Value Addition shall be as per paragraph 4.37 of FTP the Gems & Jewellery units operating under EOU & and 4.60 of Handbook of Procedures. SEZ schemes will be as per the applicable schemes. ``` 40 <!-- page break --> Duty Exemption / Remission Schemes ```text The monitoring mechanism for the Nominated 4.44 Export against Supply by Foreign Agencies (other than banks authorised by RBI) shall be Buyer as per para 4.93 of HBP. (i) Where export orders are placed on nominated (v) A bank authorised by Reserve Bank of India is allowed agencies / status holder / exporters of three years export of gold scrap for refining and import standard standing having an annual average turnover of gold bars as per Reserve Bank of India guidelines. Rupees five crores during preceding three financial years, foreign buyer may supply in advance and free

4.41 Import of Diamonds for Certification / of charge, gold/silver/ platinum, alloys, findings and Grading & Re-export mountings of gold / silver / platinum for manufacture Following agencies are permitted to import diamonds to and export. their laboratories without any import duty, for the purpose (ii) Such supplies can also be in advance and may involve of certification / grading reports, with a condition that the semi- finished jewellery including findings / mountings same should be re-exported with the certification/grading / components for repairs / re-make and export subject reports, as per the procedure laid down in Hand Book of to minimum value addition as prescribed under Procedures: paragraph 4.60 of Handbook of Procedures. In such cases of export, wastage norms as per paragraph ``` (1) Gemological Institute of America (GIA), Mumbai, 4.59 of Handbook of Procedures shall apply. Maharashtra. ```text (iii) Exports may be made by nominated agencies directly ``` (2) Indian Diamond Institute, Surat, Gujarat, India. or through their associates or by status holder / ```text (3) De Beers India Private Ltd., Surat, Gujarat, India. exporter. Import and Export of findings shall be on net (4) HRD Diamond Institute Private Limited, Mumbai, to net basis. Maharashtra, India (5) International Gemological Institute (India) Pvt. Ltd., 4.45 Export Promotion Tours/ Export of Bandra Kurla Complex, Mumbai, Branded Jewellery (6) Gemological Science International (GSI) Pvt. Ltd., (i) Nominated Agencies and their associates, with Mumbai, Maharashtra, India. approval of Department of Commerce and with approval of Gem & Jewellery Export Promotion

4.42 Export of Cut & Polished Diamonds for Council (GJEPC), may export gold / silver / platinum Certification/ Grading & Re-import jewellery and articles thereof for exhibitions abroad. List of authorized laboratories for certification / grading of (ii) Personal carriage of gold / silver / platinum jewellery, diamonds of 0.25 carat and above are given in paragraph precious, semi-precious stones, beads and articles 4.73 of Handbook of Procedures. and export of branded jewellery is also permitted, subject to conditions as in Handbook of Procedures.

4.43 Export of Cut & Polished Diamonds with Re-import Facility at Zero Duty 4.46 Personal Carriage of Export /Import Parcels An exporter (with annual export turnover of Rs 5 crores for each of the last three years) or the authorized offices/ Personal carriage of gems and jewellery export parcels by agencies in India of laboratories mentioned under foreign bound passengers and import parcels by an Indian paragraph 4.73 of Hand Book of Procedures may export importer/foreign national may be permitted as per the cut & polished diamonds (each of 0.25 carat or above) Handbook of Procedures. to any of the agencies/laboratories mentioned under paragraph 4.73 of Handbook of Procedures with re-import 4.47 Export by Post ``` facility at zero duty within 3 months from the date of export. Export of jewellery through Foreign Post Office including Such facility of re- import at zero duty will be subject to via Speed Post is allowed. The jewellery parcel shall not guidelines issued by Central Board of Customs & Excise, exceed 20 kgs by weight. Department of Revenue. 41 <!-- page break --> Foreign Trade Policy 2023 ```text

