Clarification on Actual user 9AU ) condition of Advance Authorisation

[Asked by Guest]

Dear Sir,

Request to please guide me on the following point of FTP 2015-2020

This point is in view of Para 4.16 (ii) of FTP and Notification No. 31 Dtd. 01 August 2013

1. I have manufactured my export product using duty paid input ( raw material ) and taken a CENVAT facility (credit) of the same.

2. Thereafter, I have imported duty free input against Advance Authorisation.

My doubt is :-

Can I use the input imported duty free against Advance Authorisation to manufacture “dutiable goods” in my same factory ( as stated in Para 4.16 (ii) of FTP ) and sell the same in domestic market ?

Because on one hand, DGFT vide Notification No. 31 Dtd. 01 August 2013 and Policy Circular No. 03 Dtd. 02 August 2013 state that “input actually used in manufacturing of the export product should only be imported under the Advance Authorisation. Similarly, inputs actually imported MUST be used in the export product”.

In other words, inputs actually used in manufacture of the export product should ONLY be imported under Advance Authorisation AND inputs actually imported must be used in the EXPOT Product. DGFT has not used the word “dutiable goods ” instead of “Export product” in this Notification.

(Please also refer to Para 4.12 ( i ) of FTP which state the same logic. )

On the other hand, Para 4.16 ( ii ) of FTP state that “in case where CENVAT credit facility on input have been availed for the exported goods, goods imported against Advance Authorisation shall be utilized only in the manufacture of DUTIABLE GOODS (and not necessarily export products) in same factory or outside ” My “dutiable goods” can be goods which I sell in the domestic market.

Is it not a contradictory provision?

Request to advise / guide in the matter.

Thanks and Best Regards

AI Summary

Advance Authorisation actual user rule: duty-free imports may be used for dutiable goods but domestic sale requires duty payment.
Advance Authorisation duty-free inputs must be used in exported products while the export obligation remains. Where CENVAT was availed on inputs used in export manufacture, replenishment imports under Advance Authorisation may be utilized only in the manufacture of dutiable (excisable) goods; if such goods are cleared for the domestic market the importer must pay the applicable import duty with interest and produce evidence to the DGFT to close the authorisation.