IN FORCE EPCG ·?

DGFT Regulatory Doc

Reliability

In force — no superseding record on file.

Document text

CHAPTER 1

LEGAL FRAMEWORK AND TRADE FACILITATION

A. LEGALFRAMEWORK 1.00 Legal Basis of Foreign Trade Policy(FTP)

The Foreign Trade Policy, 2015-20, (as updated) w.e.f. 05.12.2017is notified by Central Government, in exercise of powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992) [FT (D&R) Act], as amended. 1.01 Duration of FTP

The Foreign Trade Policy (FTP), 2015-2020,(as updated) w.e.f. 05.12.2017 incorporating provisions relating to export and import of goods and services, shall come into force with effect from the date of notification and shall remain in force up to 31st March, 2020, unless otherwise specified. All exports and imports made up to the date of notification shall, accordingly, be governed by the relevant FTP, unless otherwise specified. 1.02 Amendment to FTP

Central Government, in exercise of powers conferred by Section 5 of FT (D&R) Act, 1992, as amended from time to time, reserves the right to make any amendment to the FTP, by means of notification, in public interest.

in exercise of powers conferred by Section 5 of FT (D&R) Act, 1992, as amended from time to time, reserves the right to make any amendment to the FTP, by means of notification, in public interest. 1.03 Hand Book of Procedures (HBP) and Appendices & Aayat Niryat Forms (AANF)

Director General of Foreign Trade (DGFT) may, by means of a Public Notice, notify Hand Book of Procedures, including Appendices and Aayat Niryat Forms or amendment thereto, if any, laying down the procedure to be followed by an exporter or importer or by any Licensing/Regional Authority or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and provisions of FTP. 1.04 Specific provision to prevail over the general

Where a specific provision is spelt out in the FTP/Hand Book of Procedures (HBP), the same shall prevail over the general provision.

1.05 Transitional Arrangements

(a) Any License/ Authorisation/ Certificate/ Scrip/ instrument bestowing financial or fiscal benefit issued before commencement of FTP,2015-20 (as updated) w.e.f. 05.12.2017shall continue to be valid for the purpose and duration for which it was issued, such License/Authorisation/ Certificate / Scrip / any instrument bestowing financial or fiscal benefit Authorisation was issued, unless otherwise stipulated.
(b) Item wise Import/Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/ exportability of a particular item is governed by the policy as on the date of import/export.

Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/ exportability of a particular item is governed by the policy as on the date of import/export. The date of import/ export is defined in para 2.17 of HBP, 2015-20. Bill of Lading and Shipping Bill are the key documents for deciding the date of import and export respectively. In case of change of policy from ‘free' to 'restricted/prohibited/state trading' or 'otherwise regulated', the import/export already made before the date of such regulation/restriction will not be affected. However the import through High Sea sales will not be covered under this facility. Further, the import/export on or after the date of such regulation/restriction will be allowed for importer/exporter has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction/ regulation and shall be limited to the balance quantity, value and period available in the ICLC. For operational listing such ICLC, the applicant shall have to register the ICLC with jurisdictional RA against computerized receipt within 15 days of imposition of any such restriction/regulation. Whenever, Government brings out a policy change of a particular item, the change will be applicable prospectively (from the date of Notification) unless otherwise provided for.i

/regulation. Whenever, Government brings out a policy change of a particular item, the change will be applicable prospectively (from the date of Notification) unless otherwise provided for.i

B. TRADE FACILITATION& EASE OF DOINGBUSINESS 1.06 Objective

Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian exports more competitive. The various provisions of FTP and measures taken by the Government in the direction of trade facilitation are consolidated under this chapter for the benefit of stakeholders of import and export trade. 1.07 DGFT as a facilitator of exports/imports

DGFT has a commitment to function as a facilitator of exports and imports. Focus is on good governance, which depends on efficient, transparent and accountable

delivery systems. In order to facilitate international trade, DGFT consults various Export Promotion Councils as well as Trade and Industry bodies from time to time. 1.08 Niryat Bandhu - Hand Holding Scheme for new export/ import entrepreneurs.

(a) DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential exporter on the intricacies of foreign trade through counseling, training and outreach programmes. (b) Considering the strategic significance of small and medium scale enterprises in the manufacturing sector and in employment generation, ‘MSME clusters’ have been identified, based on the export potential of the product and the density of industries in the cluster, for focused interventions to boost exports.

employment generation, ‘MSME clusters’ have been identified, based on the export potential of the product and the density of industries in the cluster, for focused interventions to boost exports. (c) Outreach activities shall be organized in a structured way with the help of Export Promotion Councils as ‘industry partners’ and other willing ‘knowledge partners’ in academia and research community to achieve the objective of Niryat Bandhu Scheme. Further, in order to ensure optimum utilization of resources, efforts would be made to associate all the stakeholders, including Customs, ECGC, Banks and concerned Ministries. 1.09 Citizen’s Charter

DGFT has in place a Citizen’s Charter, giving time schedules for providing various services to clients. Time line for disposal of an Application is given in Para 9.10 of HBP. 1.10 Online Complaint Registration and Monitoring System

An EDI Help Desk is available to assist the exporters in filing online applications on the DGFT portal and resolving other EDI related issues. For assistance an email may be sent at dgftedi@nic.in or Toll Free number 1800111550 can be used. Help Desk facility is also operational at the 4 DGFT Zonal Offices (details at http://dgft.gov.in). An Online Complaint registration and monitoring system allows users to register complaint and receive status/ reply online (details are at http://dgft.gov.in).

1.11 Issue of e-IEC (Electronic-Importer Exporter Code)

(a) Importer Exporter Code (IEC) is mandatory for export/import from/to India as detailed in paragraph 2.05 of this Policy.

ft.gov.in).

1.11 Issue of e-IEC (Electronic-Importer Exporter Code)

(a) Importer Exporter Code (IEC) is mandatory for export/import from/to India as detailed in paragraph 2.05 of this Policy. DGFT issues Importer Exporter Code in electronic form (e-IEC). For issuance of e-IEC an application can be made on DGFT (http//:dgft.gov.in). Applicant can upload the documents and pay the requisite fee through Net banking. Applicant shall, however, submit the application duly signed digitally. (b) Processing of such applications by Regional Authority (RAs) of DGFT would

be done online and a digitally signed e- IEC would normally be issued/ e- mailed to the applicant within 2 working days. (c) In case the application is incomplete or otherwise ineligible, the same shall be rejected and a Rejection letter/email (with reasons for rejection) would be sent to the applicant. (d) Application for issue of e-IEC can also be made from eBiz platform
(https://www.ebiz.gov.in).

1.12 e-BRC

(a) One prominent initiative in recent times has been the e-BRC (Electronic Bank Realisation Certificate) project and its successful implementation by DGFT. It has enabled DGFT to capture details of realisation of export proceeds directly from the Banks through secured electronic mode. This has facilitated the implementation of various export promotion schemes without any physical interface with the stake holders.

proceeds directly from the Banks through secured electronic mode. This has facilitated the implementation of various export promotion schemes without any physical interface with the stake holders. (b) RBI has also developed a comprehensive IT-based system called Export Data Processing and Monitoring System (EDPMS) for monitoring of export of goods and software and facilitating AD banks to report various returns through a single platform.

1.13 MoU with State Governments for sharing of e-BRC data

MOU has been signed with 14 state governments for sharing of e-BRC data to facilitate refund of VAT/GST by the state government to exporters. MOU has also been signed with Enforcement Directorate, Agricultural Directorate, Agricultural Processed Food Products Export Development Authority and Goods & Services Tax Network (GSTN).

1.14 Exporter Importer Profile

An electronic procedure has been created to upload various documents in exporter importer profile. Once uploaded, there will be no need to submit these documents/ copies of these documents to Regional Authority repeatedly with each application. It intends to reduce the transaction cost and time and is a step towards paperless processing of different applications in DGFT. 1.15 Reduction in mandatory documents required for Export and Import

The number of mandatory documents required for exports and imports of goods from/into India have been reduced to three each, as prescribed under paragraph 2.06 of FTP.

red for Export and Import

The number of mandatory documents required for exports and imports of goods from/into India have been reduced to three each, as prescribed under paragraph 2.06 of FTP.

1.16 Facility of online filing of applications All the Regional Authorities (RA) of DGFT and extension counters have been networked with high speed internet. The applications are received and processed electronically. DGFT under the EDI initiatives has provided the facility of on line filing of applications to obtain Importer Exporter Code and various Authorisations /scrip’s. DGFT is one of the first digital signature enabled organisation of the Government of India (GOI), which has introduced a higher level of Encrypted 2048bit digital signature. There is a web interface for online filing of application after accessing DGFT website (http://dgft.gov.in). The application can be filed by exporter/CHA sitting at home or office in 24X7 environments. Application fee can also be paid online from linked banks or by using debit/credit card. The applications are signed with a digital signature and submitted electronically to the concerned Regional Authority of DGFT, which are then processed on
computer by the Regional Authority and Authorisations / scrip’s are issued. Online filing of Application has minimized the physical interface with RA.

which are then processed on
computer by the Regional Authority and Authorisations / scrip’s are issued. Online filing of Application has minimized the physical interface with RA. 1.17 Online Inter-ministerial consultation Presently, the exporters are required to file applications online on the website of DGFT under the Icon E-COM and are required to submit the duly signed and stamped printout of the online application along with all the necessary documents viz. technical specifications, literature etc. Now, a facility is being provided to upload copies of all the required documents including technical specifications, literature etc in PDF/JPG/JPEG/GIF format in the online filing system in respect of (a) Fixation of norms under Advance Authorisation by Norms Committees (b) Export of Restricted Items (c) Import of Restricted Items (d) SCOMET Items. The exporters would not be required to submit the hard copy of application except architectural drawings, machine drawings etc which may be difficult to scan and upload. The processing of the applications will also be done online. 1.18 Facility to upload documents by CA/ CS/ Cost Accountant

In order to move towards paperless processing, an electronic procedure is being developed to upload digitally signed documents by Chartered Accountant / Company Secretary / Cost Accountant. To start with, this facility would be created for Export from India Schemes under Chapter 3.

oped to upload digitally signed documents by Chartered Accountant / Company Secretary / Cost Accountant. To start with, this facility would be created for Export from India Schemes under Chapter 3. Such documents like Annexure Attached to ANF 3B, ANF 3C and ANF 3D, which are at present signed by these signatories, can be facilitated by this procedure. Exporter shall link digitally uploaded annexure with his online applications after creation of such facility. These facilities may be extended in phased manner to upload documents pertaining to other schemes like Advance Authorisation, DFIA and EPCG.

1.19 Electronic Data Interchange (EDI)

DGFT has put in place a robust EDI system for the purpose of export facilitation and good governance. DGFT has set up a secured EDI message exchange system for various documentation related activities including import and export Authorisations established with other administrative departments, namely, Customs, Banks and EPCs. This has reduced the physical interface of exporters and importers with the Government Departments and is a significant measure in the direction of reduction of transaction cost. The Endeavour of DGFT has been to enlarge the scope of EDI to achieve higher level of integration with partner departments. 1.20 Message Exchange with Community partners

Customs, Banks, Export Promotion Councils (EPCs) are major community partners of DGFT for message exchange.

f integration with partner departments. 1.20 Message Exchange with Community partners

Customs, Banks, Export Promotion Councils (EPCs) are major community partners of DGFT for message exchange. An effective message exchange system is in place with various community partners which is as follows: (a) Message Exchange with Customs (i) Importer Exporter Code Number. (ii) Authorisations/ Scrips for DFIA, AA, EPCG. (iii) Shipping Bills for Duty Free Import Authorisation (DFIA), Advance Authorisation (AA), Export Promotion Capital Goods (EPCG), Reward Scrips.

(b) Message Exchange with eBiz (https://www.ebiz.gov.in): Application for e- IEC. (c) Message Exchange with Banks (i) Application Fee (ii) electronic Bank Realisation Certificate (e-BRC)data

(d) Message Exchange with EPCs Registration cum Membership Certificate (RCMC) data.

(e) Message exchange with GSTN and RBI.

1.21 Encouraging development of Third Party API

DGFT will encourage development of third party software for integration with its system to offer users multiple options for interfacing with the DGFT. 1.22 Forthcoming e-Governance Initiatives

DGFT is currently working on the following EDI initiatives: (i) Message exchange for transmission of Bills of Entry

for interfacing with the DGFT. 1.22 Forthcoming e-Governance Initiatives

DGFT is currently working on the following EDI initiatives: (i) Message exchange for transmission of Bills of Entry

(import details) from Customs to DGFT. (ii) Online issuance of Export Obligation Discharge Certificate (EODC). (iii) Message exchange with Ministry of Corporate Affairs for CIN & DIN Information. (iv) Message exchange with CBDT for PAN. (v) Open API for submission of e-IEC Application. (vi) Mobile Applications for FTP. 1.23 Free passage of Export consignment

Consignments of items meant for exports shall not be withheld/ delayed for any reason by any agency of Central/ State Government. In case of any doubt, authorities concerned may ask for an undertaking from exporter and release such consignment.

1.24 No seizure of export related Stock

No seizure shall be made by any agency so as to disrupt manufacturing activity and delivery schedule of exports. In exceptional cases, concerned agency may seize the stock on the basis of prima facie evidence of serious irregularity. However, such seizure should be lifted within 7 days unless the irregularities are substantiated.

1.25 24 X 7 Customs clearance

CBEC introduced the facility of 24 X 7 customs clearance in the year 2012 for facilitated Bills of Entry and factory stuffed container and goods exported under free Shipping Bills. At present, this facility is available at 19 sea port and 17 air cargo complexes.

ar 2012 for facilitated Bills of Entry and factory stuffed container and goods exported under free Shipping Bills. At present, this facility is available at 19 sea port and 17 air cargo complexes. The 24 X 7 Customs clearance facility has now been extended to all Bills of Entry (not only facilitated Bills of Entry) at 19 sea port and 17 Air Cargo Complexes. Further, no MOT charges are required to be collected in respect of the services provided by the Customs officers at 24 X 7 Customs Ports and Airports. 1.26 Single Window in Customs

Indian Customs has introduced SWIFT (Single Window Interface for Facilitating trade) w.e.f. 01.04.2016 for ensuring ease of doing business. Under SWIFT, the Importers electronically lodge Integrated Declaration at a single point only with Customs. The required permission, if any, from other regulatory agencies (such as Animal quarantine, Plant quarantine, Drug Controller, Textile Committee etc.) is obtained online without the importer/exporter having to separately approach these agencies. Benefits of Single Window Scheme include:

a. Reduced Cost of doing business; b. Enhanced transparency;

btained online without the importer/exporter having to separately approach these agencies. Benefits of Single Window Scheme include:

a. Reduced Cost of doing business; b. Enhanced transparency;

c. Reduced duplicity and cost of compliance; d. Optimal utilization of manpower.

1.27 Self-Assessment of Customs Duty (a) Self-Assessment of Customs duty by importers or exporters was introduced vide Finance Act, 2011. The system is trust based. The objective is to expedite release of imported / export goods. The system operates on an electronic Risk Management System(RMS) (b) The Finance Act, 2017 has amended Section 47 of the Customs Act, 1962 to Authorize an importer to pay duty/ tax/ cess on the date of presentation of self-assessed Bill of Entry. 1.28 Authorised Economic Operator (AEO) Programme

(a) Based upon WCO’s SAFE Framework of Standards (FoS), ‘Authorised Economic Operator (AEO) programme’ has been developed by Indian Customs to enable business involved in the international trade to reap the following benefits: (i) Secure supply chain from point of export to import; (ii) Ability to demonstrate compliance with security standards when contracting to supply overseas importers /exporters; (iii) Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries; (iv) Minimal disruption to flow of cargo after a security related disruption; (v) Reduction in dwell time and related costs; and (vi) Customs advice / assistance if trade faces unexpected issues with Customs of countries with which India have MRA.

rity related disruption; (v) Reduction in dwell time and related costs; and (vi) Customs advice / assistance if trade faces unexpected issues with Customs of countries with which India have MRA.

