ADVANCE AUTHORISATION SCHEME (FOR PHYSICAL & DEEMED EXPORTS) & DUTY FREE IMPORT AUTHORISATION SCHEME (DFIA)

APPLICATION STAGE

• All export contracts/invoices should be in freely convertible currency (except Deemed Exports& exports to Iran are Allowed in Rupee Payment.)
• Manufacturer Exporter or Merchant Exporter can submit application through the Registered Office / Head Office / Branches / Manufacturing Unit.
• If the Norms are not fixed, the Exporter can submit the application to the Regional Authority for issue of Advance Authorisation on the basis of self-declaration (not for DFIA).
• While submitting the application, the exporter can opt for any Freely Convertible Currency for import / export such as US$, Euro etc.
• Advance Authorisation& DFIA will be issued showing FOB value of exports in Free Foreign Currency as well as in Indian Rupees. Accountability of an Advance Authorisation& DFIA will be in terms of Freely Convertible Currency i.e. value in Freely Convertible Currency & quantity of exports.
• In case any supporting manufacturer is involved, the following documents of the supporting manufacturer are required:
  • SSI / MSME / IL / IEM certificate showing export product(s).
  • Valid Drug Licence for same export products.
  • Central Excise License / Exemption Letter.
  • Consent Letter on Mfg. letter head.
• Kindly give correct 8 digits ITC(HS) Code for your export product as well as for all the import items to avoid delay in import/export (If necessary consult our Excise Division along with copy of shipping bill & Bill of Entry). (If Export / Import made in past)
• Fuel is allowed for Import under Advance Authorisation. (With certain pre-conditions to be fulfilled)
• Exporter can also apply for import of inputs on free of cost basis. (If foreign buyers providing). In such cases, a specific endorsement shall be made in this regard.
• Duty Free Import of mandatory spares upto 10% of the C.I.F. Value of the license which are required to be exported / supplied with the resultant product, are allowed under Advance Authorisation.
• Similarly to collect any documents from the Regional Authority, Identity Card is compulsory. If Identity Card is not obtained or expired we strongly recommended apply for the same at the earliest. (Refer Page No.40 of this booklet.)
• If supply is to EOU, please obtain LOP/LOI from buyer along with copy of Green Card.
• If supply are to SEZ, get Bills of Exports duly attested by Bond Officer (Excise / Customs) before making supplies.(This is must to avail any benefits).
• For DFIA, Exporter needs to apply online to D.G.F.T. site and on basis of File No., starts exports. Within 12 months of exports and realisation exporter needs to file for Transferable DFIA, which is valid for 12 months for imports.

ATTENTION:

Transfer of any duty free material imported or procured against Advance Authorisation from one unit of company to another for manufacturing purpose shall be done with prior intimation to jurisdictional Excise Authorities with a clear understanding that no benefit of CENVAT shall be claimed on such transferred inputs. Such transfers shall not be allowed to units located in areas included in Excise exempted area.

EXPORT STAGE

• Exports / Supplies can be made any time after obtaining online file number for having submitted the application to the Regional Authority. The hard copy can be submitted subsequently but within 5 days.
• Advance Authorisation / DFIA will be issued showing the quantity and CIF value as limiting factors. The description, quality and technical characteristics will have to be adhered to as per notified SION.
• • Licence is issued with an Export Obligation period of 18 months, with 2 E.O. extension of 6 months each. (subject to composition fees) & valid for import for 12 months (+ 1 Revalidation for six months)
  • First E.O. Extension of EO period upto six months from the date of expiry of EO period subject to payment of composition fee of 0.5% of the shortfall in E.O.
  • 2nd E.O. Extension of six months after extension as considered by Regional Authority, provided Authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro-rata basis. This will be subject to payment of composition fee @ 0.5% per month on unfulfilled FOB value of export obligation. Authorization holder will have to submit a certificate to RA from an Independent Chartered Accountant/Chartered Engineer certifying that unutilised imported/domestically procured inputs are available with the applicant.
• Validity of Authorisation for Import / Export :Authorisaiton must be valid on the date of import and export.

