Use of Indian Materials in Export under Advance license

[VISHAL PATEL]

Dear Sir,

plz guide is it possible to use 100% indigenous materials for export under advance license and during shipping bill filing we declare in DEEC declaration we declarate as Indigenous raw materials used for export?

plz help

[KASTURI SETHI]

Your question is improper and odd. If you intend to you 100% indigenous materials, the very purpose of Advance Authorisation is defeated. What benefit do you want to get by using 100% indigenous materials for export under Advance Authorisation ? Why to follow tedious path ehen you can export in a simple and routine manner. Anyhow, there is a provision to procure indigenous material as per para 2.35(b) of FTP 2015-20.

2.35 Execution of Legal Undertaking (LUT) / Bank Guarantee (BG)

(a) --------------------

(b) In case of indigenous sourcing, Authorisation holder shall furnish LUT/BG/Bond to RA concerned before sourcing material from indigenous supplier/nominated agency as prescribed in Chapter 2 of Handbook of Procedures.

Relevant extract of Chapter 2 of Handbook of Procedures.

Bank Guarantee /LUT:

2.29 Execution of BG/Legal undertaking for Advance Authorisation/ EPCG Authorisation

(a) -----------------------

(b) In case of indigenous sourcing, Authorisation holder shall furnish BG/ LUT to RA as per Customs Circular No.58/2004 dated 31.10.04, as amended from time to time. In case, the firm has already executed BG/LUT for the full value of the licence/ certificate/ authorisation/ permission (covering the items indigenously procured) to the Customs and furnishes proof of the same to Regional Authority (RA), no BG/LUT shall be required to be executed with the RA. The RA concerned shall endorse on the authorisation that the Customs Authority shall release/redeem BG/LUT only after receipt of NOC or EODC from the RA concerned. RA shall endorse a copy of the same along with a forwarding letter to the Customs Authority at the Port of registration for their information and record.

You will have to follow Customs circular no.58/2004 dated 31.10.04 amended from time to time.Last amended on 13.09.2019.

Since there is a provision for procurement of indigenous materials under Advance Authorisation, it can be implied that indigenous materials can be used.

[Mahir S]

Use of 100 percent indigenous goods for export under advance authorization scheme is not allowed and shall not be counted as fulfillment of export obligation under the Advance license scheme.

[YAGAY andSUN]

Goods/Raw material imported against AA can only be used for manufacturing of goods for meeting the export obligation as mentioned in AA. If using 100% indigenous material then better to opt AIR Duty Drawback as it is not allowed in case of AA.

AI Summary

Use of indigenous materials under Advance Authorization: BG/LUT required; solely indigenous sourcing may not satisfy export obligation. Solely indigenous sourcing under the Advance Authorization scheme is subject to procedural conditions: the authorisation holder must furnish a Bank Guarantee or Legal Undertaking to the Regional Authority before sourcing, with endorsement and coordination between RA and Customs as per Handbook of Procedures and applicable Customs circulars; however, solely indigenous sourcing has been advised not to count towards fulfilment of the export obligation under the Advance Authorization, and alternative routes such as duty drawback may be preferable.