(b) The AEO programmes have been implemented by other Customs administrations that give AEO status holders preferential Customs treatment in terms of reduced examination, faster clearances and other benefits. Thus, the AEO programme is expected to result in Mutual Recognition Agreements (MRA) with these Customs administrations. MRAs would ensure export goods get due Customs facilitation at the point of entry in the foreign country. Apart from securing supply chain, the benefits include reduction in dwell time and consequent cost of doing business. Indian Customs has signed MRA with Hong Kong Customs to recognise respective AEO Programmes to enable trade to get benefits on reciprocal basis. Indian Customs is also engaged in finalising MRA with other counties such as South Korea, Taiwan, USA etc.

(c) As a step further towards trust based compliance, Indian Customs has introduced the new/revamped Authorised Economic Operator (AEO)

ith other counties such as South Korea, Taiwan, USA etc.

(c) As a step further towards trust based compliance, Indian Customs has introduced the new/revamped Authorised Economic Operator (AEO)

Programme wherein extensive benefits, including greater facilitation and self-certification, have been provided to those entities who have demonstrated internal strong control system and compliance with CBEC. 1.29 Prior filing facility for Shipping Bills

To facilitate processing of shipping bills before actual shipment, prior online filing facility for shipping bills has been provided by the Customs - 7 days for air shipments & ICDs and 14 days for shipments by sea. 1.30 Cutting down delay in filing of Export General Manifest (EGM) for duty drawback

To facilitate quicker filing of EGMs and quicker rectification of EGM errors, there is a mechanism of monthly monitoring of EGMs by Chief Commissioners of Customs to ensure that facilitation does not lag on this account (Instruction No. 603/01/2011-DBK dated 31.07.2013). 1.31 Facility of Common Bond / LUT against Authorisations issued under different EPSchemes

CBEC Circular 11(A)/2011-Cus dated 25.02.2011 has provided the financial year- wise facility of executing common Bond/LUT against Advance Authorisation (AA)/Export Promotion Capital Goods (EPCG) Authorisation which is usable across all EDI ports/ locations.

he financial year- wise facility of executing common Bond/LUT against Advance Authorisation (AA)/Export Promotion Capital Goods (EPCG) Authorisation which is usable across all EDI ports/ locations. 1.32 Exemption from Service Tax on Services received abroad

(Deleted) 1.33 Export of perishable agricultural Products

To reduce transaction and handling costs, a single window system to facilitate export of perishable agricultural produce has been introduced. The system will involve creation of multi- functional nodal agencies to be accredited by Agricultural and Processed Food Products Export Development Authority (APEDA), New Delhi. The detailed procedure has been notified at Appendix 1C to Appendices &ANFs. 1.34 Time Release Study (TRS)

Customs Authority has decided to undertake ‘Time Release Study’ (TRS) as per WCO guidelines at major Customs locations on six monthly basis. WCO Time Release Study (TRS) is a unique tool and method for measuring the actual performance of Customs. The underlying objectives of Time Release Study are:

(i) Identifying bottlenecks in the international supply chain / or constraints

ol and method for measuring the actual performance of Customs. The underlying objectives of Time Release Study are:

(i) Identifying bottlenecks in the international supply chain / or constraints

affecting Customs release. (ii) Establishing baseline trade facilitation performance measurement. 1.35 Towns of Export Excellence (TEE)

(a) Objective: Development and growth of export production centres. A number of towns have emerged as dynamic industrial clusters contributing handsomely to India’s exports. It is necessary to grant recognition to these industrial clusters with a view to maximize their potential and enable them to move up the value chain and also to tap new markets.

(b) Selected towns producing goods of Rs. 750 Crore or more may be notified as TEE based on potential for growth in exports. However, for TEE in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs.150 Crore. The following facilities will be provided to such TEE’s: (i) Recognized associations of units will be provided financial assistance under MAI scheme, on priority basis, for export promotion projects for marketing, capacity building and technological services. (ii) Common Service Providers in these areas shall be entitled for Authorisation under EPCG scheme.

1.36 DGCI&S, Kolkata as the provider of trade data

Director General of Commercial Intelligence and Statistics (DGCI&S) is an ISO certified organization under the administrative control of DGFT.

1.36 DGCI&S, Kolkata as the provider of trade data

Director General of Commercial Intelligence and Statistics (DGCI&S) is an ISO certified organization under the administrative control of DGFT. It is the provider of trade data which is a source of guidance and direction for export & import trade and which help the exporters and importers formulate their trade strategy. Foreign trade data is disseminated by DGCI&S through (i) Monthly & Quarterly publications in CD form and (ii) Generation of data from the Foreign Trade database as per user’s request. The DGCI&S has a Priced Information System (PIS) for disseminating data except for purely Central and State Governments and United Nations bodies. DGCI&S has put in place a Data Suppression Policy. The aim of this policy is to maintain confidentiality of importer’s and exporter’s commercially sensitive business data. Transaction level data would not be made publicly available to protect privacy. DGCI&S trade data shall be made available at aggregate level with a minimum possible time lag on commercial criteria. DGCI&S can be visited at http://dgciskol.nic.in. 1.37 Reducing/eliminating printout in Customs Clearance With the aim of ease of doing business and promoting paperless clearance, CBEC

l criteria. DGCI&S can be visited at http://dgciskol.nic.in. 1.37 Reducing/eliminating printout in Customs Clearance With the aim of ease of doing business and promoting paperless clearance, CBEC

has done away with routine print-outs of several documents including GAR 7 Forms/TR6 Challans, TP copy, Exchange Control copy of Bill of Entry and Shipping Bills and Export Promotion copy of Shipping Bill. However, hard copy of EP copy of shipping Bill/ Bill of Entry may be provided on request only. 1.38 National Committee on Trade Facilitation (NCTF) Consequent to India’s ratification of the WTO Agreement on Trade Facilitation (TFA) in April 2016, the National Committee on Trade Facilitation (NCTF) has been constituted. The establishment of the Committee is part of mandatory, institutional arrangement of the TFA. This inter-ministerial body on trade facilitation will be chaired by the Cabinet Secretary. Its Secretariat will be housed within the Central Board of Excise and Customs (CBEC), in the Directorate General of Export Promotion, New Delhi. The defined objective behind setting up the NCTF is to have national level body that will facilitate domestic co-ordination and implementation of TFA provisions. It will play the lead role in developing the Pan-India road map for trade facilitation. It will be instrumental in synergizing the various trade facilitation perspectives across the country and will also focus on an outreach programmes for sensitization of all stakeholders about TFA.

It will be instrumental in synergizing the various trade facilitation perspectives across the country and will also focus on an outreach programmes for sensitization of all stakeholders about TFA. 1.39 E-mailinitiatives CBEC has initiated e-mail notification service to importers for information related to all important stages of import clearances. 1.40 Facility of deferred payment As a trade facilitation measure, CBEC has introduced facility of deferred payment of customs duty. Further, Deferred Payment of Import Duty Rules, 2016 have been notified and the same have come into effect from 16.11.2016. The importers certified under AEO Programme (Tier-two) and (Tier-Three) have been notified for availing the benefit of these Rules

1.41 With a view to expand employment opportunities, certain special focus initiatives for Handlooms, Handicraft, Leather, Marine, Sports Goods and Toys sectors are required. These sectors are being provided the following duty free (only basic customs duty free with effect from 01.07.2017) entitlements:ii i. Handlooms

a. Duty free import entitlement of specified trimmings and embellishments up to 5% of FOB value of exports during previous financial year. Handloom and made ups are included for the entitlement.

b. Duty free import entitlement of hand knotted carpet samples up to 1% of FOB value of exports during previous financial year.

ii. Handicrafts a. Duty free import entitlement of tools, trimmings and embellishments up to 5% of FOB value of exports during previous financial year. Entitlement shall extend to merchant exporters tied up with supporting manufacturers. b. Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable

iii. Leather and Footwear

a. Duty free import entitlement of specified items up to 3% of FOB value of exports of leather garments during preceding financial year. b. Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), and other leather products upto 5% of FOB value of export of previous financial yeariii

iv. Marine Sector

Duty free import of specified specialised inputs/chemicals and flavoring oils is allowed to the extent of 1% of FOB value of preceding financial year's export.

v. Sports Goods and Toys Duty free import of specified specialised inputs allowed to the extent of 3% of FOB value of preceding financial year's export. However, the term "Duty" specified above shall mean "Basic Customs Duty" w.e.f. 0l.07.2017.

ecified specialised inputs allowed to the extent of 3% of FOB value of preceding financial year's export. However, the term "Duty" specified above shall mean "Basic Customs Duty" w.e.f. 0l.07.2017.

iPara (b) Amended Vide Notification no. 05 dated 25.04.2018 iiPara 1.41 inserted vide Notification no. 09 dated 29.05.2018 iii Amended vide Corrigendum to Notification no, 09 dated

CHAPTER 2

GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS

2.00 Objective

The general provisions governing import and export of goods and services are dealt with in this chapter.

2.01 Exports and Imports – ‘Free’, unless regulated

(a)
Exports and Imports shall be ‘Free’ except when regulated by way of ‘prohibition’, ‘restriction’ or ‘exclusive trading through State Trading Enterprises (STEs)’ as laid down in Indian Trade Classification (Harmonized System) [ITC (HS)] of Exports and Imports. The list of
‘Prohibited’, ‘Restricted’, and STE items can be viewed by clicking on ‘Downloads’ at http://dgft.gov.in

(b)
Further, there are some items which are ‘free’ for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force.

2.02 Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports.

(a)
ITC (HS) is a compilation of codes for all merchandise / goods for export/ import. Goods are classified based on their group or sub-group at 2/4/6/8 digits.

(HS)] of Exports and Imports.

(a)
ITC (HS) is a compilation of codes for all merchandise / goods for export/ import. Goods are classified based on their group or sub-group at 2/4/6/8 digits.

(b) ITC (HS) is aligned at 6 digit level with international Harmonized System goods nomenclature maintained by World Customs Organization (http://www.wcoomd.org). However, India maintains national Harmonized System of goods at 8 digit level which may be viewed by clicking on ‘Downloads’ at http://dgft.gov.in

(c)
The import/export policies for all goods are indicated against each item in ITC (HS).Schedule 1 of ITC (HS) lays down the Import Policy regime while Schedule 2 of ITC (HS) details the Export Policy regime.

(d) Except where it is clearly specified, Schedule 1 of ITC (HS), Import Policy is for new goods and not for the Second Hand goods. For Second Hand goods, the Import Policy regime is given in Para 2.31 in this FTP.

2.03 Compliance of Imports with Domestic Laws

(a) Domestic Laws/ Rules/ Orders/ Regulations/ technical specifications/ environmental/safety and health norms applicable to domestically produced goods shall apply, mutatis mutandis, to imports, unless specifically exempted.

(b) However, Goods to be utilized/ consumed in manufacture of export products, as notified by DGFT, may be exempted from domestic standards/ quality specifications.

s specifically exempted.

(b) However, Goods to be utilized/ consumed in manufacture of export products, as notified by DGFT, may be exempted from domestic standards/ quality specifications.

2.04 Authority to specify Procedures

DGFT may, specify Procedures to be followed by an exporter or importer or by any licensing/Regional Authority (RA) or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedures, or amendments if any, shall be published by means of a Public Notice.

Importer-Exporter Code/e-IEC

2.05 Importer-Exporter Code (IEC)/ (e-IEC)

(I) An IEC is a 10-character alpha-numeric number allotted to a person that is mandatory for undertaking any export/import activities. With a view to maintain the unique identity of an entity (firm/company/LLP etc.), consequent upon introduction / implementation of GST, IEC will be equal to PAN and will be separately issued by DGFT based on an application.
(a) No export or import shall be made by any person without obtaining an IEC number uness specifically exempted. For services exports, IEC shall be necessary as per the provisions in Chapter 3 only when teh service provider is taking benefits under the Foreign Trade Policy. (b) Exempt categories and corresponding permanent IEC numbers are given in

Para 2.07 of Handbook of Procedures.

(c) Application process for IEC and updation in IEC is completely online and IEC can be generated by the applicant as per the procedure detailed in the Handbook of Procedure.i (d) An IEC holder has to ensure that details in its IEC is updated electronically every year, during April-June period. However, for the current year only, this period is extended by another month i.e. till 31st August, 2021. In cases where there are no changes in IEC details same also needs to be confirmed online.ii
(e) An IEC shall be de-activated, if it is not updated within the prescribed time. An IEC so de-activated may be activated, on its successful updation. This would however be without prejudice to any other action taken for violation of any other provisions of the FTP.iii

(f) An IEC may be also be flagged for scrutiny. IEC holder(s) are required to ensure that any risks flagged by the system is timely addressed; failing which the IEC shall be deactivated.iv

2.06 Mandatory documents for export/import of goods from/into India:

(a) Mandatory documents required for export of goods from India:

Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt
Commercial Invoice cum Packing List*
Shipping Bill/Bill of Export/ Postal Bill of Export

(b) Mandatory documents required for import of goods into India

Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as the case may be.
Commercial Invoice cum Packing List*

import of goods into India

Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as the case may be.
Commercial Invoice cum Packing List*
Bill of Entry

[Note: *(i) As per CBEC Circulars issued under the Customs Act, 1962

(ii) Separate Commercial Invoice and Packing List would also be accepted.]

(c) For export or import of specific goods or category of goods, which are subject to any restrictions/policy conditions or require NOC or product specific compliances under any statute, the regulatory authority concerned may notify additional documents for purposes of export or import.

(d) In specific cases of export or import, the regulatory authority
concerned may electronically or in writing seek additional
documents or information, as deemed necessary to ensure legal
compliance.

(e) The above stipulations are effective from 1st April, 2015.

2.07 Principles of Restrictions

DGFT may, through a Notification, impose ‘Prohibition’ or ‘Restriction’:--

a. on export of foodstuffs or other essential products for preventing or relieving critical shortages;
b. on imports and exports necessary for the application of standards or regulations for the classification, grading or marketing of commodities in international trade; c. on imports of fisheries product, imported in any form, for enforcement of governmental measures to restrict production of the domestic product or for certain other purposes; d.

ational trade; c. on imports of fisheries product, imported in any form, for enforcement of governmental measures to restrict production of the domestic product or for certain other purposes; d. on import to safeguard country’s external financial position and to ensure a level of reserves.
e. on imports to promote establishment of a particular industry;
f. for preventing sudden increases in imports from causing serious injury to domestic producers or to relieve producers who have suffered such injury; g. for protection of public morals or to maintain public order;
h. for protection of human, animal or plant life or health i. relating to the importations or exportations of gold or silver; j. necessary to secure compliance with laws and regulations including those relating to the protection of patents, trademarks and copyrights, and the prevention of deceptive practices k. relating to the products of prison labour

l. for the protection of national treasures of artistic, historic or archaeological value
m. for the conservation of exhaustible natural resources n. for ensuring essential quantities for the domestic processing industry
o. essential to the acquisition or distribution of products in general or local short supply; p. for the protection of country’s essential security interests: i. relating to fissionable materials or the materials from which they are derived; ii. relating to the traffic in arms, ammunition and implements of war; iii. taken in time of war or other emergency in international relations; or
q.

e materials from which they are derived; ii. relating to the traffic in arms, ammunition and implements of war; iii. taken in time of war or other emergency in international relations; or
q. in pursuance of country’s obligations under the United Nations Charter for the maintenance of international peace and security.v

2.08 Export/Import of Restricted Goods/Services

Any goods /service, the export or import of which is ‘Restricted’ may be exported or imported only in accordance with an Authorisation / Permission or in accordance with the Procedures prescribed in a Notification / Public Notice issued in this regard.