VERY IMPORTANT

• All exempted materials along with wastage should be mentioned in Customs/Proforma Invoice & Shipping Bills. This is a mandatory requirement for obtaining EODC. If it is Deemed Exports, Invoice duly attested by their Excise authorities showing exempted material/ components on net to net basis including wastage and file number is mandatory.
• To avoid any problem with the Excise authorities we strongly recommend you to clear the consignments under Excise Bond only without payment of duty.
• If supply to EOU / SEZ, kindly get Bill of Exports, Invoice and ARE-3/ARE-1 form duly attested by Excise Authorities showing list of raw materials (including wastage) and file number.
• We suggest you that as soon as you start the exports against particular License, kindly send us the Customs Proforma Invoice (one or two times) for our approval to avoid any problem in future either with the Customs or Licensing Authorities.

PRECAUTION (Very Important)

2.9 The description & ITC (HS) Code in Shipping Bill, Bill of Exports, Bills of Entry and Authorization should tally exactly as per the Advance Authorization / EPCG Licence & MEIS Scheme.

IMPORT STAGE

• The following duties are exempted :
  • Basic Customs Duty.
  • Additional Customs Duty including Education Cess. (Not for DFIA)
  • Anti Dumping Duty / Safeguard Duty / Transition Product Specific Safeguard Duty (these are however payable on deemed exports under para 7.02 (c), (d) & (g)
• LUT/BG: In case the authorisation holder wishes to import, the inputs against the Advance Authorisation, prior to exports, he can do so by furnishing the Bank Guarantee / LUT to the Customs Authorities as per the guidelines of Custom Circular No. 58/04 dated 21.10.2004. However, the following categories of Exporter can clear the goods against Advance Authorisation on furnishing LUT.
  • Exporters having minimum export turnover of Rs. 5 crores in the current or preceding year and having three years export performance in the past.
  • Public Sector Undertaking
  • Status Holder
  • Manufacturer Exporter registered with Excise Authority and having minimum export turnover of Rs. 1 crore and above in the preceding year and having export during pre-vious 2 financial years (This provision is not applicable to Proprietorship & Partnership firms).
  • Manufacturer Exporter registered with Central Excise who has paid Rs. 1 crore or more Excise Duty during preceding financial year.
  • Manufacturer Exporter not covered above has to give Bank Guarantee to the extent of 15% of duty saved.
  • Others including Merchant Exporter and Service Provider have to give Bank Guarantee to the extent of 100% of the duty saved. (except Status Holder).

  For procurement of raw material from the Indigenous Manufacturer, the exporter has to give a Bank Guarantee / LUT to Regional Licensing Authority.

• Date of Reckoning of Import / Export: (Be aware)
  • Date of reckoning of import is decided with reference to date of shipment / dispatch of goods form supplying country and not the date of arrival of goods at an Indian port.
  • Date of reckoning of export is decided with reference to date of shipment / dispatch of goods from India.
  • Very Important: Earlier Advance Authorization were valid till end of the month irrespective of date of expiry but w.e.f. 01/04/2015, the licence shall expire on the date of expiry itself. (i.e. not valid till end of the month)

IMPORTANT POINTS

• Advance Authorisation or materials imported are not transferable even after completion of export obligation. In case Bank Guarantee / LUT has been redeemed, the Licensee can get the duty free inputs processed from any manufacturer under Actual User Condition i.e. for domestic sale.
• Goods already imported / shipped / arrived in advance but not cleared from Customs are also allowed for clearance against Advance Authorisation issued subsequently.
• The authorisation holder can procure the inputs from Indigenous sources / EOU etc. against Invalidation Certificate / ARO to be issued by the Regional Authorities in terms of para 4.14 of Handbook