4.49 — Regularisation of Bonafide Default

Cases of bonafide default in fulfilment of Export Obligation may be regularised by Regional Authority as under:

• (a) If Export Obligation is fulfilled in terms of value, but there is a shortfall in terms of quantity, the Authorisation holder shall, for regularisation, pay:

  • (i) To customs authorities, customs duty on unutilized value of imported / indigenously procured material along with interest as notified by DoR. Exporter shall pay Customs Duty along-with applicable interest online through ICEGATE Payment Gateway.

  • (ii) An amount equivalent to 10% of the CIF value of unutilised imported material, if the item of import is restricted, into "Head Account: 1453, Foreign Trade and Export Promotion and Minor Head 102". Provisions of this sub paragraph will not be applicable if unutilized material was freely importable on date of import/domestic procurement.

• (b) If the Export Obligation is fulfilled in quantity but there is shortfall in value, no penalty shall be imposed if Authorisation holder has achieved minimum Value Addition prescribed. However, if Value Addition falls below the minimum Value Addition prescribed, Authorisation holder shall be required to deposit an amount equal to 1% of shortfall in FOB value in Indian Rupee, online through DGFT website.[viii]

• (c) Value wise shortfall shall be calculated with reference to actual quantity of exports and FOB value of realisation with reference to pro- rata

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ee, online through DGFT website.[viii]

• (c) Value wise shortfall shall be calculated with reference to actual quantity of exports and FOB value of realisation with reference to pro- rata

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quantity of imports and CIF value. For example, if export performance is only 50% quantity wise but import has been for complete CIF value permitted, then Value Addition would be calculated on a pro- rata basis, i.e., with reference to 50% of CIF value of imports. This would, accordingly, imply that where Authorisation holder is unable to export, no penalty on value wise shortfall shall be imposed.

• (d) If Export Obligation is not fulfilled both in terms of quantity and value, the Authorisation holder shall, for the regularisation, pay as per a), b) and c) above.

• (e) In case an exporter is unable to complete Export Obligation undertaken in full and he has not made any import under Authorisation, Authorisation holder will also have an option to get the Authorisation cancelled and apply for drawback after obtaining permission from Customs authorities for conversion of shipping bills to Drawback Shipping Bills.

r will also have an option to get the Authorisation cancelled and apply for drawback after obtaining permission from Customs authorities for conversion of shipping bills to Drawback Shipping Bills.

• (f) Regional Authority shall compare relevant portion of Appendix 4H duly verified and certified by Chartered Accountant / Cost Accountants with that of norms allowed in Authorisation(s) and actual quantity imported against Authorisation(s) in the beginning of licensing year for all such Authorisations redeemed in preceding licensing year. In this verification process, in case it is found that Authorisation holder has consumed lesser quantity of inputs than imported, Authorisation holder shall be liable to pay customs duty on unutilized value of imported material, along with interest thereon as notified, or affect additional export within the Export Obligation period.

• (g) Regularization of Bona fide default in the cases where Authorisation was issued for import of drugs from unregistered sources with pre import condition.

Import of drugs from unregistered sources issued with pre import condition shall be regularised in the following manner:

d for import of drugs from unregistered sources with pre import condition.

Import of drugs from unregistered sources issued with pre import condition shall be regularised in the following manner:

• (i) The Authorisation holder shall submit documents showing consumption of full imported quantity as per norms. In case, there is shortfall in fulfilment of Export Obligation and unutilized imported quantity remains with the authorisation holder, the Authorisation holder shall submit a self-declaration along with the Charted Accountant’s certificate regarding destruction of the unutilized duty free imported material accompanied by an affidavit-cum-indemnity bond indemnifying the Government for any harm or loss occurring due to diversion of such imported material from unregistered sources into domestic market that may be detected in future by any authority, or proof of re-export of the same in terms of Para 4.42 of HBP.[ix]

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  - (ii) Exports made under any shipping bills /under the same authorisation after expiry of Export Obligation period using unutilized quantity of drugs shall also be accepted in-lieu of submission of destruction certificate as stated in para (i) above, provided the exact description and technical characteristics of the drug exported matches with that of export item described in the Advance Authorisation. However, the Authorisation holder shall pay customs duty with applicable interest to the Custom Authority on unutilized quantity imported under Advance Authorisation.

ed in the Advance Authorisation. However, the Authorisation holder shall pay customs duty with applicable interest to the Custom Authority on unutilized quantity imported under Advance Authorisation. Such exports shall only be considered for waiver of destruction certificate and not for waiver of liability of applicable duties and interest.[ix]

• 4.50 Payment of Customs Duty and Interest in case of bonafide default in Export Obligation

  • (a) Customs duty with interest as notified by DoR to be recovered from Authorisation holder on account of regularisation or enforcement of BG/LUT, shall be deposited by Authorisation holder in relevant Head of Account of Customs Revenue i.e., "Major Head 0037 - Customs and minor head 001-Import Duties” Online through ICEGATE Payment Gateway within 30 days of demand raised by Regional / Customs Authority and documentary evidence shall be produced to this effect to Regional Authority / Customs Authority immediately. Exporter can also make suo motu payment of customs duty and interest based on self/own calculation as per procedure laid down by DoR, which would be adjusted at the time of closure of the case.

  • (b) Mode of payment: Online through ICEGATE Payment Gateway

  • (c) Exporter shall produce documentary evidence of online payment to Regional Authority along-with duty calculation sheet at the time of regularization of their case.

ICEGATE Payment Gateway

• (c) Exporter shall produce documentary evidence of online payment to Regional Authority along-with duty calculation sheet at the time of regularization of their case.

• (d) Regional Authority shall verify the quantity of excess import before redeeming the case. Regional Authority may direct license holders to pay balance amount of customs duty after informing the reasons of the difference in the liability worked out by Authorisation holder and the calculations by Regional Authority. In such case, the balance amount of duty and interest, if any shall be paid by Authorisation holder within 30 days, for regularization of the matter.

• (e) The interest shall be paid Online through ICEGATE Payment Gateway at the rate applicable on the date of payment of delayed duty amount to the Customs Authority.

• (f) On receipt of said documentary evidence from Authorisation holder,

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Regional Authority shall redeem the case, and endorse details of duty paid on the EODC/Redemption Letter and inform details of recovery/ deposits made to the Customs Authority at the port of registration or the Commissioner of Customs having jurisdiction over the factory of the Authorisation holder, as the case may be.

• (g) Payment of duty, interest and any dues for regularisation shall, however, be without prejudice to any other action that may be taken by Customs Authorities at any stage under Customs Act, 1962.