2.09 Export of SCOMET Items

Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET), as indicated in Appendix-3 of Schedule 2 of ITC(HS) Classification of Export & Import Items, shall be governed by the specific provisions of (i) Chapter IV A of the FT(D&R) Act, 1992 as amended from time to time (ii) Sl. No. 4 & 5 of Table A and Appendix-3 of Schedule 2 of ITC(HS) Classification of Export &

the specific provisions of (i) Chapter IV A of the FT(D&R) Act, 1992 as amended from time to time (ii) Sl. No. 4 & 5 of Table A and Appendix-3 of Schedule 2 of ITC(HS) Classification of Export &

Import Items (iii) Para 2.16, Para 2.17, Para 2.18 of FTP and (iv) Para 2.73 -2.82 of Hand Book of Procedures, in addition to the other provisions of FTP and Handbook of Procedures governing export Authorisations.

2.10 Actual User Condition

Goods which are importable freely without any ‘Restriction’ may be imported by any person. However, if such imports require an Authorisation, actual user alone may import such good(s) unless actual user condition is specifically dispensed with by DGFT.

2.11 Terms and Conditions of an Authorisation

Every Authorisation shall, inter alia, include either all or some of the following terms and conditions (as applicable in terms of the para under which the Authorisation has been issued), in addition to such other conditions as may be specified: (a) Description, quantity and value of goods; (b) Actual User condition (as defined in Chapter 9);
(c) Export Obligation;
(d) Minimum Value addition to be achieved; (e) Minimum export/import price;
(f) Bank guarantee/ Legal undertaking / Bond with Customs Authority/RA (as in para 2. 35 of FTP). (g) Validity period of import/export as specified in Handbook of Procedures.

2.12 Application Fee

nk guarantee/ Legal undertaking / Bond with Customs Authority/RA (as in para 2. 35 of FTP). (g) Validity period of import/export as specified in Handbook of Procedures.

2.12 Application Fee

Application for IEC/ Authorisation / License / Scrips must be accompanied by application fees as indicated in the Appendix 2K of Appendices and Aayat Niryat Forms. Fees must be paid online through electronic fund transfer (EFT) mechanism or through Credit/Debit Cards, unless provided otherwise.

2.13 Clearance of Goods from Customs against Authorisation

Goods already imported / shipped / arrived, in advance, but not cleared from Customs may also be cleared against an Authorisation issued subsequently. However, such goods already imported/shipped/arrived, in advance are first warehoused against Bill of Entry for Warehousing and then cleared for home consumption against an Authorisation issued subsequently. This facility will however be not available to “restricted” items or items traded through STEs.

2.14 Authorisation - not a Right

No person can claim an Authorisation as a right and DGFT or RA shall have power to refuse to grant or renew the same in accordance with provisions of FT (D&R) Act, Rules made there under and FTP.

2.15 Penal action and placing of an entity in Denied Entity List (DEL)

a) If an Authorisation holder violates any condition of such Authorisation or fails to fulfill export obligation, or fails to deposit the requisite amount within the period specified in demand notice issued by Department of Revenue and /or DGFT, he shall be liable for action in accordance with FT (D&R) Act, the Rules and Orders made there under, FTP and any other law for time being in force.

b) With a view to raising ethical standards and for ease of doing business, DGFT has provided for self certification system under various schemes. In such cases, applicants shall undertake self certification with sufficient care and caution in filling up information/particulars. Any information/particulars subsequently found untrue/incorrect will be liable for action under FTDR Act, 1992 and Rules therein in addition to penal action under any other Act/Order.

c) A firm may be placed under Denied Entity List (DEL), by the concerned RA, under the provision of Rule 7 of Foreign Trade (Regulation) Rules, 1993. On issuance of such an order, for reasons to be recorded in writing, a firm may be refused grant or renewal of a license, certificate, scrip or any instrument bestowing financial or fiscal benefits.

n issuance of such an order, for reasons to be recorded in writing, a firm may be refused grant or renewal of a license, certificate, scrip or any instrument bestowing financial or fiscal benefits. If a firm is placed under DEL all new licences, scrips, certificates, instruments etc will be blocked from printing/ issue/renewal.

d) DEL orders may be placed in abeyance, for reasons to be recorded in writing by the concerned RA. DEL order can be placed in abeyance, for a period not more than 60 days at a time.

e) A firm's name can be removed from DEL, by the concerned RA for reasons to be recorded in writing, if the firm completes Export Obligation/ pays penalty/ fulfils requirement of Demand Notice(s) issued by the RA/submits documents required by the RA.

2.15A Any firm/company coming under the adjudication proceeding before the National Company Law Tribunal (NCLT) shall inform the concerned Regional Authority (RA) and NCLT of any outstanding export obligations/liabilities under any of the schemes under FTP. The total outstanding duty saved amount/dues along with interest, and any penalty imposed under FTD&R Act, or any other dues, shall be counted as part of the dues to the government against the said firm/company.vi

ding duty saved amount/dues along with interest, and any penalty imposed under FTD&R Act, or any other dues, shall be counted as part of the dues to the government against the said firm/company.vi

Prohibitions (Country, Organisations, Groups, Individuals etc. and Product Specific):

2.16 Prohibition on Import and Export of ‘Arms and related material’ from / to Iraq

Notwithstanding the policy on Arms and related materials in Chapter 93 of ITC(HS), the import/export of Arms and related material from/to Iraq is ‘Prohibited’. However, export of Arms and related material to Government of Iraq shall be permitted subject to ‘No Objection Certificate’ from the Department of Defence Production.

2.16 A Prohibition on Trade with the Islamic State in Iraq and the Levant [ISIL, also known as Daesh], Al Nusrah Front [ANF] and other individuals, groups, undertakings and entities associated with Al Qaida.

In compliance with United Nations Security Council Resolution No. 2199 [2015] (full text of the Resolution is available at http://www.un.org/press/en/2015/
sc11775.doc.htm), trade in oil and refined oil products, modular refineries and related materials, besides items of cultural (including antiquities), scientific and religious importance is prohibited with the Islamic State in Iraq and the Levant [ISIL], Al Nusrah Front [ANF] and other individuals, groups, undertakings and entities associated, directly or indirectly, with Al Qaida.

is prohibited with the Islamic State in Iraq and the Levant [ISIL], Al Nusrah Front [ANF] and other individuals, groups, undertakings and entities associated, directly or indirectly, with Al Qaida. 2.17 Prohibition on direct or indirect import and export from/to DPRK

Direct or Indirect export and import of items, whether or not originating in Democratic People’s Republic of Korea (DPRK) to/from DPRK is detailed in Appendix – I of FTP.vii 2.18 Direct or Indirect Export/Import to/from Iran

(a) Direct or indirect export to Iran or import from Iran of any item, material, equipment, goods and technology mentioned in the following documents would be permitted subject to the provisions contained in Annex-B to the United Nations Security Council Resolution 2231 (2015):

(i) Items listed in INFCIRC/254/Rev.9/Part 1 and INFCIRC /254/Rev.7 /Part 2 (IAEA Documents) as updated by the IAEA from time to time.

(ii) Items listed in S/2006/263 (UN Security Council document) as updated by the Security Council from time to time.

(b) All the UN Security Council Resolutions/Documents and IAEA Documents referred to above are available on the UN Security Council website (www.un.org/Docs/sc) and IAEA website (www.iaea.org).

2.19 Prohibition on Import of Charcoal from Somalia

Direct or indirect import of charcoal is prohibited from Somalia, irrespective of whether or not such charcoal has originated in Somalia [United Nations Security Council Resolution 2036 (2012)].

Direct or indirect import of charcoal is prohibited from Somalia, irrespective of whether or not such charcoal has originated in Somalia [United Nations Security Council Resolution 2036 (2012)]. Importers of Charcoal shall submit a declaration to Customs that the consignment has not originated in Somalia.

Import / Export through State Trading Enterprises:

2.20 State Trading Enterprises (STEs)

(a) State Trading Enterprises (STEs) are governmental and non- governmental enterprises, including marketing boards, which deal with goods for export and /or import. Any good, import or export of which is governed through exclusive or special privilege granted to State Trading Enterprise (STE), may be imported or exported by the

concerned STE as per conditions specified in ITC (HS). The list of STEs notified by DGFT is in Appendix-2J. (b) Such STE(s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale in a non discriminatory manner and shall afford enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales. (c) DGFT may, however, grant an authorisation to any other person to import or export any of the goods notified for exclusive trading through STEs.

for participation in such purchases or sales. (c) DGFT may, however, grant an authorisation to any other person to import or export any of the goods notified for exclusive trading through STEs.

Trade with Specific Countries:

2.21 Trade with Neighbouring Countries

DGFT may issue instructions or frame schemes as may be required to promote trade and strengthen economic ties with neighboring countries.

2.22 Transit Facility

Transit of goods through India from/ or to countries adjacent to India shall be regulated in accordance with bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with International Conventions.

2.23 Trade with Russia under Debt-Repayment Agreement

In case of trade with Russia under Debt Repayment Agreement, DGFT may issue instructions or frame schemes as may be required, and anything contained in FTP, in so far as it is inconsistent with such instructions or schemes, shall not apply.

Import of Specific Categories of Goods:

2.24 Import of Samples

Import of samples shall be governed by Para 2.65 of Handbook of Procedures.

2.25 Import of Gifts

Import of goods, including those purchased from e-commerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited except for life saving drugs/ medicines / oxygen concentrators and Rakhi (but not gifts related to Rakhi).

The exemption for oxygen concentrators is allowed only for a period till 31 July 2021 for personal use.

saving drugs/ medicines / oxygen concentrators and Rakhi (but not gifts related to Rakhi).

The exemption for oxygen concentrators is allowed only for a period till 31 July 2021 for personal use.

Explanation:

Rakhi (but not gifts related to Rakhi) will be covered under Section 25(6) of Customs Act, 1962 that reads “….. no duty shall be collected if the amount of duty leviable is equal to or less than Rs. 100/.”
Import of goods as gifts with payment of full applicable duties is allowedviii 2.26 Passenger Baggage

(a) Bona-fide household goods and personal effects may be imported as part of passenger baggage as per limits, terms and conditions thereof in Baggage Rules notified by Ministry of Finance.

(b) Samples of such items that are otherwise freely importable under FTP may also be imported as part of passenger baggage without an Authorisation.

(c) Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts, trimming and embellishments required for export, as part of their passenger baggage without an Authorisation.

2.27 Re – import of goods repaired abroad

Capital goods, equipments, components, parts and accessories, whether imported or indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without an Authorisation.

genous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without an Authorisation.

2.28 Import of goods used in projects abroad

Project contractors after completion of projects abroad, may import without an Authorisation, goods including capital goods used in the project, provided they have been used for at least one year.

2.29 Import of Prototypes

Import of new / second hand prototypes / second hand samples may be allowed on payment of duty without an Authorisation to an Actual User (industrial) engaged in production of or having industrial license / letter of intent for research in item for which prototype is sought for product development or

research, as the case may be, upon a self- declaration to that effect, to
satisfaction of customs authorities 2.30 Import through courier service/Post

Imports through a registered courier service or post are permitted as per Notification(s) issued under the Customs Act, 1962. However, importability of such items shall be regulated in accordance with FTP/ ITC (HS), 2017.

Import Policy for Second Hand Goods:

2.31 Second Hand Goods S.No Categories of Second
Hand Goods Import
Policy Conditions, if any I Second Hand Capital Goods (a) i. Desktop Computers,

ii. Refurbished/re-conditioned spares of re-furbished parts of Personal Computers/ Laptops

iii. Air conditioners

iv. Diesel generating sets.

and Capital Goods (a) i. Desktop Computers,

ii. Refurbished/re-conditioned spares of re-furbished parts of Personal Computers/ Laptops

iii. Air conditioners

iv. Diesel generating sets.

Restricted Importable against Authorization

(b) All electronics and IT Goods notified under the Electronics and IT Goods (Requirements of Compulsory Registration ) Order, 2012 as amended from time to time Restricte d (i) Importable against an authorization subject to conditions laid down under Electronics and IT Goods (Requirements of Compulsory Registration ) Order, 2012 as amended from time to time. (ii) Import of

unregistered/non- compliant notified products as in CRO, 2012 as amended from time to time is “Prohibited”.ix

(c) Refurbished / re-conditioned spares of Capital Goods Free Subject to production of Chartered Engineer certificate to the effect that such spares have at least 80% residual life
of original spare.

(d) All other second hand capital goods {other than (a) (b) & (c) above}

Free

II Second Hand Goods other
than capital goods

Restricted Importable against Authorisation III Second Hand Goods imported for the purpose of repair/refurbishing / re- conditioning or re-engineering

Free Subject to condition that waste generated during the repair / refurbishing of imported items is treated as per domestic Laws/ Rules/ Orders/ Regulations/ technical specifications/ Environmental / safety and health norms and the imported item is re-exported back as per the Customs Notification.x

s per domestic Laws/ Rules/ Orders/ Regulations/ technical specifications/ Environmental / safety and health norms and the imported item is re-exported back as per the Customs Notification.x

Import Policy for Metallic Waste and Scraps:

32 Import of Metallic waste and Scrap

(a) Import of any form of metallic waste, scrap will be subject to the condition that it will not contain hazardous, toxic waste, radioactive contaminated waste/scrap containing radioactive material, any types of arms, ammunition, mines, shells, live or used cartridge or any other explosive material in any form either used or otherwise as detailed in Para 2.54 of Handbook of Procedures.

(b) The types of metallic waste and scrap which can be imported freely, and the Procedures of import in the shredded form; unshredded compressed and loose form is laid down in Para 2.54 of Handbook of Procedures.

2.33 Removal of Scrap/waste from SEZ

A SEZ unit/Developer/ Co-developer may be allowed to dispose of in DTA any waste or scrap, including any form of metallic waste and scrap, generated during manufacturing or processing activity, without an Authorisation, on payment of applicable Customs Duty.

Other Provisions Related to Imports:

2.34 Import under Lease Financing

No specific permission of RA is required for lease financed capital goods.

, on payment of applicable Customs Duty.

Other Provisions Related to Imports:

2.34 Import under Lease Financing

No specific permission of RA is required for lease financed capital goods.

2.35 Execution of Legal Undertaking (LUT) / Bank Guarantee (BG)

(a) Wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute, Legal Undertaking (LUT) / Bank Guarantee (BG) / Bond with the Customs Authority, as prescribed, before clearance of goods.

(b) In case of indigenous sourcing, Authorisation holder shall furnish LUT/BG/Bond to RA concerned before sourcing material from indigenous supplier/nominated agency as prescribed in Chapter 2 of Handbook of Procedures.

2.36 Private/Public Bonded Warehouses for Imports

(a) Private/ Public bonded warehouses may be set up in DTA as per rules, regulations and notifications issued under the Customs Act, 1962. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such bonded warehouses.

(b) Such goods may be cleared for home consumption in accordance with provisions of FTP and against Authorisation, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods.

ver required. Customs duty as applicable shall be paid at the time of clearance of such goods.

2.37 Special provision for Hides Skins and semi-finished goods

Hides, Skins and semi-finished leather may be imported in the Public/ Private Bonded warehouse for the purpose of DTA sale and the unsold items

thereof can be re-exported from such bonded warehouses on payment of the applicable rate of export duty.

2.38 Sale on High Seas

Sale of goods on high seas for import into India may be made subject to FTP or any other law in force.

Exports:

2.39 Free Exports

All goods may be exported without any restriction except to the extent that such exports are regulated by ITC (HS) or any other provision of FTP or any other law for the time being in force. DGFT may, however, specify through a public notice such terms and conditions according to which any goods, not included in ITC (HS), may be exported without an Authorisation.

2.40 Deleted

2.41 Benefits for Supporting Manufacturers

For any benefit to accrue to the supporting manufacturer (as defined in Para 9.58 of FTP), the names of both supporting manufacturer as well as the merchant exporter must figure in the concerned export documents, especially in ARE-1 / ARE-3 / Shipping Bill / Bill of Export/ Airway Bill.

