Page 263 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes performance under the EPCG Scheme, and also in the extension of export obligation period by
2 years, based on certain conditions.

12.7 Duty Free Import Authorization Scheme

This scheme is the latest improvement announced in the Annual Supplement 2006 to the FTP
2004-09. The new scheme seeks to clubs the Advance Licencing scheme and the Duty Free
Replenishment Certificate and were to come into effect from May 1, 2006. The new scheme will
offer the facility to import the required inputs before the exports. It will also allow transferability
of scrip once the export obligation is complete. Imports made under this authorization will be
exempt from payment of basic custom duty, additional customs duty, education cess, anti-
dumping duty and safeguard duty, if any. The scheme proposes to combine the salient features
of both the earlier schemes. Earlier, an exporter could either avail Advance Licencing or DFRC.
This improvement promises best of both the schemes to the exporter.
Advance Licencing scheme provides for issue of an import licence to allow duty free import of
inputs, which are physically incorporated in the export product (making normal allowance for
wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed in the course of their
use to obtain the export product, are also allowed under the scheme.
Advance Licence can be issued for the following:
(i) Physical exports: Advance Licence may be issued for physical exports including exports to
SEZ to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s)
for import of inputs required for the export product.
(ii) Intermediate supplies: Advance Licence may be issued for intermediate supply to a
manufacturer-exporter for the import of inputs required in the manufacture of goods to be
supplied to the ultimate exporter/deemed exporter holding another Advance Licence.
(iii) Deemed exports: Advance Licence can be issued for deemed export to the main contractor
for import of inputs required in the manufacture of goods to be supplied to the categories
specified in the Foreign Trade Policy.
Advance Licence is issued for duty free import of inputs subject to actual user condition. Such
licences (other than Advance Licence for deemed exports) are exempted from payment of basic
customs duty, additional customs duty, education cess, anti-dumping duty and safeguard duty,
if any. Advance Licence for deemed export shall be exempted from basic customs duty, additional
customs duty and education cess only. However in case of supplies to EOU/SEZ/EHTP/STP/
BTP under such licences, anti-dumping duty and safeguard duty shall also be exempted. These
provisions were further upgraded in the Annual Supplement 2005 to the Foreign Trade Policy.
Now, Safeguard duty and anti-dumping duty have been exempted on inputs under Advance
Licence for deemed export supplies made to projects under ICB (International Competitive
Bidding) procedure (Circular No. 30/2005-Cus.12th July, 2005).
Advance Licence and/or materials imported thereunder are not permitted to be transferred
even after completion of export obligation. The scope of Advance Licence for Annual Requirement
has been extended to all categories of exporters having past export performance. Earlier, the
licences were issued to status-holders only.
Transfer of duty free material imported or procured under Advance Licence from one unit of the
company to another unit of the same company has been allowed with prior intimation to the
jurisdictional central excise authority. Earlier, prior permission of the jurisdictional Central
Excise Authority was required.

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