Page 220 - DMGT547_INTERNATIONAL_MARKETING

Unit 12: Export Procedures and Policies

allowance for wastage). In addition, fuel, oil, energy catalysts, etc., which are consumed in the Notes
course of their use to obtain the export product are also allowed under the scheme. The raw
materials/inputs are allowed duty free as per the quantity specified in the Standard Input-
Output Norms (SION) notified by the DGFT or as per self-declared norms of the. The Advance
Authorisations are not issued for some specified items like vegetable oils, cereals, spices, honey,
etc. The Advance Authorisation holder is required to fulfill the export obligation (EO) by exporting
a specified quantity/value of the resultant product. The Advance Authorisations are issued both
for physical exports as well as deemed exports. These are also issued on the basis of annual
requirements of the exporter, which enables him to plan his manufacturing / export programme
on a long term basis. The Advance Authorisations are issued on pre-export or post export basis
in accordance with the FTP and procedures in force on the date of issue of Authorisation.

The imports/exports against Advance Authorisations and their utilization require proper
monitoring as the goods are imported duty free against a liability to export. For this, the
Advance Authorisation holder is required to maintain a proper record of his imports and exports
and to pay the duties in case he is unable to fulfil his export obligation, the Advance Authorisation
holder is required to indicate the Advance Authorization No./ date on the body of the Shipping
Bill/Invoice (in case of deemed exports). After fulfilment of specified export obligation, the
Advance Authorisation holder is required to submit relevant export documents along with
Advance Authorisation to the DGFT authorities for obtaining Export Obligation Discharge
Certificate (EODC). After obtaining EODC, the Advance Authorisation Authorization holder
produces the same before the Customs for the purpose of obtaining redemption of bond/Bank
Guarantee filed by him. The concerned Commissioners of Customs and Central Excise are also
required to effectively monitor the compliance with provisions of Customs Notifications. The
Commissioners of Customs have also been advised to put in place an institutional mechanism
whereby they meet the RLA at least once every quarter to pursue issues relating to EO fulfilment
status so that the action is taken against defaulters.

The Advance Authorisations normally have a validity period for fulfilment of Export
Obligation(EO) of 36 months from the date of issue with certain exceptions. The relevant DGFT
authority who issues the Authorisation is competent to grant revalidation or grant extension of
EO period beyond the prescribed period. No All Industry Rate (AIR) of Duty Drawback is
admissible to an Advance Authorisation holder. However, the Advance Authorisation holder is
entitled to 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. Every
Advance Authorisation holder is required to maintain a true and proper account of consumption
and utilisation of duty free imported/domestically procured goods for a minimum period of 3
years.
Duty Free Import Authorisation (DFIA): The Duty Free Import Authorisation (DFIA) scheme
introduced in 2006 is similar to Advance Authorisation scheme in most aspects except with 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 sourced only on
payment of Additional Customs duty/Central Excise duty. The DFIA Authorisations are issued
only for products for which SION have been notified. This scheme is operationalized through a
Notification No.40/2006-Cus., dated 1-5-2006. The DFIA Scheme in the present FTP (2009-14)
was operationalized by the Customs Notification.
The monitoring of export obligation is an essential ingredient of the DFIA scheme. Thus, the
Commissioners of Customs have been advised to put in place an institutional mechanism
whereby they meet the RLA at least once every quarter to pursue issues relating to EO fulfilment
status so that the concerted action is taken against defaulters. Further, there is a requirement that

LOVELY PROFESSIONAL UNIVERSITY 215