2.42 Third Party Exports

anufacturer as well as the merchant exporter must figure in the concerned export documents, especially in ARE-1 / ARE-3 / Shipping Bill / Bill of Export/ Airway Bill.

2.42 Third Party Exports

Third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. In such cases, export documents such as shipping bill shall indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realization Certificate (BRC), Export Order and Invoice should be in the name of third party exporter. .

Exports of Specific Categories:

2.43 Export of Samples

Export of Samples and Free of charge goods shall be governed by provisions given in Para 2.66 of Handbook of Procedures.

2.44 Export of Gifts

Goods including edible items, of value not exceeding Rs.5,00,000/- in a licensing year, may be exported as a gift. However, items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift, without an Authorisation.

2.45 Export of Passenger Baggage

(a) Bona-fide personal baggage may be exported either along with passenger or, if unaccompanied, within one year before or after passenger's departure from India. However, items mentioned as restricted in ITC (HS) shall require an Authorisation. Government of India officials proceeding abroad on official postings shall, however, be permitted to carry along with their personal baggage, food items (free, restricted or prohibited) strictly for their personal consumption.

proceeding abroad on official postings shall, however, be permitted to carry along with their personal baggage, food items (free, restricted or prohibited) strictly for their personal consumption. The Provisions of the Para shall be subject to Baggage Rules issued under Customs Act, 1962.

(b) Samples of such items that are otherwise freely exportable under FTP may also be exported as part of passenger baggage without an Authorisation.

2.46 Import for export

I. (a) Goods imported, in accordance with FTP, may be exported in same or substantially the same form without an Authorisation provided that item to be imported or exported is not in the restricted for import or export in ITC (HS).

(b) Goods, including capital goods (both new and second hand), may be imported for export provided:

i. Importer clears goods under Customs Bond;

ii. Goods are freely exportable, i.e., are not “Restricted”/ “Prohibited”/ subject to “exclusive trading through State Trading Enterprises” or any conditionality/ requirement as may be required under Schedule 2 – Export Policy of the ITC (HS);

iii. Export is against freely convertible currency or as per 2.52(d)(ii) of FTP.xi

(d) Capital goods, which are freely importable and freely exportable, may be imported for export on execution of LUT/BG with Customs Authority.

d’ goods for import (except ‘Prohibited’ items).

(d) Capital goods, which are freely importable and freely exportable, may be imported for export on execution of LUT/BG with Customs Authority. (e) Notwithstanding the above, goods which are freely importable may be re- exported except items as in the Prohibited or SCOMET List of exports, in same or substantially same form even though such goods are under “restricted list” for export, subject to the following conditions:

(i) Goods are not of Indian Origin; (ii) Goods imported shall be kept in bonded warehouse under supervision of Customs; (iii) Goods to be exported have never been cleared for home consumption;
(iv) Export of goods shall be subjected to Section 69 of Customs Act, 1962.

II. (a) Goods imported against payment in freely convertible currency would be permitted for export only against payment in freely convertible currency, unless otherwise notified by DGFT. Goods imported under Para 2.52(d)(i) would be permitted for exports only against payments as per Para 2.52(d)(ii), unless otherwise notified by DGFT.xii

(b) Export of such goods to the notified countries (presently only Iran) would be permitted against payment in Indian Rupees, subject to minimum 15% value addition.

(c) However, re-export of food, medicine and medical equipments, namely,
items covered under ITC(HS) Chapters 2 to 4, 7 to 11, 15 to 21, 23, 30 and items under headings 9018, 9019, 9020, 9021 & 9022 of Chapter-90 of ITC(HS) will not be subject to minimum value addition requirement for export to Iran.

ters 2 to 4, 7 to 11, 15 to 21, 23, 30 and items under headings 9018, 9019, 9020, 9021 & 9022 of Chapter-90 of ITC(HS) will not be subject to minimum value addition requirement for export to Iran. Exports of these items to Iran shall, however, be subject to all other conditions of FTP 2015-20 and ITC (HS) 2017, as applicable. Bird’s eggs covered under ITC (HS) 0407 & 0408 and Rice covered under ITC (HS) 1006 are not covered under this dispensation, as at II (a) above.

(d) Exports under this dispensation, as at I (e) and II (a), (b) and (c) above shall not be eligible for any export incentives.

2.47 Export through Courier Service/Post

Exports through a registered courier service/Foreign Post Office is permitted as per Notification issued by DoR. However, exportability of such items shall be regulated in accordance with FTP/Export Policy in ITC(HS), 2018. The value limit for exports through courier service shall be Rs.5,00,000 per consignment.xiii 2.48 Export of Replacement Goods

Goods or parts thereof on being exported and found defective/damaged or otherwise unfit for use may be replaced free of charge by the exporter and such goods shall be allowed for export by Customs authorities, provided that replacement goods are not mentioned as restricted/SCOMET items for exports in ITC (HS). If the export item is ‘restricted’/ under SCOMET, the exporter shall require a export license for replacement.

eplacement goods are not mentioned as restricted/SCOMET items for exports in ITC (HS). If the export item is ‘restricted’/ under SCOMET, the exporter shall require a export license for replacement.

2.49 Export of Repaired Goods

Goods or parts thereof, except restricted under ITC (HS), on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shall be allowed clearance without an Authorisation and in accordance with customs notification. To that extent the exporter shall return the benefits /incentive availed on the returned goods. If the item is ‘restricted’ for import, the exporter shall require an import license.

However, re-export of such defective parts/spares by the Companies/firms and Original Equipment Manufacturers shall not be mandatory if they are imported exclusively for undertaking root cause analysis, testing and evaluation purpose.” 2.50 Export of Spares

nies/firms and Original Equipment Manufacturers shall not be mandatory if they are imported exclusively for undertaking root cause analysis, testing and evaluation purpose.” 2.50 Export of Spares

Warranty spares (whether indigenous or imported) of plant, equipment, machinery, automobiles or any other goods [except those restricted under ITC (HS)] may be exported along with main equipment or subsequently but within contracted warranty period of such goods, subject to approval of RBI.
2.50A Re-export of imported Goods found defective and unsuitable for use:

Imported goods found defective after Customs clearance, or not found as per specifications or requirements may be re-exported back as per Customs Act, 1962.

2.51 Private Bonded Warehouses for Exports

(a) Private bonded warehouses exclusively for exports may be set up in DTA as per terms and conditions of notifications issued by DoR.
(b) Such warehouses shall be entitled to procure goods from domestic manufacturers without payment of duty. Supplies made by a domestic supplier to such notified warehouses shall be treated as physical exports provided payments are made in free foreign exchange.

Payments and Receipts on Imports / Exports:

2.52 Denomination of Export Contracts

(a) All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.

Contracts

(a) All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.

(b) However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country

of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non- resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting bank service charges) on account of this transaction would be taken as export realization under export promotion schemes of FTP.

(c) Contracts (for which payments are received through Asian Clearing Union (ACU) shall be denominated in ACU Dollar. However, participants in the ACU may settle their transactions in ACU Dollar or in ACU Euro as per RBI Notifications. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and invoices can be denominated in Indian rupees against EXIM Bank/Government of India line of credit.

(d) Invoicing, payment and settlement of exports and imports is also permissible in INR under RBI’s A.P.(DIR Series) Circular No.10 dated 11th July, 2022.

nk/Government of India line of credit.

(d) Invoicing, payment and settlement of exports and imports is also permissible in INR under RBI’s A.P.(DIR Series) Circular No.10 dated 11th July, 2022. Accordingly, settlement of trade transactions in INR may also take place through the Special Rupee Vostro Accounts opened by AD banks in India as permitted under Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, in accordance to the following procedures:

(i) Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier. (ii) Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country.xiv

goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country.xiv

2.53 Applicability of FTP Schemes for Export Realisations in Indian Rupees

(i) Export proceeds realized in Indian Rupees against exports to Iran are permitted to avail exports benefits / fulfilment of Export Obligations under the Foreign Trade Policy (2015-20), at par with export proceeds realized in freely convertible currency, subject to compliance of para 2.18 of the FTP.

(ii) Export proceeds realized in Indian Rupees as per para 2.52(d)(ii) are permitted to avail exports benefits/ fulfilment of Export Obligations under the Foreign Trade Policy (2015-20).xv

2.54 Non-Realisation of Export Proceeds

(a) If an exporter fails to realize export proceeds within time specified by RBI, he shall, without prejudice to any liability or penalty under any law in force, be liable to return all benefits / incentives availed against such exports and action in accordance with provisions of FT (D&R) Act, Rules and Orders made there under and FTP.

(b) In case an Exporter is unable to realize the export proceeds for reasons beyond his control (force-majeure), he may approach RBI for writing off the unrealised amount as laid down in Para 2.87 of Handbook of Procedures.

(c) The payment realized through insurance cover, would be eligible for benefits under FTP as per Procedures laid down in Para 2.85 of Handbook of Procedures.

2.87 of Handbook of Procedures.

(c) The payment realized through insurance cover, would be eligible for benefits under FTP as per Procedures laid down in Para 2.85 of Handbook of Procedures.

2.54A Export Credit Agencies (ECAs)

(i) Export Credit Agencies (ECAs) are policy instrument for Government to support exports. ECAs support exports by insurance, guarantee and also direct lending. Export Credit Agencies (ECAs) like Export Credit Guarantee Corporation of India Ltd. (ECGC) provides credit insurance

support to exports and export credit lending. Covers issued by ECGC to exporters, protect against losses arising out of payment failures due to insolvency or default of the buyers or due to political risks. Exporters can diversify their markets in addition to protecting existing markets through such covers. ECGC also supports Medium and Long term (MLT) exports including project exports. Exim Bank is the other ECA in the business of lending for MLT exports and fronting the government’s line of credit. (ii) ECGC indemnifies losses of exporters in export trade due to insolvency or default of the buyer. Additionally losses due to political risk like war, sudden import restriction, promulgation of law or decree after the shipment has been effected are also covered. Some of the anti- dumping measures or non-tariff barriers introduced after a shipment has been made will come under the purview of the political risk. In such cases exporter’s interest are protected by ECGC.

anti- dumping measures or non-tariff barriers introduced after a shipment has been made will come under the purview of the political risk. In such cases exporter’s interest are protected by ECGC.

Export Promotion Councils:

2.55 Recognition of EPCs to function as Registering Authority for issue of RCMC

(a) Export Promotion Councils (EPCs) are organizations of exporters, set up with the objective to promote and develop Indian exports. Each Council is responsible for promotion of a particular group of products/ projects/services as given in Appendix 2T of AANF.

(b) EPCs are also eligible to function as Registering Authorities to issue Registration-cum-Membership Certificate (RCMC) to its members. The criteria for EPCs to be recognized as Registering Authorities for issue of RCMC to its members are detailed in Para 2.92 of the Handbook of Procedures.

2.56 Registration-cum-Membership Certificate (RCMC)

Any person, applying for:

(a) An Authorisation to import/export (except items) listed as ‘Restricted’ items in ITC (HS)
Or (b) Any other benefit or concession under FTP shall be required to furnish or upload on DGFT’s website in the Importer Exporter Profile, the RCMC granted by competent authority in accordance with Procedures specified in Handbook of Procedures unless specifically exempted under FTP.

n DGFT’s website in the Importer Exporter Profile, the RCMC granted by competent authority in accordance with Procedures specified in Handbook of Procedures unless specifically exempted under FTP. Certificate of Registration as Exporter of Spices (CRES) issued by Spices Board and Certificate of Registration as Exporter of coir & coir products issued by the Coir Board shall be treated as Registration-Cum-Membership Certificate (RCMC) for the purposes under this Policy.

Policy Interpretation and Relaxations:

2.57 Interpretation of Policy

(a) The decision of DGFT shall be final and binding on all matters relating to interpretation of Policy, or provision in Handbook of Procedures, Appendices and Aayat Niryat Forms or classification of any item for import / export in the ITC (HS).

(b) A Policy Interpretation Committee (PIC) may be constituted to aid and advice DGFT. The composition of the PIC would be as follows:

(i)
DGFT: Chairman

(ii)
All Additional DGFTs in Headquarters: Members

(iii) All Joint DGFTs in Headquarters looking after Policy matters:
Members

of the PIC would be as follows:

(i)
DGFT: Chairman

(ii)
All Additional DGFTs in Headquarters: Members

(iii) All Joint DGFTs in Headquarters looking after Policy matters:
Members

(iv)
Joint DGFT (PRC/PIC): Member Secretary

(v)
Any other person / representative of the concerned Ministry / Department, to be co-opted by the Chairman.

2.58 Exemption from Policy/Procedures

DGFT may in public interest pass such orders or grant such exemption, relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade to any person or class or category of persons from any provision of FTP or any Procedures. While granting such exemption, DGFT may impose such conditions as he may deem fit after consulting the Committees as under:

Sl. No. Description Committee
(a)
Fixation / modification of product norms
Norms Committees

(b)
Nexus with Capital Goods (CG) and benefits under EPCG Schemes
EPCG Committee (c)
All other issues
Policy Relaxation
Committee (PRC)

2.59 Personal Hearing by DGFT for Grievance Redressal

(a) Government is committed to easy and speedy redressal of grievances from Trade and Industry. Paragraph 2.58 of FTP provides for relaxation of Policy and Procedures on grounds of genuine hardship and adverse impact on trade.

easy and speedy redressal of grievances from Trade and Industry. Paragraph 2.58 of FTP provides for relaxation of Policy and Procedures on grounds of genuine hardship and adverse impact on trade. If an importer/exporter is aggrieved by any decision taken by Policy Relaxation Committee (PRC), or a decision/order by any authority in the Directorate General of Foreign Trade, a specific request for Personal Hearing (PH) along with the prescribed application fee as per Appendix-2K has to be made to DGFT. DGFT may

consider request for relaxation after consulting concerned Norms Committee, EPCG Committee or Policy Relaxation Committee (PRC) and the decision conveyed in pursuance to the personal hearing shall be final and binding.

(b) The opportunity for Personal Hearing will not apply to a decision/order made in any proceeding, including an adjudication proceeding, whether at the original stage or at the appellate stage, under the relevant provisions of FT (D&R) Act, 1992, as amended from time to time.

2.60 Regularization of EO default and settlement of Customs duty and interest through Settlement Commission

With a view to providing assistance to firms who have defaulted under FTP for reasons beyond their control as also facilitating merger, acquisition and rehabilitation of sick units, it has been decided to empower Settlement Commission in Department of Revenue to decide such cases also with effect
from 01.04.2005.

tating merger, acquisition and rehabilitation of sick units, it has been decided to empower Settlement Commission in Department of Revenue to decide such cases also with effect
from 01.04.2005.

Self Certification of Originating Goods: 2.61 Approved Exporter Scheme for Self Certification of Certificate of Origin.

(i)
Currently, Certificates of Origin under various Preferential Trade Agreements [PTA], Free Trade Agreements [FTAs], Comprehensive Economic Cooperation Agreements [CECA] and Comprehensive Economic Partnerships Agreements [CEPA] are issued by designated agencies as per Appendix 2B of Appendices and Aayat and Niryat Forms. A new optional system of self certification is being introduced with a view to reducing transaction cost.

(ii) The Manufacturers who are also Status Holders shall be eligible for Approved Exporter Scheme. Approved Exporters will be entitled to self- certify their manufactured goods as originating from India with a view to qualifying for preferential treatment under different PTAs/FTAs/ CECAs/CEPAs which are in operation. Self-certification will be permitted only for the goods that are manufactured as per the Industrial Entrepreneurs Memorandum (IEM) / Industrial License (IL) /Letter of Intent (LOI) issued to manufacturers.

ification will be permitted only for the goods that are manufactured as per the Industrial Entrepreneurs Memorandum (IEM) / Industrial License (IL) /Letter of Intent (LOI) issued to manufacturers.

(iii) Status Holders will be recognized by DGFT as Approved Exporters for self- certification based on availability of required infrastructure, capacity and trained manpower as per the details in Para 2.109 of Handbook of Procedures 2015-20 read with Appendix 2F of Appendices & Aayaat Niryat Forms.

