Page 264 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 12: Export Incentives Schemes

Export obligation under Advance Licence is based on Value Addition. The Foreign Trade Policy Notes
has defined Value Addition as follows:
V.A. = A–B/B*100

Where,
V.A. Value Addition
A FOB value of the export realized /FOR value of supply received
B CIF value of the imported inputs covered by the licence, plus any other imported materials
used on which the benefit of duty drawback is being claimed.
An Advance Licence contains:
(a) The names and description of items to be imported and exported/supplied

(b) The quantity of each item to be imported or wherever the quantity cannot be indicated,
the value of the item shall be indicated. However, if in standard input-output norms,
the quantity and value of individual inputs is a limiting factor, the same shall be
applicable
(c) The aggregate CIF value of imports

(d) The FOB/FOR value and quantity of exports/supplies.
Advance Licence is valid for a period of 18 months from the date of shipment/despatch of goods
from the foreign country. This validity period may be extended by a maximum of 6 months,
based on the merits of each case at the discretion of the competent licencing authority. The
exporter must fulfill his export obligation under advance licence within a period of 18 months
from the date of issue of the licence. Two further extensions of 6 months each are possible after
the expiry of the original period on the payment of composition fee at prescribed rates.

Duty Free Replenishment Certificate is issued to a merchant-exporter or manufacturer-exporter
for the import of inputs used in the manufacture of goods without payment of basic customs
duty. However, such inputs are subject to the payment of additional customs duty equal to the
excise duty at the time of import. DFRC is issued in respect of exports for which payments are
received in non-convertible currency.

!
Caution DFRC is issued only in respect of products covered under the Standard Input
Output Norms (SION) as notified by DGFT.
The DFRC and the specific inputs procured against it are subject to actual user condition under
the following circumstances:
(i) The export proceeds have not been realized and the exports have not been made under an
irrevocable letter of credit or the bill of exchange is not avalised/co-accepted/guaranteed

(ii) The DFRC is issued against a SION with actual user condition
(iii) Specific inputs under a SION are subject to actual user condition.
Under all other circumstances, the inputs procured against DFRC are freely transferable. However,
in case of fuel, the import entitlement will be allowed to be transferred only to the companies which
have been granted authorization to market fuels by the Ministry of Petroleum & Natural Gas.
DFRC is valid for a period of 18 months. An application for grant of DFRC may be made to the
Regional Authority concerned in the form given in ‘Aayaat Niryaat Form’ along with the

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