4.48 Private / Public Bonded Warehouse 7 days. Cut and polished diamonds and coloured gemstones so supplied by non-DDA holder will also ``` Private / Public Bonded Warehouses may be set up in SEZ/ be counted towards discharge of his export obligation DTA for import and re-export of cut and polished diamonds, and/ or entitle him to replenishment Authorisation. cut and polished coloured gemstones, uncut & unset precious & semi- precious stones, subject to achievement of minimum value addition of 5% by DTA units. 4.51 Export of cut & polished precious and semi-precious stones for treatment and re-import 4.49 Special Notified Zone (SNZ) Gems and Jewellery exporters shall be allowed to export ```text Import, auction/sale and re-export of rough diamonds by cut and polished precious and semi-precious stones for entities, as notified vide RBI Notification 116 of 1st April, the treatment and re- import as per customs rules and 2014, as amended from time to time, on consignment regulations. In case of re-export, the exporter shall be or outright basis, will be permitted in Special Notified entitled for duty drawback as per rules. ``` Zone (SNZ) administered by the operator of SNZ, under supervision of Customs. The procedure of import, auction/ ```text sale and re- export of rough diamonds (unsold) would be 4.52 Re-import of rejected Jewellery as specified by CBIC. Gems & Jewellery exporters shall be allowed to re-import rejected precious metal jewellery as per paragraph 4.90 of