(iv) The details of the Scheme, along with the penalty provisions, are provided in Appendix 2F of Appendices and Aayaat Niryat Forms and will come into effect only when India incorporates the scheme into a specific agreement with its partner/s and the same is appropriately notified by DGFT. 2.62 Certification of Origin of Goods EU-GSP Exporters can self-certify the Statement on Origin of their goods, as per the self-certification scheme , Certification of Origin of Goods for European Union Generalised System of Preferences (EU-GSP) , of the European Union (EU) under the Registered Exporter System (REX) as in Para 2.104 (c) of the Handbook of Procedures.

of Goods for European Union Generalised System of Preferences (EU-GSP) , of the European Union (EU) under the Registered Exporter System (REX) as in Para 2.104 (c) of the Handbook of Procedures.

Appendix I (Para 2.17)

2.17 Prohibition on direct or indirect import and export from/to Democratic People's Republic of Korea (DPRK)

“Prohibition on export: (A) The direct or indirect supply, sale, transfer or export of the following items to Democratic People’s Republic of Korea (DPRK) is prohibited:- (i) any battle tanks, armoured combat vehicles, large calibre artillery systems, combat aircraft, attack helicopters, warships, missiles or missile systems as defined for the purpose of the United Nations Register on Conventional Arms, or related materiel including spare parts; (ii) all arms and related materiel, including small arms and light weapons and their related materiel; (iii) all items, materials, equipment, goods and technology as set out in the United Nations Security Council (UNSC) and International Atomic Energy Agency (IAEA) documents, namely,

S/2006/853*;
S/2006/853/Corr.1;
Part B of S/2009/364;
Annex III of Resolution 2094 (2013);
S/2016/1069;
Annex A to INFCIRC/254/Rev.12/Part1 (IAEA document);
Annex to INFCIRC/254/Rev.9/Part2 (IAEA document);
S/2014/253;
S/2016/308;
Annex III of Resolution 2321 (2016); and

016/1069; 6. Annex A to INFCIRC/254/Rev.12/Part1 (IAEA document); 7. Annex to INFCIRC/254/Rev.9/Part2 (IAEA document); 8. S/2014/253; 9. S/2016/308; 10. Annex III of Resolution 2321 (2016); and

other items, materials, equipment, goods and technology, as determined by the Central Government, which could contribute to DPRK’s nuclear related, ballistic missile-related or other weapons of mass destruction related programmes; (iv) luxury goods, including, but not limited to, the items specified in Annex IV of Resolution 2094 (2013), Annex IV of Resolution 2270 (2016) and Annex IV of Resolution 2321 (2016); (v) items as determined by the Central Government, except food or medicine, that could directly contribute to the development of the Democratic People’s Republic of Korea’s operational capabilities of its armed forces. This measure is subject to the exemptions set out in paragraph 8 (a) and (b) of Resolution 2270 (2016); Prohibition on import (B) The direct or indirect procurement or import from DPRK, of items, whether or not originating in DPRK, covered in sub-paragraphs (A)(i), (A)(ii), (A)(iii) and (A)(v) above is prohibited. Sectoral prohibitions (export) (C) The direct or indirect supply, sale, transfer or export of the following items to DPRK is prohibited: (i) new helicopters and new or used vessels, except as approved in advance by the Committee on a case-by-case basis; (ii) aviation fuel, including aviation gasoline, naptha-type jet fuel, kerosene- type jet fuel, and kerosene-type rocket fuel.

xcept as approved in advance by the Committee on a case-by-case basis; (ii) aviation fuel, including aviation gasoline, naptha-type jet fuel, kerosene- type jet fuel, and kerosene-type rocket fuel. This measure is subject to the provisions of paragraph 31 of Resolution 2270 (2016) and paragraph 20 of Resolution of 2321 (2016); (iii) condensates and natural gas liquids; (iv) refined petroleum products. This measure is subject to the limits, exceptions and procedures set out in paragraph 5 of Resolution 2397 (2017);

(v) crude oil. This measure is subject to the limits, exemptions and procedures set out in paragraph 4 of Resolution 2397 (2017);

(vi) all industrial machinery [Chapter 84 and 85 of ITC(HS)], transportation vehicles [Chapter 86 to 89 of ITC(HS)], and iron, steel, and other metals [Chapter 72 to 83 of ITC(HS)]. This measure is subject to the exemptions set out in paragraph 7 of Resolution 2397 (2017);
Sectoral prohibitions (import) (D) The direct or indirect procurement or import from DPRK, of the following items is prohibited: (i) coal, iron and iron ore. This measure is subject to the exemptions and procedures set out in paragraph 8 of Resolution 2371 (2017);
(ii) gold, titanium ore, vanadium ore, and rare earth minerals; (iii) copper, nickel, silver and zinc; (iv) statues, unless the Committee approves on a case-by-case basis in advance; (v) seafood (including fish, crustaceans, mollusks, and other aquatic invertebrates in all forms).

silver and zinc; (iv) statues, unless the Committee approves on a case-by-case basis in advance; (v) seafood (including fish, crustaceans, mollusks, and other aquatic invertebrates in all forms). This measure is subject to the exemptions, clarifications and procedures set out in paragraph 9 of Resolution 2371 (2017) and paragraph 6 of Resolution 2397 (2017);
(vi) lead and lead ore. This measure is subject to the exemptions and procedures set out in paragraph 10 of Resolution 2371 (2017); (vii) textiles (including but not limited to fabrics and partially or fully completed apparel products). This measure is subject to the exemptions and procedures set out in paragraph 16 of Resolution 2375 (2017); (viii) food and agricultural products [Chapters 12, 08, 07 of ITC(HS)], machinery [Chapter 84 of ITC(HS)], electrical equipment [Chapter 85 of ITC(HS)], earth and stone including magnesite and magnesia [Chapter 25 of ITC(HS)], wood [Chapter 44 of ITC(HS)], and vessels [Chapter 89 of ITC(HS)]. These measures are subject to the procedures set out in paragraph 6 of Resolution 2397(2017).

Explanation.-

25 of ITC(HS)], wood [Chapter 44 of ITC(HS)], and vessels [Chapter 89 of ITC(HS)]. These measures are subject to the procedures set out in paragraph 6 of Resolution 2397(2017).

Explanation.-

a) UNSC means the United Nations Security Council; b) IAEA means the International Atomic Energy Agency; c) Committee means the Committee of the UNSC set up in terms of paragraph 12 of Resolution 1718 (2006); d) Resolution, as the case may be, means the UNSC Resolutions under Chapter VII of the Charter of the United Nations on Democratic People’s Republic of Korea, namely, 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), 2270 (2016), 2231 (2016), 2356 (2017), 2371 (2017), 2375 (2017) and 2397(2017)”.xvi

i Amendment vide Notification No. 58/2015-2020 dated 12.02.2021. ii Amended vide Notification No. 16/2015-2020 dated 09.08.2021.
iii Inserted vide Notification No. 58/2015-2020 dated 12.02.2021. iv Inserted vide Notification No. 58/2015-2020 dated 12.02.2021. v Amended vide Notification No. 17/2015-2020 dated 10.08.2021. vi Inserted vide Notification no. 25/2015-2020 dated 18.10.2019. vii Modified vide Notification No.52/2015-2020 dated 07.03.2018 viii Amendment vide Notification No. 04/2015-2020 dated 30.04.2021. ix Amendment vide Notification No. 5/2015-2020 dated 07.05.2019. x Inserted vide Notification No.58/2015-2020 dated 28.03.2018 xi Amendment vide Notification no. 43/2015-2020 dated 09.11.2022. xii Amendment vide Notification no. 43/2015-2020 dated 09.11.2022.

. x Inserted vide Notification No.58/2015-2020 dated 28.03.2018 xi Amendment vide Notification no. 43/2015-2020 dated 09.11.2022. xii Amendment vide Notification no. 43/2015-2020 dated 09.11.2022. xiii Amendment vide Notification No. 36/2015-2020 dated 27.09.2018. xiv Inserted vide Notification No. 33/2015-2020 dated 16.09.2022. xv Amendment vide Notification no. 43/2015-2020 dated 09.11.2022. xvi Modified vide Notification No.52/2015-2020 dated 07.03.2018.

CHAPTER 3 FTP Text as on 14.11.2022 EXPORTS FROM INDIA SCHEMES 3.00 Objective

The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs.

3.01 Exports from India Schemes

There shall be following two schemes for exports of Merchandise and Services respectively:

(i)
Merchandise Exports from India Scheme (MEIS).

(ii)
Service Exports from India Scheme (SEIS).

3.02 Nature of Rewards

Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for :

(i)
Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.

(ii)
Payment of Central excise duties on domestic procurement of inputs or goods,
(iii) Deleted

goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.

(ii)
Payment of Central excise duties on domestic procurement of inputs or goods,
(iii) Deleted

(iv) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy. Merchandise Exports from India Scheme (MEIS) 3.03 Objective

Objective of the Merchandise Exports from India Scheme (MEIS) is to promote the manufacture and export of notified goods/ products. 3.04 Entitlement under MEIS

Exports of notified goods/products with ITC[HS] code, to notified markets as listed in Appendix 3B, shall be rewarded under MEIS. Appendix 3B also lists the rate(s) of rewards on various notified products [ITC (HS) code wise]. The basis of calculation of reward would be on realised FOB value of exports in free foreign exchange, or on FOB value of exports as given in the Shipping Bills in freely convertible foreign currencies, whichever is less, unless otherwise specified.

3.04A

The total reward which may be granted to an IEC holder under the Merchandise Exports from India Scheme (MEIS) shall not exceed Rs. 2 Crore per IEC on exports made in the period 01.09.2020 to 31.12.2020 [period based on Let Export Order (LEO) date of shipping bill(s)].

ndise Exports from India Scheme (MEIS) shall not exceed Rs. 2 Crore per IEC on exports made in the period 01.09.2020 to 31.12.2020 [period based on Let Export Order (LEO) date of shipping bill(s)]. Any IEC holder who has not made any export with LEO date during the period 01.09.2019 to 31.08.2020 or any new IEC obtained on or after 01.09.2020 would not be eligible for submitting any claim for benefits under MEIS for exports made with effect from 01.09.2020.i

3.04 B

Benefits under MEIS shall not be available for exports made with effect from 01.01.2021.ii

3.05 Entitlement under MEIS for export of goods through Courier or Foreign Post Officesiii

Export of goods through courier or foreign post office, as notified in Appendix 3C, of FOB value upto Rs 5,00,000 per consignment shall be entitled for rewards under MEIS. If the value of exports is more than Rs 5,00,000 per consignment then MEIS reward would be calculated on the basis of FOB value of Rs 5,00,000 only.

3.06 Ineligible categories under MEIS The following exports categories /sectors shall be ineligible for Duty Credit Scrip entitlement under MEIS

(i)
Supplies made from DTA units to SEZ units (ii)
Export of imported goods covered under paragraph 2.46 of FTP; (iii) Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India; (iv) Deemed Exports; (v)
SEZ/ EOU /EHTP/ BTP /FTWZ products exported through DTA units;
(vi) Export products which are subject to Minimum export price or export duty.

-shipped through India; (iv) Deemed Exports; (v)
SEZ/ EOU /EHTP/ BTP /FTWZ products exported through DTA units;
(vi) Export products which are subject to Minimum export price or export duty. (vii) Exports made by units in FTWZ.

Service Exports from India Scheme (SEIS) 3.07 Objective

Objective of Service Exports from India Scheme (SEIS) is to encourage and maximize export of notified Services from India. 3.08 Eligibility

(a) Service Providers of notified services, located in India, shall be rewarded under SEIS. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of this policy shall be eligible. The notified services and rates of rewards are listed in Appendix 3D.

(aa) For SEIS Claims on services rendered in the FY 2019-20, the notified services and rates are listed in Appendix 3X as per Annexure to this Notificationiv.

(b) Such service provider should have minimum net free foreign exchange earnings of US$15,000 in year of rendering service to be eligible for Duty Credit Scrip. For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in year of rendering service. v

(c)
Payment in Indian Rupees for service charges earned on specified services, shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India. The list of such services is indicated in Appendix 3E. However, there shall be no such specified services under Appendix 3E for exports made in the financial year 2019-20.

f Reserve Bank of India. The list of such services is indicated in Appendix 3E. However, there shall be no such specified services under Appendix 3E for exports made in the financial year 2019-20. vi

(d) Net Foreign exchange earnings for the scheme are defined as under:

Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.

(e) If the IEC holder is a manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances shall be taken into account for service sector only.

(f)
In order to claim reward under the scheme, Service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.
3.09 Ineligible categories under SEIS Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible.

rnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible.

3.10 Entitlement under SEIS

Service Providers of eligible services shall be entitled to Duty Credit Scrip at notified rates (as given in Appendix 3D) on net foreign exchange earned.

(a) For SEIS claim for FY 2019-20, service providers of eligible services shall be entitled to Duty Credit Scrips at notified rates (as given in Appendix 3X) on net foreign exchange earned, with the total entitlement capped at Rs 5 crore per IEC for FY 2019-20. vii

(b) For SEIS claims for FY 2019-20, the deadline for filing the online application as per ANF 3B shall be 28.02.2022. Provision of late cut under Para 9.02 HBP 2015-20 shall not apply for SEIS applications for FY 2019-20 and such applications shall get time barred after 28.02.2022.viii

3.11 Remittances through Credit Card and other instruments for MEIS and SEIS

Free Foreign Exchange earned through international credit cards and other instruments, as permitted by RBI shall also be taken into account for computation of value of exports.
3.12 Effective date of schemes (MEIS and SEIS)

The schemes shall come into force with effect from the date of notification of this Policy, i.e. the rewards under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of this Policy.

ith effect from the date of notification of this Policy, i.e. the rewards under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of this Policy. 3.13 Special Provisions

(a) With Government reserves the right in public interest, to specify exportproducts or services or markets, which shall not be eligible for computation of entitlement of duty credit scrip

(b) Government reserves the right to impose restriction / change the rate/ceiling on Duty Credit Scrip under this chapter.

(c) Government may also notify goods in Appendix 3A which shall not be allowed for debiting through Duty Credit Scrips in case of import.

(d) Government may prescribe value cap of any kind for a product(s) or limit total reward per IEC holder under this chapter at any time. 3.13A
Last date of submitting Applications for Scrip based Schemes

             With The last date for submission of online applications under MEIS for

exports made in the period 01.09.2020 to 31.12.2020, and applicable late cut as in Para 9.02 of HBP would be as below:

Scheme Last date of submission of Application Late cut if submitted till the last date as in Column 2 (as % of entitlement under the scheme) (1) (2) (3) (i) MEIS (for exports made in the period 01.09.2020 to 31.12.2020) 31.08.2022 Nil

        No further MEIS applications would be allowed to be submitted after

the prescribed last date (as above) and such applications would become time-barred.

o 31.12.2020) 31.08.2022 Nil

        No further MEIS applications would be allowed to be submitted after

the prescribed last date (as above) and such applications would become time-barred. Late cut provisions shall also not be available for submitting claims at a later date.ix 3.13B Validity Period of Scrips

(a) With In supersession of existing laid down provisions regarding validity of a Duty Credit Scrips in Hand Book of Procedures (HBP) 2015-20, the new validity period of a Duty Credit Scrip issued on or after 16.09.2021 shall be 12 months from the date of issue, for scrip based Schemes under chapter 3 and chapter 4 of the Foreign Trade Policy (FTP) 2015-20 or the earlier FTPs.x

Common Provisions for Exports from India Schemes (MEIS and SEIS) 3.14 Transitional Arrangement

For the goods exported or services rendered upto the date of notification of this Policy, which were otherwise eligible for issuance of scrips under erstwhile Chapter 3 of the earlier Foreign Trade Policy(ies) and scrip is
applied / issued on or after notification of this Policy against such export of goods or services rendered, the then prevailing policy and procedure regarding eligibility, entitlement, transferability, usage of scrip and any other condition in force at the time of export of goods or rendering of the services, shall be applicable to such scrips.

egarding eligibility, entitlement, transferability, usage of scrip and any other condition in force at the time of export of goods or rendering of the services, shall be applicable to such scrips. 3.15 CENVAT/ Drawback

Additional Customs duty specified under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 /Central excise duty paid in cash or through debit under Duty Credit scrip shall be adjusted as CENVAT Credit or Duty Drawback as per DoR rules or notifications. Basic Custom duty paid in cash or through debit under Duty Credit scrip shall be adjusted for Duty Drawback as per DoR rules or notifications. 3.16 Import under lease financing

Utilization of Duty Credit Scrip shall be permitted for payment of duty in case of import of capital goods under lease financing in terms of provision in

paragraph 2.34 of FTP.

