TaxTMI 
TaxTMI 
TaxTMI 
Export Promotion Schemes
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....ce providers who have free foreign exchange earning of at least Rs.10 lakhs in preceding financial year/current financial year. For individuals, the limit of minimum free foreign exchange earnings is Rs.5 lakhs. Duty credit scrip @ 10% of free foreign exchange earnings is issued to relevant exporters. From 2013-14, the SFIS benefit is allowed on the Net foreign exchange earned. 2.2. Scrip may be used for import of capital goods including spares, office equipment and professional equipment, office furniture or consumables that are related to the applicant's service sector business. Further, w.e.f. 18.4.2013, for service provider who is also engaged in manufacturing activity, the import of capital goods including spares related to its manufacturing sector business is permitted, subject to certain conditions. The goods should be otherwise freely importable and/or restricted under ITC (HS). However, items listed in appendix 37B of HBP v1 cannot be imported. In case of specified hotels, clubs, etc the duty credit scrip can also be used to import food items and alcoholic beverages. 2.3 The import of vehicles is not permitted. However, the vehicles which are in the nature of professiona....
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....set other disadvantages by grant of freely transferable duty credit scrips @ 5% of FOB value of exports in free foreign exchange. Certain products are also given duty credit scrips equivalent to 2% of FOB value of exports in addition to the normal scrips. VKGUY scrips can be used for import of items except those listed in appendix 37B of HBP v1 or for domestic procurement or for payment of service tax on procurement of services. The scheme is implemented vide Notifications No.95/2009-Cus dated 11-9-2009, No. 32/2012- CE dated 9.7.2012 and 8/2013-ST dated 18-4-2013. 3.2 Agri. Infrastructure Incentive Scrip (AIIS) is issued to Status Holders exporting specified agricultural products @ 10% of FOB value of agricultural exports (including VKGUY benefits), subject to the condition that the total benefits to all status holders put together does not exceed Rs. 100 Cr (Rs. 50 Cr for each half year). Certain capital goods / equipment are permitted for import or domestic procurement against AIIS. The goods are subject to actual user condition and non-transferable, while the AIIS scrips have transferability amongst Status Holders as well as to Units (not including developers) in Food Parks fo....
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....o.29/2012-CE., dated 9-7-2012 and No. 7/2013-ST dated 18-4-2013. 6. Status Holders Incentive Scrip (SHIS): 6.1 The Status Holders of specified sectors are entitled to the SHIS scrip at 1% of FOB value of exports of the specified sectors made during the years 2009-10, 2010-11 and 2011-12 and 2012-13 so as to promote investment in up-gradation of technology. 6.2 SHIS is not issued to the exporters in a particular year if they have in that year availed the benefits of Technology Up-gradation Fund Scheme (TUFS) or/and have got Zero duty EPCG Authorization. 6.3 SHIS is issued with actual user condition and may be used for imports of capital goods (as defined in FTP) except those mentioned in appendix 37B of HBP v1 relating tocertain specified sectors. It may also be used for import of a limited quantity of spares for already imported capital goods, subject to conditions. With effect from 5.6.2012 a limited transferability amongst status holders is permitted provided the transferee status holder is a manufacturer. With effect from 18.4.2013, SHIS is also permitted for transfer to a manufacturer group-company of the status holder when endorsed by the Regional Authority mentioning the....
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....10-DBK dated 18.01.2011 and it has also been instructed that scrips issued by the DGFT should normally be accepted unless there is a reason for detailed verification for which the AC / DC shall record the reasons in writing in file for such verification. The first two aspects have also been reiterated vide Circular No.17/2012-Customs. c) Board's Instruction No.603/01/2011-DBK dated 11.10.2013 have directed field formations to maintain a proper record of post facto sample verifications in drawback cases, and when such verifications indicate lower FOB realizations, the same should be intimated to RA/DGFT when any benefit under FTP is involved. d) Clearance of goods from Custom Bonded warehouses utilizing duty credit scrips of SFIS, VKGUY, FMS, FPS, SHIS is allowed as per the same procedure as is prescribed for DEPB scrips. [Refer Circular No. 50/2011-Cus., dated 9-11-2011 read with No.72/2003-Cus and No.68/2000-Cus] e) Re-credit of duty credit scrips, in respect of re-export of goods imported using reward/ DEPB scrips, which was earlier permitted when imported goods were found defective/unfit for use, has been extended to re-export for any other reason, subject to fulfillment ....
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....orter tied to a supporting manufacturer(s). They can also be issued to sub-contractors in respect of supplies of goods to specified projects provided the name of such subcontractor appears in the main contract. 8.6 AA have a minimum of 15% value addition with effect from the current FTP, 2009-14.In para 4.1.2 of FTP the formula/norm for Value Addition (except for gems and jewellery) includes a reference to intent of claiming drawback. All Industry Rate (AIR) of Duty Drawback is not admissible to an AA holder. However, the Advance Authorization holder may claim Brand Rate of Duty Drawback in respect of inputs which are not imported against the Advance Authorisation and on which Customs/Excise duties have been paid. However, for this the drawback would be allowed only for such duty paid items which have been endorsed for drawback payment on the authorization itself by the Regional Authority. This specification is in para 4.1.14 of FTP and is essential to ensure the value addition norms are correctly met. 8.7 The value addition for gems and jewellery and for specified goods is specified as perAppendix-11B and para 4A2.1 of HBP Vol.1. In case of Authorisation for Tea, the minimum val....