4.50 Diamond & Jewellery Dollar Accounts Handbook of Procedures. (a) Firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal 4.53 Export and import on consignment jewellery plain, minakari and / or studded with / basis without diamond and / or other stones with a track Gems & Jewellery exporters shall be allowed to export and record of at least three years in import or export of import diamond, gemstones & jewellery on consignment diamonds / coloured gemstones / diamond and basis as per Handbook of Procedures and Customs Rules coloured gemstones studded jewellery / plain gold and Regulations. ``` jewellery and having an average annual turnover of Rs. 3 crore or above during preceding three licensing ```text years may also carry out their business through SCHEME FOR REMISSION OF designated Diamond Dollar Accounts(DDA). DUTIES AND TAXES ON EXPORTED (b) Dollars in such accounts available from bank finance PRODUCTS ``` and / or export proceeds shall be used only for: 4.54    Scheme Objective and Operating ```text (i) Import / purchase of rough diamonds from Principles overseas/ local sources; (ii) Purchase of cut and polished diamonds, coloured i. The Scheme’s objective is to refund, currently un- gemstones and plain gold jewellery from local refunded: sources; a. Duties/ taxes / levies, at the Central, State and (iii) Import / purchase of gold from overseas / local level, borne on the exported product, nominated agencies and repayment of dollar including prior stage cumulative indirect taxes on loans from the bank; and goods and services used in the production of the exported product and (iv) Transfer to Rupee Account of exporter. Details of this DDA Scheme are given in Handbook of b. Such indirect Duties/ taxes / levies in respect of Procedures. distribution of exported product. (c) A non DDA holder is also permitted to supply cut and ii. The rebate under the Scheme shall not be available polished diamonds to DDA holder, receive payment in respect of duties and taxes already exempted or in dollars and convert the same into Rupees within remitted or credited. ``` 42 <!-- page break --> Duty Exemption / Remission Schemes ```text iii. The determination of ceiling rates under the Scheme issue of rebate. However, adequate safeguards to will be done by a Committee in the Department avoid any misuse on account of non-realization and of Revenue/Drawback Division with suitable other systemic improvements as in operation under representation of the DoC/DGFT, line ministries and Drawback Scheme, IGST and other GST refunds experts, on the sectors prioritized by Department of relating to exports would also be applicable for claims Commerce and Department of Revenue. made under the RoDTEP Scheme. iv. The overall budget/outlay for the RoDTEP Scheme ix. Mechanism of Issuance of Rebate: Scheme would would be finalized by the Ministry of Finance in be implemented through end to end digitization of consultation with Department of Commerce (DoC), issuance of rebate amount in the form of a transferable taking into account all relevant factors. duty credit/electronic scrip (e-scrip), which will be v. The Scheme will operate in a Budgetary framework maintained in an electronic ledger by the Central for each financial year and necessary calibrations and Board of Indirect Taxes & Customs (CBIC). Necessary revisions shall be made to the Scheme benefits, as and rules and procedure regarding grant of RoDTEP claim when required, so that the projected remissions for under the Scheme and implementation issues including each financial year are managed within the approved manner of application, time period for application Budget of the Scheme. No provision for remission of and other matters including export realization, export arrears or contingent liabilities is permissible under the documentation, sampling procedures, record keeping Scheme to be carried over to the next financial year. etc. would be notified by the CBIC, Department of Revenue on an IT enabled platform with a view to end vi. The sequence of introduction of the Scheme across to end digitization. Necessary provisions for recovery ``` sectors, prioritization of the sectors to be covered, of rebate amount where foreign exchange is not degree of benefit to be given on various items within realized, suspension/withholding of RoDTEP in case of the rates recommended by the Committee and within frauds and misuse, as well as imposition of penalty will a ceiling as may be prescribed, on the per item/total also be built suitably by CBIC. overall benefit amount permissible, within the overall ```text budget/ outlay finalized, will be decided and notified x. The Scheme will take effect for exports from 1st January by the Department of Commerce (DoC) in consultation 2021. However for exports made by categories under with Department of Revenue. Para 4.55 (x), (xi) and (xii), the implementation date will be decided later as per provisions of Para 4.55B. ``` vii. Under the Scheme, a rebate would be granted to eligible exporters at a notified rate as a percentage of ```text FOB value with a value cap per unit of the exported 4.55    Ineligible Supplies/ Items/Categories product, wherever required, on export of items which under the Scheme are categorized under the notified 8 digit HS Code. The following categories of exports/ exporters shall not be However, for certain export items, a fixed quantum of eligible for rebate under RoDTEP Scheme: rebate amount per unit may also be notified. Rates i. Export of imported goods covered under paragraph ``` of rebate / value cap per unit under RoDTEP will 2.46 of FTP. be notified in Appendix 4R. In addition to necessary ```text changes which may be brought in view of budget ii. Exports through trans-shipment, meaning thereby control measures as mentioned above, efforts would exports that are originating in third country but trans- be made to review the RoDTEP rates on an annual shipped through India. basis and to notify them well in advance before the iii. Export products which are subject to Minimum export beginning of a financial year. price or export duty. viii. The rebate allowed is subject to the receipt of iv. Products which are restricted for export under sale proceeds within time allowed under the Schedule-2 of Export Policy in ITC (HS). Foreign Exchange Management Act, 1999 failing v. Products which are prohibited for export under which such rebate shall be deemed never to have Schedule-2 of Export Policy in ITC (HS). been allowed. The rebate would not be dependent vi. Deemed Exports. ``` on the realization of export proceeds at the time of 43 <!-- page break --> Foreign Trade Policy 2023 ```text vii. Supplies of products manufactured by DTA units to 4.56 Nature of Rebate ``` SEZ/FTWZ units. The e-scrips would be used only for payment of duty of ```text viii. Products manufactured in EHTP and BTP. Customs leviable under the First Schedule to the Customs ix. Products manufactured partly or wholly in a warehouse Tariff Act, 1975 viz. Basic Customs Duty. under section 65 of the Customs Act, 1962 (52 of 1962). 4.57 Monitoring, Audit and Risk x. Products manufactured or exported in discharge of Management System: export obligation against an Advance Authorisation or Duty Free Import Authorization or Special Advance For the purposes of audit and verification, the exporter Authorisation issued under a duty exemption scheme would be required to keep records substantiating claims of relevant Foreign Trade Policy. made under the Scheme. A monitoring and audit mechanism with an IT based Risk Management System xi. Products manufactured or exported by a unit licensed (RMS) would be put in place by the CBIC, Department of ``` as hundred per cent Export Oriented Unit (EOU) in Revenue to physically verify the records of the exporters on terms of the provisions of the Foreign Trade Policy. sample basis. Sample cases for physical verification will ```text xii. Products manufactured or exported by any of the units be drawn objectively by the RMS, based on risk and other situated in Free Trade Zones or Export Processing relevant parameters. Zones or Special Economic Zones. 4.57A or a broad level monitoring, an Output F ``` xiii. Products manufactured or exported availing the benefit Outcome framework will be maintained and of the Notification No. 32/1997-Customs dated 1st monitored at regular intervals. April, 1997. xiv. Exports for which electronic documentation in 4.58   Residual Issues ICEGATE EDI has not been generated/ Exports from ```text non-EDI ports. Residual issues related to the Scheme arising subsequently xv. Goods which have been taken into use after shall be considered by an Inter-Ministerial Committee, manufacture. named as “RODTEP Policy Committee (RPC)” chaired by DGFT (comprising members of Department of Commerce ```

4.55 A  Government, however, reserves the right to and Department of Revenue), whose decisions would be modify any of the categories as mentioned binding. above for inclusion or exclusion under the scope ```text of RoDTEP, at a later date. 4.59 The Appendix 4R containing the eligible RoDTEP export items, rates and per unit value caps, wherever

4.55 B Inclusion of exports made by categories applicable is available at the DGFT portal www.dgft.gov.in mentioned in para 4.55 (x), (xi) and (xii) above under the link ‘Regulatory Updates >RoDTEP’. and RoDTEP rates for export items under such categories would be decided based on the recommendations of the RoDTEP Committee. ``` 44 <!-- page break -->