3.17 Transfer of export performance

(a)
Transfer of export performance from one IEC holder to another IEC holder shall not be permitted. Thus, a shipping bill containing name of applicant shall be counted in export performance / turnover of applicant only if export proceeds from overseas are realized in applicant’s bank account and this shall be evidenced from e - BRC / FIRC.

(b) However, MEIS, rewards can be claimed either by the supporting manufacturer (along with disclaimer from the company / firm who has realized the foreign exchange directly from overseas) or by the company/ firm who has realized the foreign exchange directly from overseas. 3.18 Facility of payment of custom duties and fee through duty credit scrips

(a)
Duty Credit Scrip can be utilized / debited for payment of Custom Duties in case of EO defaults for Authorisations issued under Chapters 4 and 5 of Foreign Trade Policy. Such utilization /usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes. However, penalty / interest shall be required to be paid in cash.

(b)
Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under Para 4.49 of HBP 2015-20.

ty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under Para 4.49 of HBP 2015-20. 3.19 Risk Management System (a)
A Risk Management System shall be in operation whereby every month Computer system in DGFT Headquarters, on random basis and on the basis of guidelines issued by the DGFT from time to time, will select 10% of applications for each RA where scrips and Status Holder Certificates have already been issued, under each scheme. RA in turn may call for original documents in all such selected cases for further examination in detail. In case any discrepancy and/ or over claim is found on such examination, the applicant shall be under obligation to rectify such discrepancy and/or refund over claim in cash with interest at the rate prescribed under section 28 A A of the Customs Act 1962, from the date of issue of scrip in the relevant Head of Account of Customs within one month. The original holder of scrip, however, may refund such over claim by surrendering the same scrip whether partially utilized or fully unutilized, without interest.

(b) Regional Authority may ask for original proof of landing certificate (wherever required under the policy), annexures attached to ANFs or

ally utilized or fully unutilized, without interest.

(b) Regional Authority may ask for original proof of landing certificate (wherever required under the policy), annexures attached to ANFs or

any other document, which has been uploaded digitally or any other export related documents related to the application such as Export Invoices at any time within three years from the date of issue of scrip.
Failure to submit such documents in original would make applicant liable to refund the reward granted along with interest at the rate prescribed under section 28 A A of the Customs Act 1962, from the date of issuance of scrip. If an applicant is found to have mis- declared the Item description under any ITC HS Code, appropriate action under FT(D&R) Act, would be taken. It would be the responsibility of applicant to maintain such documents, certificate etc. for a period of at least three years from the date of issuance of scrips or the completion
of scrutiny under RMS initiated by the RA whichever is later. 3.20 Status Holder

(a) Status Holders are business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade. Status Holders are expected to not only contribute towards India’s exports but also provide guidance and handholding to new entrepreneurs.

(b)
All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status recognition will depend on export performance.

All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status recognition will depend on export performance. An applicant shall be categorized as status holder on achieving export performance during the current and previous three financial years (for Gems& Jewellery Sector the performance during the current and previous two financial years shall be considered for recognition as status holder) as indicated in paragraph 3.21 of Foreign Trade Policy. The export performance will be counted on the basis of FOB of export earning in freely convertible foreign currencies or in Indian Rupees as per para 2.53 of the FTP.xi

(c) For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at the exchange rate notified by CBEC, as applicable on 1st April of each Financial Year.

(d) For granting status, export performance is necessary in at least two out of four years. 3.21 Status Category

Status Category

Export Performance
FOB / FOR (as converted) Value (in US $ million) One Star Export House
3 Two Star Export House
25 Three Star Export House
100 Four Star Export House
500 Five Star Export House 2000 3.22 Grant of Double Weightage

(a)
The exports by IEC holders under the following categories shall be granted double weightage for calculation of export performance for grant of status.

(i) Micro, Small & Medium Enterprises (MSME) as defined in Micro, Small & Medium Enterprises Development (MSMED) Act 2006.

e weightage for calculation of export performance for grant of status.

(i) Micro, Small & Medium Enterprises (MSME) as defined in Micro, Small & Medium Enterprises Development (MSMED) Act 2006.
(ii) Manufacturing units having ISO/BIS. (iii) Units located in North Eastern States including Sikkim and
Jammu & Kashmir.
(iv) Units located in Agri Export Zones.

(b)
Double Weightage shall be available for grant of One Star Export House Status category only. Such benefit of double weightage shall not be admissible for grant of status recognition of other categories namely Two Star Export House, Three Star Export House, Four Star export House and Five Star Export House.

3.23 Other conditions for grant of status

(a) Export performance of one IEC holder shall not be permitted to be transferred to another IEC holder. Hence, calculation of exports performance based on disclaimer shall not be allowed.

(b)
Exports made on re-export basis shall not be counted for recognition.

(c)
Export of items under Authorisation, including SCOMET items, would be included for calculation of export performance.

Exports made on re-export basis shall not be counted for recognition.

(c)
Export of items under Authorisation, including SCOMET items, would be included for calculation of export performance.

3.24 Privileges of Status Holders

A Status Holder shall be eligible for privileges as under:

(a)
Authorisation and Customs Clearances for both imports and exports may be granted on self-declaration basis;

(b) Input-Output norms may be fixed on priority within 60 days by the Norms Committee ;Special scheme in respect of Input Output Norms to be notified by DGFT from time to time, for specified status holder

(c)
Exemption from furnishing of Bank Guarantee for Schemes under FTP, unless specified otherwise anywhere in FTP or HBP;

(d)
Exemption from compulsory negotiation of documents through banks. Remittance / receipts, however, would be received through banking channels;

(e)
Two star and above Export houses shall be permitted to establish Export Warehouses as per Department of Revenue guidelines.

(f)
Three Star and above Export House shall be entitled to get benefit of Accredited Clients Programme (ACP) as per the guidelines of CBEC (website: http://cbec.gov.in).

(g)
The status holders would be entitled to preferential treatment and priority in handling of their consignments by the concerned agencies.

(h)
Manufacturers who are also status holders (Three Star/Four Star/Five Star) will be enabled to self-certify their manufactured goods (as per

f their consignments by the concerned agencies.

(h)
Manufacturers who are also status holders (Three Star/Four Star/Five Star) will be enabled to self-certify their manufactured goods (as per

their IEM/IL/LOI) as originating from India with a view to qualify for preferential treatment under different preferential trading agreements (PTA), Free Trade Agreements (FTAs), Comprehensive Economic Cooperation Agreements (CECA) and Comprehensive Economic Partnership Agreements (CEPA). Subsequently, the scheme may be extended to remaining Status Holders.

(i) Manufacturer exporters who are also Status Holders shall be eligible to self-certify their goods as originating from India as per Para 2.108 (d) of Hand Book of Procedures.

(j)
Status holders shall be entitled to export freely exportable items (excluding Gems and Jewellery, Articles of Gold and precious metals) on free of cost basis for export promotion subject to an annual limit as below:

a. Annual limit of 2% of average annual export realization during preceding three licensing years for all exporters (excluding the exporters of following sectors-(1) Gems and Jewellery Sector, (2) Articles of Gold and precious metals sector).

b. Annual limit of Rupees One Crore or 2% of average annual export realization during preceding three licensing years, whichever is lower. (for exporters of the following sectors-(1) Gems and Jewellery Sector, (2) Articles of Gold and precious metals sector).

ealization during preceding three licensing years, whichever is lower. (for exporters of the following sectors-(1) Gems and Jewellery Sector, (2) Articles of Gold and precious metals sector).

c. In case of supplies of pharmaceutical products, vaccines and lifesaving drugs to health programmes of international agencies such as UN, WHO- PAHO and Government health programmes, the annual limit shall be upto 8% of the average annual export realisation during preceding three licensing years.

The free of cost supplies made under provisions of Para 3.24(j) shall not be entitled to Duty Drawback or any other export incentive under any export promotion scheme.xii

3.25 A 2% Additional Ad hoc Incentive for 2 HS Codes / tariff lines, as below:

i. 85171211 – Mobile Phones, other than push button type and ii. 85171219 – Mobile Phones, push button type

would be available, along with the rewards under MEIS for exports made in the period 01.01.2020 to 31.03.2020 only. The basis of calculation of reward would be on realised FOB value of exports in free foreign exchange, or on FOB value of exports as given in the Shipping Bills in freely convertible foreign currencies, whichever is less, unless otherwise specified. All other provisions as applicable for MEIS in the Foreign Trade Policy, 2015-20 and Handbook of Procedures 2015-20, shall be applicable for the 2% Additional Ad Hoc Incentive as well. The application for MEIS for the said codes would be considered as an application for the Additional Ad hoc Incentive also.

-20, shall be applicable for the 2% Additional Ad Hoc Incentive as well. The application for MEIS for the said codes would be considered as an application for the Additional Ad hoc Incentive also. xiii

i Amended vide Notification No. 58/2015-20 dated 07.03.2022 ii Amended vide Notification No. 30/2015-20 dated 01.09.2020 iii Amended vide Notification No. 22/2015-20 dated 26.07.2018 iv Amended vide Notification No. 29/2015-20 dated 23.29.2021 v Amended vide Notification No. 08/2015-20 dated 24.05.2018 vi Amended vide Notification No. 29/2015-20 dated 23.29.2021 vii Amended vide Notification No. 29/2015-20 dated 23.29.2021 viii Amended vide Notification No. 53/2015-20 dated 01.02.2022 ix Amended vide Notification No. 15/2015-20 dated 01.07.2022 x Amended vide Notification No. 26/2015-20 dated 16.09.2021 xi Amended vide Notification No. 43/2015-20 dated 09.11.2022 xii Amended vide Notification No. 28/2015-20 dated 27.08.2018 xiii Amended vide Notification No. 43/2015-20 Dated 29.01.2020

6.09.2021 xi Amended vide Notification No. 43/2015-20 dated 09.11.2022 xii Amended vide Notification No. 28/2015-20 dated 27.08.2018 xiii Amended vide Notification No. 43/2015-20 Dated 29.01.2020

CHAPTER 4 DUTY EXEMPTION / REMISSION SCHEMES 4.00 Objective Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of inputs or duty remission. 4.01 Schemes (a) Duty Exemption Schemes. The Duty Exemption schemes consist of the following: • Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement). • Duty Free Import Authorisation (DFIA).

(b) Duty Remission Scheme. Duty Drawback (DBK) Scheme, administered by Department of Revenue.

(c) Scheme for Rebate on State and Central Taxes and Levies (RoSCTL), as notified by the Ministry of Textiles on 07.03.2019, and implemented by the DGFT.5

(d) Scheme for Rebate of State Levies (RoSL),as notified in para 6.3 of Ministry of Textiles Notification No. 14/26/2016-IT (Vol-II) dated 07.03.2019 and as amended vide Notification No. 12015/11/2020-TTP dated 09.06.2020 will be implemented by the DGFT in scrip mode, for which procedures will be laid down separately.10

(e) Schemes for Remission of Duties and Taxes on Exported Products (RoDTEP) notified by Department of Commerce and administered by Department of Revenue.12 4.02 Applicability of Policy & Procedures

Authorisation under this Chapter shall be issued in accordance with the Policy and Procedures in force on the date of issue of the Authorisation.

nue.12 4.02 Applicability of Policy & Procedures

Authorisation under this Chapter shall be issued in accordance with the Policy and Procedures in force on the date of issue of the Authorisation.

4.03 Advance Authorisation

(a) Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed.

(b) Advance Authorisation is issued for inputs in relation to resultant product, on the following basis:

(i) As per Standard Input Output Norms (SION) notified (available in Hand Book of Procedures); OR (ii) On the basis of self declaration as per paragraph 4.07 of Handbook
of Procedures. OR (iii) Applicant specific prior fixation of norm by the Norms Committee
OR (iv) On the basis of Self Ratification Scheme in terms of Para 4.07A of Foreign Trade Policy.

4.04 Advance Authorisation for Spices

Duty free import of spices covered under Chapter-9 of ITC (HS) shall be permitted only for activities like crushing /grinding / sterilization / manufacture of oils or oleoresins. Authorisation shall not be available for simply cleaning, grading, re-packing, etc.

4.04A Special Advance Authorisation Scheme for export of Articles of Apparel and Clothing accessories.

esins. Authorisation shall not be available for simply cleaning, grading, re-packing, etc.

4.04A Special Advance Authorisation Scheme for export of Articles of Apparel and Clothing accessories.

Duty free import of fabric under ‘Special Advance Authorisation Scheme for export of Articles of Apparel and Clothing Accessories’ shall be allowed, as per Customs Notification issued for this scheme, for export of items covered under Chapter 61 and 62 of ITC(HS) Classification of Export and Import, subject to the following terms and conditions:

(i) The authorisation shall be issued based on Standard Input Output Norms (SION) or prior fixation of norms by Norms Committee.

(ii) The authorisation shall be issued for the import of relevant fabrics including inter lining only as input. No other input, packing material, fuel, oil and catalyst shall be allowed for import under this authorisation.

(iii) Exporters shall be eligible for All Industry Rate of Duty Drawback, for non fabric inputs, as determined by Central Government for this scheme. For the purpose of value addition norm of Para 4.08 of FTP, the value of any other input used on which benefit of Drawback is claimed or intended to be claimed

Central Government for this scheme. For the purpose of value addition norm of Para 4.08 of FTP, the value of any other input used on which benefit of Drawback is claimed or intended to be claimed

shall be equal to 22% of the FOB value of export realised. Minimum value addition shall be as per Para 4.09 of FTP.

(iv) Where the exporter desires to claim drawback determined and fixed by Jurisdictional Customs Authority (brand rate), he shall follow Para 4.15 of FTP regarding declarations to be made in application for the authorisation and make export under claim for brand rate. In such cases the value addition shall be as per Para 4.08 of FTP. Minimum value addition shall be as per Para 4.09 of FTP.

(v) Authorisation, and the fabric imported, shall be subject to actual user condition. The same shall be non transferable even after completion of export obligation. However fabric imported may be transferred for job work in terms of provisions of GST Acts under intimation to the Customs authority at the port of registration (excluding to units located in areas eligible for area based exemption from Central Excise Duty). Invalidation of the Authorisation shall not be permitted.

(vi) The fabric imported shall be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only Physical exports shall fulfill the export obligation.

ll be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only Physical exports shall fulfill the export obligation.

(vii) Provisions of paragraphs 4.02, 4.05(a), 4.13(i), 4.13(ii), 4.14, 4.15, 4.17, 4.19, 4.21(i), 4.21(ii), 4.21(iii), 4.21(v), 4.22(i), and 4.24 of Foreign Trade Policy shall be applicable in so far as they are not inconsistent with this scheme.

4.05 Eligible Applicant / Export /Supply

(a) Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer.

(b) Advance Authorisation for pharmaceutical products manufactured through Non-Infringing (NI) process (as indicated in paragraph 4.18 of Handbook of Procedures) shall be issued to manufacturer exporter only.

(c) Advance Authorisation shall be issued for: (i) Physical export (including export to SEZ) (ii) Intermediate supply; and/or (iii) Supply of goods to the categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of this FTP.