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....4.28 of HBP vol.1, etc. 10. Duty Free Import Authorisation (DFIA): 10.1 The Duty Free Import Authorisation (DFIA) scheme introduced in 2006 is similar toAdvance Authorisation scheme in many aspects. DFIA has a minimum value addition requirement of 20%. Once export obligation is completed, transferability of authorisation/ material imported against the authorisation is permitted. However, once the transferability has been endorsed, the inputs can be imported/domestically source only on payment of Additional Customs duty/Central Excise duty. The DFIA Authorizations are issued only for products for which SION have been notified. There is a requirement that in case the facility of rebate under Rules 18 or 19(2) of the Central Excise Rules, 2002 or CENVAT facility under the Cenvat Rules, 2004 has been availed, then the duty free imported goods have to be used in the manufacture of the dutiable goods. 10.2 After the annual supplement 2013 to the FTP, the exemption from anti-dumping duty and safeguard duty is not available in case materials are imported against a DFIA made transferable. In case imported materials are transferred the importer is to pay an amount equal to the anti-dumpin....
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....nt/service exporters, the EO is required to be fulfilled by exporting goods manufactured or capable of being manufactured or services rendered by the use of capital goods imported under the scheme. Up to 50% of the EO may also be fulfilled by export of other goods manufactured or service(s) provided by the importer or his group company or managed hotel, which has the EPCG Authorization, subject to certain conditions. 11.6 In order to ensure fulfilment of EO as also to secure interest of Revenue, the EPCG Authorization holder is required to file bond with or without bank guarantee with the Customs prior to commencement of import of capital goods. Bank guarantee equal to100% of the differential duty in case of merchant exporters and 25% in case of manufacturer exporters is required to be submitted except in case of exempted categories. [Refer Circulars No. 58/2004- Cus dated 21-10-2004, No.17/2009-Cus., dated 25-5-2009, No.32/2009-Cus., dated 25-11-2009, No. 06/2011-Cus., dated 18-1-2011 and No. 8/2013-cus dated 04.03.2013] 11.7 EPCG Authorization may also be obtained for annual requirement with a specific duty saved amount and corresponding EO. It indicates the export products thr....
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....tion would be fixed. There is no provision for extension of export obligation period in this scheme. 12.2 In the Scheme the duty remission is envisaged in proportion to export obligation fulfilled within a fixed export obligation period. Unlike the EPCG duty exemption schemes, the block obligation periods or their related proportions of export obligation fulfilment are not pre-defined in the new scheme. More than one duty credit scrip may issue (against the duty paid import of capital goods) based on the progressive fulfilment, during the specified export obligation period, of larger extents of the total export obligation. The meaning of 'export obligation' would apply individually to each duty credit scrip. Further, scrip issuance is akin to a discharge (or partial discharge) of the export obligation and is a remission by the DGFT of duty collected by the CBEC. Therefore, it is necessary that the Deputy/ Assistant Commissioner of Customs satisfies himself of the compliance of the conditions of the notification (including fulfilment of export obligation, the quantum of duty remission in the duty credit scrip, the cumulative duty credits issued against imported duty paid capital go....
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....t obligation to be fulfilled. The Commissioners of Customs are also to exercise special checks so as to ensure that there is no misuse of the scheme and a proper record of all such checks is maintained. These shall include random verifications of the address shown on the authorizations (for import of capital goods) during their validity period in at least 10% of authorizations, random verifications of the certificates produced (not issued by central excise authorities) and of the declarations submitted with respect to Condition No. 14 (e)(i) of the Customs notifications in at least 10% cases. These verifications should be made through the Commissioners of Central Excise. The central excise authorities should include, in their verification, a check of the periodical utility bills (containing the address) as one of the means enabling verification of installation/ operation/ authorization holder premises. The Commissioners are expected to exercise due diligence to prevent misuse. If any other measure or safeguard is considered necessary it may be informed to the Board for appropriate action. Moreover, relevant aspects should also be incorporated in the monthly report of "Monitoring of....
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....3.2 However, as before, EO is to be over and above the average level of exports achieved in the preceding three licensing years for the same and similar products. Certain sectors are not required to maintain average level of exports. The Authorizations are issued to manufacturer exporters and merchant exporter with or without supporting manufacturer, and service providers and also available to Common Service Provider (CSP). The authorizations specify the value/quantity of the export product to be exported against it. The Authorization holder is required to file bond with or without bank guarantee with the Customs prior to commencement of import of capital goods. Bank guarantee exemptions are available in terms of the Circular No. 58/2004-Cus dated 21-10-2004, No.17/2009- Cus dated 25-5-2009, No.32/2009-Cus dated 25-11-2009, No. 06/2011-Cus dated 18- 1-2011 and No. 8/2013-Cus dated 04.03.2013. The A uthorization may also be obtained for annual requirement with a specific duty saved amount and corresponding EO with indication of the export products through which EO shall be fulfilled. The CG imported are subject to actual user condition and the goods imported cannot be transferred or....
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....s is required to be verified on a random basis through Central Excise divisions. When address verifications or Installation Certificate verifications are requested by the Customs authorities in respect of EPCG authorizations, the Central Excise authorities should include, in their verification, a check of the periodical utility bills (containing the address) as one of the means enabling verification of installation/operation/ licensee premises. [Refer Circulars No.5/2010-Cus., dated 16-3-2010, No.25/2012-Cus., dated 6-9-2012 and Instruction No.609/119/2010-DBK., dated 18-1-2011] 16. Certain general provisions relating to export promotion schemes: 16.1 Imports and exports under the Export Promotion schemes are restricted to the ports, airports, ICDs and LCSs, as specified in the respective Customs duty exemption notifications. However, these notifications empower the Commissioners of Customs to permit export/ import under these schemes from any other place which has not been notified, on case to case basis by making suitable arrangements at such places. Foreign Post Office at New Delhi has also been included as port of export for benefits under FPS/FMS/VKGUY/AIIS. 16.2 Facility ....