(iv) Supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.

g) and (h) of this FTP.

(iv) Supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.

4.06 Advance Authorisation for Annual Requirement

(i) Advance Authorisation for Annual Requirement shall only be issued for items notified in Standard Input Output Norms (SION). And it shall not be available in case of adhoc norms under paragraph 4.03 (b) (ii) of FTP.

(ii) Advance Authorisation for Annual Requirement shall also not be available in respect of SION where any item of input appears in Appendix 4-J.

4.07 Eligibility Condition to obtain Advance Authorisation for Annual Requirement

(i) Exporters having past export performance (in at least preceding two financial years) shall be entitled for Advance Authorisation for Annual requirement.

(ii) Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and / or FOR value of deemed export in preceding financial year or Rs 1 crore, whichever is higher.

4.07A Self Ratification Scheme

(i) Where there is no SION/valid Adhoc Norms for an export product and where SION has been notified but exporter intends to use additional inputs in the manufacturing process, eligible exporter can apply for an Advance Authorisation under this scheme on self declaration and self ratification basis. RA may issue Advance Authorisations and such cases need not be referred to Norms Committees for ratification of norms.

thorisation under this scheme on self declaration and self ratification basis. RA may issue Advance Authorisations and such cases need not be referred to Norms Committees for ratification of norms. Application under this scheme shall be made along with a Certificate from Chartered Engineer in the prescribed format.

(ii) A Certificate from a Chartered Engineer who has been not been penalised in the last five years under FT(D&R) Act 1992,Customs Act 1962, Central Excise Act 1944, GST Acts and allied acts and rules made there under shall only be accepted for grant of Authorisation under this scheme.

(iii) Detailed procedure for administering the scheme shall be prescribed in the Handbook of Procedures.

(iv) An exporter (manufacturer or merchant), who holds AEO Certificate under Common Accreditation Programme of CBEC is eligible to opt for this scheme.

(v) The scheme shall not be available for the following export products:

a) All items covered under Chapter-1 to 24 and Chapter-71of ITC(HS)

ogramme of CBEC is eligible to opt for this scheme.

(v) The scheme shall not be available for the following export products:

a) All items covered under Chapter-1 to 24 and Chapter-71of ITC(HS)

Classification; b) Biotechnology items and related products; and c) SCOMET items.

(vi) The scheme shall not be available for the following inputs: A. All vegetable / edible oils classified under Chapter-15 and all types of
oilseeds classified under Chapter-12 of ITC (HS)book; B. All types of cereals classified under Chapter–10 of ITC (HS) book; C. Horn, hoof and any other organ of animal; D. Wild animal products, organs and waste thereof; E. Honey;
F. All items with basic customs duty of 30% or more; G. All types of fruits/ nuts/ vegetables classified under Chapter-7 and Chapter-8 of ITC (HS)book; H. Items covered under heading 2515, 2516, 3301, 3302, 3303 6801 and
6802 of ITC(HS) Classification; I. Items covered under Chapter 50 to 63 of ITC(HS) classification. J. Acetic Anhydride, Ephedrine and Pseudoephedrine; K. Vitamins; L. Biotechnology items and related products; M. Insecticides, Rodenticides, Fungicides, Herbicides, Anti sprouting products, and plant growth regulators, disinfectants and similar products of all forms, types and grades; N. Waste/Scrap of all types; and O. Second hand goods.

(vii) Inputs imported shall be subject to pre import condition and they shall be physically incorporated in the export product (making normal allowance for wastage).

; and O. Second hand goods.

(vii) Inputs imported shall be subject to pre import condition and they shall be physically incorporated in the export product (making normal allowance for wastage). In case of local procurement under invalidation/ARO, the inputs shall be procured prior to manufacture of export item and shall be physically incorporated in the export product. (viii) Wherever value of by-products and recoverable wastage generated during manufacturing process is more than 5% of CIF value, corresponding quantity of main input shall be reduced from the entitlement to the extent that value of

disallowed quantity is equal to the value of by-products and recoverable wastage generated during manufacturing process. (ix) DGFT or any person authorised by him may conduct audit of the manufacturer. The frequency and manner of audit shall be prescribed by DGFT in Handbook of Procedures. The manufacturer shall be required to provide the necessary facility to verify the books of account/other documents as required, give information and assistance for timely completion of the audit. Non- availability of production and consumption documents/data shall be treated as misdeclaration and indulgence in fraudulent activities and shall be penalised under FT(D&R) Act, as amended and rules made there under.

production and consumption documents/data shall be treated as misdeclaration and indulgence in fraudulent activities and shall be penalised under FT(D&R) Act, as amended and rules made there under. (x) DGFT or any person authorised by him may initiate special audit, considering the nature and complexity of the case and revenue of government, if he is of the opinion at any stage of scrutiny/enquiry/investigation that the norms have not been claimed correctly or the excess benefit has been availed. Special audit can be conducted even if the manufacturer has already been audited before.
(xi) If the audit results in detection of misdeclaration and/or instances of claiming of inputs which are not used in manufacturing process or excess quantity of inputs than consumed, demand and recovery actions will be initiated in addition to initiation of action against the authorisation holder, manufacturer and Chartered Engineer in terms of Foreign Trade Development and Regulation Act 1992 and/or Customs Act 1962, as amended and rules made there under. (xii) In cases where Chartered Engineer has not exercised due diligence or has willfully become party to misdeclaration action will be initiated under against such person under FT(D&R) Act 1992, as amended and rules made there under. In addition, such cases shall also be referred to ‘The Institute of Engineers India’ for taking action as warranted under the bylaws of the institute.

t 1992, as amended and rules made there under. In addition, such cases shall also be referred to ‘The Institute of Engineers India’ for taking action as warranted under the bylaws of the institute. (xiii) All the provisions applicable for Advance Authorisation Scheme shall be applicable to this scheme also in so far they are not inconsistent with this scheme. 4.08 Value Addition

Value Addition for the purpose of this Chapter (except for Gems and Jewellery sector for which value addition is prescribed in paragraph 4.38 of FTP) shall be:-

A-B VA= --------- x100, where
B

A =FOB value of export realized/FOR value of supply received.

B =CIF value of inputs covered by Authorisation, plus value of any other input used on which benefit of DBK is claimed or intended to be claimed. 4.09 Minimum Value Addition

(i) Minimum value addition required to be achieved under Advance Authorisation is 15%.

(ii) Export Products where value addition could be less than 15% are given in Appendix 4D.

(iii) Minimum value addition for Gems & Jewellery Sector is given in

paragraph 4.61 of Handbook of Procedures.

(iv) In case of Tea, minimum value addition shall be 50%.

4.10 Import of Mandatory Spares

Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation. 4.11 Ineligible categories of import on Self Declaration basis

(a) Import of following products shall not be permissible on self-declaration basis:

i. All vegetable / edible oils classified under Chapter- 15 and all types of oilseeds classified under Chapter- 12 of ITC (HS) book;

ii. All types of cereals classified under Chapter–10 of ITC (HS) book;

iii. All Spices other than light black pepper (light berries) having a basic customs duty of more than 30%, classified under Chapter-9 and 12 of ITC (HS)book;

iv. All types of fruits/ vegetables having a basic customs duty of more than 30%, classified under Chapter-7 and Chapter-8 of ITC(HS) book;

v. Horn, Hoof and any other organ of animal;

;

iv. All types of fruits/ vegetables having a basic customs duty of more than 30%, classified under Chapter-7 and Chapter-8 of ITC(HS) book;

v. Horn, Hoof and any other organ of animal;

vi. Honey;

vii. Rough Marble Blocks/Slabs; and

viii. Rough Granite.

ix. Vitamins except for use in pharmaceutical industry.

(b) For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no Authorisation shall be issued by Regional Authority under paragraph 4.07 of Handbook of Procedures and applicants shall be required to apply under paragraph 4.06 of Hand Book of Procedures to the Norms Committee.

(c) Where export and/or import of biotechnology items and related products are involved, Authorisation under paragraph 4.07 of Handbook of Procedures shall be issued by Regional Authority only on submission of a “No Objection Certificate” from Department of Biotechnology.

4.12 Accounting of Input

(i) Wherever SION permits use of either (a) a generic input or (b) alternative input, unless the name of the specific input together with quantity [which has been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, within quantity specified and match the description in the relevant bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill.

isation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill.

(ii) In addition, if in any SION, a single quantity has been indicated against a number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in shipping bills.

(iii) At the time of discharge of export obligation (issue of EODC) or at the time of redemption, Regional Authority shall allow only those inputs which have been specifically indicated in the shipping bill together with quantity.

(iv) The above provisions will also be applicable for supplies to SEZs and

ority shall allow only those inputs which have been specifically indicated in the shipping bill together with quantity.

(iv) The above provisions will also be applicable for supplies to SEZs and

supplies made under Deemed exports. Details as given above will have to be indicated in the relevant Bill of Export, ARE-3, Central Excise certified Invoice / import document / Tax Invoice for export prescribed under the GST rules. 4.13 Pre-import condition in certain cases

(i) DGFT may, by Notification, impose pre-import condition for inputs under this Chapter.

(ii) Import items subject to pre-import condition are listed in Appendix 4-J or will be as indicated in Standard Input Output Norms (SION).

(iii) Import of drugs from unregistered sources shall have pre-import condition. 4.14 Details of Duties exempted

Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti- dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable. Import against supplies covered under

paragraph 7.02 (c) & (g) of FTP will not be exempted from payment of

applicable Anti-dumping Duty, Countervailing Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any. However, imports under Advance Authorisation for physical as well as deemed exports are also exempt from whole of the integrated tax and Compensation Cess leviable under sub- section (7) and sub-section (9) respectively, of section 3 of the Customs Tariff Act, 1975 (51 of 1975).15 4.15 Admissibility of Drawback

Drawback as per rate determined and fixed by Customs authority in terms of DoR Rules shall be available for duty paid imported or indigenous inputs (not specified in the norms) used in the export product. For this purpose, applicant shall indicate clearly details of duty paid input in the application for Advance Authorisation. As per details mentioned in the application, Regional Authority shall also clearly endorse details of such duty paid inputs in the condition sheet of the Advance Authorisation. 4.16 Actual User Condition for Advance Authorisation

(i) Advance Authorisation and / or material imported under Advance Authorisation shall be subject to ‘Actual User’ condition. The same shall not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed.

ansferable even after completion of export obligation. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed.

(ii) In case where CENVAT/input tax credit facility on input has been availed for the exported goods, even after completion of export obligation, the goods imported against such Advance Authorisation shall be utilized only in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer). For this, the Authorisation holder shall produce a certificate from Chartered Accountant at the time of filing application for Export Obligation Discharge Certificate to Regional Authority concerned.4

(iii) Waste / Scrap arising out of manufacturing process, as allowed, can be disposed off on payment of applicable duty even before fulfillment of export obligation. 4.17 Validity Period for Import and its Extension

Validity period for import under Advance Authorisation shall be as prescribed in Handbook of Procedures.
4.18 Importability / Exportability of items that are Prohibited/ Restricted / STE

(i) No export or import of an item shall be allowed under Advance Authorisation / DFIA if the item is prohibited for exports or imports respectively. Export of a prohibited item may be allowed under Advance Authorisation provided it is separately so notified, subject to the conditions given therein.

(ii) Items reserved for imports by STEs cannot be imported against Advance Authorisation / DFIA.

e Authorisation provided it is separately so notified, subject to the conditions given therein.

(ii) Items reserved for imports by STEs cannot be imported against Advance Authorisation / DFIA. However, those items can be procured from STEs against ARO or Invalidation letter. STEs are also allowed to sell goods on High Sea Sale basis to holders of Advance Authorisation / DFIA holder. STEs are also permitted to issue “No Objection Certificate (NOC)” for import by Advance Authorisation / DFIA holder. Authorisation Holder would be required to file Quarterly Returns of imports effected against such NOC to concerned STE and STE would submit half-yearly import figures of such imports to concerned administrative Department for monitoring with a copy endorsed to DGFT.

(iii) Items reserved for export by STE can be exported under Advance Authorisation / DFIA only after obtaining a ‘No Objection Certificate’ from the concerned STE.

(iv) Import of restricted items shall be allowed under Advance Authorisation/DFIA.

(v) Export of restricted / SCOMET items however, shall be subject to all

Para 4.34 amended vide Notification No.16/2015-20 dated 02.09.2019,

vii)

Para 4.29 amended vide Notification No.57/2015-20 dated 31.03.2020,

viii)

Para 4.44 amended vide Notification No.15/2015-20 dated 25.06.2020,

ix)

Para 4.37 amended vide Notification No.25/2015-20 dated 10.08.2020,

Para 4.01 amended vide Notification No. 37/2015-20 dated 06.10.2020,

xi)

Para 4.25 amended vide Notification No.38/2015-20 dated 06.10.2020,

xii)

Para 4.01 amended vide Notification No. 19/2015-20 dated 17.08.2021,

xiii)

Para 4.54 to Para 4.59 added vide Notification No.19/2015-20 dated

17.08.2021, xiv)

Para 4.42 amended vide Notification No.42/2015-20 dated 08.11.2021,

xv)

Para 4.14 amended vide Notification No.16/2015-20 dated 01.07.2022,

xvi)

Para 4.21 amended vide Notification No.43/2015-20 dated 09.11.2022,

xvii)

Para 4.42 amended vide Notification No.56/2015-20 dated 07.02.2023.

CHAPTER 5 EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME

5.00 Objective

The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.

5.01 EPCG Scheme

(a)
EPCG Scheme allows import of capital goods (except those specified in negative list in Appendix 5 F) for pre-production, production and post- production at zero customs duty. Capital goods imported under EPCG Authorisation for physical exports are also exempt from IGST and Compensation Cess upto 30.09.2021 only, leviable thereon under the subsection(7) and subsection(9) respectively, of section 3 of the Customs Tariff Act, 1975 (51 of 1975), as provided in the notification issued by Department of Revenue. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources in accordance with provisions of paragraph 5.07 of FTP. Capital goods for the purpose of the EPCG scheme shall include:

(i) Capital Goods as defined in Chapter 9 including in CKD/SKD condition thereof; (ii)
Computer systems and software which are a part of the Capital Goods being imported; (iii) Spares, moulds, dies, jigs, fixtures, tools & refractories; and (iv) Catalysts for initial charge plus one subsequent charge.

(b)
Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme.

v) Catalysts for initial charge plus one subsequent charge.

(b)
Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme.

(c)
Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.
Authorisation shall be valid for import for 18 months from the date of issue of Authorisation. However, in case the validity period for imports expires during 1st February, 2020 to 31st July, 2020, the validity stands automatically

extended by further 6 months from the date of such expiry. Revalidation of EPCG Authorisation shall not be permitted.

(d)
In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.

(e)
Deleted.

(f)
Deleted.

(g)
Import of items which are restricted for import shall be permitted under EPCG Scheme only after approval from Exim Facilitation Committee (EFC) at DGFT Headquarters.

(h)
If the goods proposed to be exported under EPCG authorisation are restricted for export, the EPCG authorisation shall be issued only after approval for issuance of export authorisation from Exim Facilitation Committee at DGFT Headquarters.

EPCG authorisation are restricted for export, the EPCG authorisation shall be issued only after approval for issuance of export authorisation from Exim Facilitation Committee at DGFT Headquarters.

5.02 Coverage

(a)
EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service providers. Name of supporting manufacturer(s) shall be endorsed on the EPCG Authorisation before installation of the capital goods in the factory / premises of the supporting manufacturer (s). In case of any change in supporting manufacturer (s) the RA shall intimate such change to jurisdictional Customs Authority of existing as well as changed supporting manufacturer(s) and the Customs at port of registration of Authorisation.

(b)
Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is designated / certified as a Common Service Provider (CSP) by the DGFT, Department of Commerce or State Industrial Infrastructural Corporation in a Town of Export Excellence subject to provisions of Foreign Trade Policy/Handbook of Procedures with the following conditions:-

(i) Export by users of the common service shall be counted towards fulfillment of EO of the CSP provided the EPCG Authorisation details of

Handbook of Procedures with the following conditions:-

(i) Export by users of the common service shall be counted towards fulfillment of EO of the CSP provided the EPCG Authorisation details of

the CSP is mentioned in the respective Shipping bills and concerned RA must be informed about the details of the users prior to such export;

(ii) Such export will not count towards fulfillment of specific export obligations in respect of other EPCG Authorisations (of the CSP/User); and

(iii) Authorisation holder shall be required to submit Bank Guarantee (BG) which shall be equivalent to the duty saved. BG can be given by CSP or by any one of the users or a combination thereof, at the option of the CSP.

5.03 Actual User Condition

Imported capital goods shall be subject to Actual User condition till export obligation is completed and EODC is granted.

5.04 Export Obligation (EO)

Following conditions shall apply to the fulfillment of EO:- (a) EO shall be fulfilled by the authorisation holder through export of goods which are manufactured by him or his supporting manufacturer / services rendered by him, for which the EPCG authorisation has been granted.

(b) EO under the scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any; except for categories mentioned in paragraph 5.13(a) of HBP.

in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any; except for categories mentioned in paragraph 5.13(a) of HBP. Such average would be the arithmetic mean of export Performance in the preceding three licensing years for same and similar products.

(d) Shipments under Advance Authorisation, DFIA, Drawback scheme or reward schemes under Chapter 3 of FTP; would also count for fulfillment of EO under EPCG Scheme.

(e) Export shall be physical export. However, supplies as specified in paragraph 7.02 (a), (b), (e), (f) & (h) of FTP shall also be counted towards fulfillment of export obligation, along with usual benefits available under paragraph 7.03 of FTP.

(f) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.

(g) Royalty payments received by the Authorisation holder in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG.

(h) Payment received in rupee terms for such Services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG scheme.

ed for discharge under EPCG.

(h) Payment received in rupee terms for such Services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG scheme.

5.05 Deleted

5.06 LUT/Bond/BG in case of Agro units

LUT/Bond or 15% BG, as applicable, maybe furnished for EPCG authorisation granted to units in Agri-Export Zones provided EPCG authorisation is taken for export of primary agricultural product(s) notified or their value added variants.

5.07 Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier A person holding an EPCG authorisation may source capital goods from a domestic manufacturer. Such domestic manufacturer shall be eligible for deemed export benefits under paragraph 7.03 of FTP and as may be provided under GST Rules under the category of deemed exports. Such domestic sourcing shall also be permitted from EOUs and these supplies shall be counted for purpose of fulfilment of positive NFE by said EOU as provided in Para 6.09 (a) of FTP.

5.08 Calculation of Export Obligation

In case of direct imports, EO shall be reckoned with reference to actual duty saved amount. In case of domestic sourcing, EO shall be reckoned with reference to notional Customs duties saved on FOR value.

of direct imports, EO shall be reckoned with reference to actual duty saved amount. In case of domestic sourcing, EO shall be reckoned with reference to notional Customs duties saved on FOR value.

5.09 Incentive for early EO fulfillment

With a view to accelerating exports, in cases where Authorisation holder has fulfilled 75% or more of specific export obligation and 100% of Average Export Obligation till date, if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned and the Authorisation redeemed by RA concerned. However no benefit under Para 5.21 of HBP shall be permitted where incentive for early EO fulfillment has been availed.

5.10 Reduced EO for Green Technology Products

For exporters of Green Technology Products, Specific EO shall be 75% of EO as stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04. The list of Green Technology Products is given in Para 5.29 of HBP.

5.11 Reduced EO for North East Region and Jammu &Kashmir

For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu & Kashmir, specific EO shall be 25% of the EO, as stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04.

, Nagaland, Sikkim, Tripura and Jammu & Kashmir, specific EO shall be 25% of the EO, as stipulated in Para 5.01. There shall be no change in average EO imposed, if any, as stipulated in Para 5.04.

5.12 Post Export EPCG Duty Credit Scrip(s)

(a)
Post Export EPCG Duty Credit Scrip(s) shall be available to exporters who intend to import capital goods on full payment of applicable duties, taxes and cess in cash and choose to opt for this scheme.

(b) Basic Customs duty paid on Capital Goods shall be remitted in the form of freely transferable duty credit scrip(s) similar to those issued under Chapter 3 of FTP,

(c)
Specific EO shall be 85% of the applicable specific EO under the EPCG Scheme. However, average EO shall remain unchanged.

(d)
Duty remission shall be in proportion to the EO fulfilled.

(e)
All provisions for utilization of scrips issued under Chapter 3 of FTP shall also be applicable to Post Export EPCG Duty Credit Scrip(s).

(f) All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this scheme.

TP shall also be applicable to Post Export EPCG Duty Credit Scrip(s).

(f) All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this scheme.

Updated as on 01.04.2021

CHAPTER 6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs)
6.00 Introduction and Objective
(a)
Units undertaking to export their entire production of goods and services(except permissible sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP) Scheme, Software Technology Park(STP) Scheme or Bio-Technology Park (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning,
re-engineering, rendering of services, development of software, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not covered under these schemes.
(b)
Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation.
6.01 Export and Import of Goods
(a)
An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS).

oduction and employment generation.
6.01 Export and Import of Goods
(a)
An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS). However export of gold jewellery, including partly processed jewellery, whether plain or studded, and articles, containing gold of 8 carats and above upto a maximum limit of 22 carats only shall be permitted. The export of findings like posts, push backs, locks which help in collating the jewellery pieces together, containing gold of 3 carats and above up to a maximum limit of 22 carats only shall be allowed. (b)
Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfilment of the conditions indicated in ITC (HS). In respect of an EOU, permission to export a prohibited item may be considered, by BOA, on a case to case basis, provided such raw materials are imported and there is no procurement of such raw material from DTA.

EOU, permission to export a prohibited item may be considered, by BOA, on a case to case basis, provided such raw materials are imported and there is no procurement of such raw material from DTA.

(c)
Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc up to a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed.
(d) (i) An EOU / EHTP/ STP/ BTP unit may import and / or procure, from DTA or bonded warehouses in DTA / international exhibition held in India, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS) subject to conditions given at para (ii) & (iii) below. Any permission required for import under any other law shall be applicable. Units shall also be permitted to import goods including capital goods required for approved activity, free of cost or on loan / lease from clients. Import of capital goods will be on a self-certification basis. Goods imported by a unit shall be with actual user condition and shall be utilized for export production.
(ii) The imports and/ or procurement from bonded warehouse in DTA or from international exhibition held in India shall be without payment of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and additional duty, if any, leviable thereon under Section 3(1), 3(3) and 3(5) of the said Customs Tariff Act.

of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and additional duty, if any, leviable thereon under Section 3(1), 3(3) and 3(5) of the said Customs Tariff Act. Such imports and/ or procurements shall be made without payment of integrated tax and compensation cess leviable thereon under section 3(7) and 3(9) of the Customs Tariff Act, 1975 as per notification issued by the Department of Revenue and such exemptions would be available upto 31.03.2021 only.
(iii) The procurement of goods covered under GST from DTA would be on payment of applicable GST and compensation cess. The refund of GST paid on such supply from DTA to EOU would be available to the supplier subject to such conditions and documentations as specified under GST rules and notifications issued there under. EOUs can also procure excisable goods falling under the Fourth Schedule of Central Excise Act, 1944 from DTA without payment of applicable duty of excise.

s and notifications issued there under. EOUs can also procure excisable goods falling under the Fourth Schedule of Central Excise Act, 1944 from DTA without payment of applicable duty of excise.

(e)
State Trading regime shall not apply to EOU manufacturing units. However, in respect of Chrome Ore/Chrome concentrate, State
Trading Regime as stipulated in export policy of these items, will be applicable to EOUs.
(f)
EOU/EHTP/STP/BTP units may import/procure from DTA, with or without payment of duties/taxes as provided at Para 6.01 (d)(ii) and 6.01(d)(iii) above, certain specified goods for creating a central facility. Software EOU/ DTA units may use such facility for export of software. (g)
An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture, pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in connection with its activities for use outside the premises of the unit.
(h)
Gems and jewellery EOUs may source gold / silver / platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold / silver / platinum from nominated agencies, either on loan basis or outright purchase basis shall export gold / silver / platinum within 90 days from date of release.
(i)
EOU / EHTP / STP / BTP units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit/ Escrow Rupee Account of buyer subject to RBI clearance, if any.

TP / STP / BTP units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit/ Escrow Rupee Account of buyer subject to RBI clearance, if any.
(j)
Procurement and export of spares / components, upto 5% of FOB value of exports, may be allowed to same consignee / buyer of the export article, subject to the condition that it shall not count for NFE and direct tax benefits.
(k)
Development Commissioner/ Designated Officer may allow, on a case to case basis, requests of EOU / EHTP / STP/ BTP units in sectors other than Gems & Jewellery, for consolidation of goods related to manufactured articles and export thereof along with manufactured article. Such goods may be allowed to be imported / procured from DTA by EOU with or without payment of duty and/or taxes as provided at Para 6.01 (d) (ii) and (iii) above, as the case may be to the extent of 5% FOB value of such

manufactured articles exported by the unit in preceding financial year. Details of procured / imported goods and articles manufactured by the EOU will be listed separately in the export documents. In such cases, value of procured / imported goods will not be taken into account for calculation of NFE and DTA sale entitlement. Such procured / imported goods shall not be allowed to be sold in DTA. BOA may also specify any other conditions.
6.02 Second hand Capital goods
Second hand capital goods, without any age limit, may also be imported with or without payment of duty/ taxes as provided under Para 6.01(d)(ii) above.

nditions.
6.02 Second hand Capital goods
Second hand capital goods, without any age limit, may also be imported with or without payment of duty/ taxes as provided under Para 6.01(d)(ii) above.
6.03 Leasing of Capital Goods
(a)
An EOU/EHTP/STP/BTP unit may, on the basis of a firm contract between parties, source capital goods from a domestic/ foreign leasing company with or without payment of duties/taxes as provided at Para 6.01 (d) (ii) and (iii) above, as the case may be in such a case, EOU/EHTP /STP / BTP unit and domestic/ foreign leasing company shall jointly file documents to enable import/ procurement of capital goods.
(b)
An EOU/EHTP/BTP/STP unit may sell capital goods and lease back the same from a Non Banking Financial Company (NBFC), subject to the following conditions:
(i)
The unit should obtain permission from the jurisdictional Deputy /Assistant Commissioner of Customs for entering into transaction of ‘Sale and Lease Back of Assets’, and submit full details of the goods to be sold and leased back and the details of NBFC;
(ii)
The goods sold and leased back shall not be removed from the unit’s premises;
(iii) The unit should be NFE positive at the time when it enters into sale and lease back transaction with NBFC;
(iv) A joint undertaking by the unit and NBFC should be given to pay duty on goods in case of violation or contravention of

e time when it enters into sale and lease back transaction with NBFC;
(iv) A joint undertaking by the unit and NBFC should be given to pay duty on goods in case of violation or contravention of

any provision of the notification under which these goods were imported or procured, read with Customs Act, 1962 or Central Excise Act, 1944, and that the lien on the goods shall remain with the Customs Department, which will have first charge over the said goods for recovery of sum due from the unit to Government under provision of Section 142(b) of the Customs Act, 1962 read with the Customs (Attachment of Property of Defaulters for Recovery of Govt. Dues) Rules, 1995.
6.04 Net Foreign Exchange Earnings
EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner. In addition sector specific provision of Appendix 6B of Appendices & ANFs, where a higher value addition and other conditions are given, shall be required to be followed. NFE Earnings shall be calculated cumulatively in blocks of five years, starting from commencement of production. Whenever a unit is unable to achieve NFE due to prohibition / restriction imposed on export of any product mentioned in LoP, the five year block period for calculation of NFE earnings may be suitably extended by BoA.

nable to achieve NFE due to prohibition / restriction imposed on export of any product mentioned in LoP, the five year block period for calculation of NFE earnings may be suitably extended by BoA. Further, wherever a unit is unable to achieve NFE due to adverse market condition or any grounds of genuine hardship having adverse impact on functioning of the unit, the five year block period for calculation of NFE earnings may be extended by BOA for a period of upto one year, on a case to case basis. The method of calculation of NFE in detail is given in Para 6.10 of Handbook of Procedures 2015-20
6.05 Applications & Approvals/Letter of Permission / Letter of Intent and Legal Undertaking
(a) (i)
Application for setting up an EOU shall be considered by Unit Approval Committee (UAC)/ Board of Approval (BoA) as the case may be, as detailed in the Hand Book of Procedure. A detail of administration of EOUs and power of DC is given in HBP.
(ii) In case of units under EHTP / STP schemes, necessary approval / permission under relevant paras of this Chapter shall be granted by officer designated by Ministry of Communication and Information Technology, Department

EHTP / STP schemes, necessary approval / permission under relevant paras of this Chapter shall be granted by officer designated by Ministry of Communication and Information Technology, Department

of Electronics & Information Technology, instead of DC, and by Inter-Ministerial Standing Committee (IMSC) instead of BOA.
(iii) Bio-Technology Parks (BTP) would be notified by DGFT on recommendations of Department of Biotechnology. In case of units in BTP, necessary approval / permission under relevant provisions of this chapter will be granted by designated officer of Department of Biotechnology.
(iv) On approval, a Letter of Permission (LoP) / Letter of Intent (LoI) shall be issued by DC / designated officer to EOU / EHTP / STP / BTP unit. The validity of LoP/LoI shall be given in the Hand Book of Procedures.
(b)
LoP / LoI issued to EOU / EHTP / STP / BTP units by concerned authority, subject to compliance of provision in Para 6.01 above, would be construed as an Authorisation for all purposes. (c) Unit shall execute an LUT with DC concerned. Failure to ensure positive NFE or to abide by any of the terms and conditions of LoP / LoI / IL / LUT shall render the unit liable to penal action under provisions of the FT (D&R) Act, as amended, and Rules and Orders made there under, without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL.
6.06 Investment Criteria
Only projects having a minimum investment of Rs. 1 Crore in plant & machinery shall be considered for establishment as EOUs.

ncellation or revocation of LoP / LoI / IL.
6.06 Investment Criteria
Only projects having a minimum investment of Rs. 1 Crore in plant & machinery shall be considered for establishment as EOUs. However, this shall not apply to existing units, units in EHTP / STP/ BTP, and EOUs in Handicrafts /Agriculture/ Floriculture/Aquaculture/Animal Husbandry /Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BOA may allow establishment of EOUs with a lower investment criteria.
6.07 Applications & Approvals
(a) Deleted
(b) Deleted
(c) Deleted
(d) Deleted

6.08 DTA Sale of Finished Products / Rejects / Waste/ Scrap / Remnants and By-products
Entire production of EOU/EHTP/STP/BTP units shall be exported. However, the following are allowed as exceptions subject to the conditions specified.
(a)(i)
Units, other than gems and jewellery units may sell finished goods manufactured by them as specified in LoP (including byproducts, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods) which are freely importable under FTP in DTA, subject to fulfillment of positive NFE, on payment of excise duty, if applicable, and/ or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the

stoms Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods). No DTA sale shall be permissible in respect of, pepper & pepper products, marble and such other items as may be notified from time to time.
(ii)
Such DTA sale shall also not be permissible to units engaged in activities of packaging / labeling / segregation / refrigeration / compacting / micronisation / pulverization / granulation / conversion of monohydrate form of chemical to anhydrous form or vice-versa.
(iii) (a)
Sales made to a unit in SEZ shall also be taken into account for purpose of arriving at FOB value of export by EOU provided payment for such sales are made from Foreign Currency Account of SEZ unit.
(b)
Sale to DTA would also be subject to mandatory requirement of registration of pharmaceutical products (including bulk drugs).
(iv) An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.

ion 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.

(v)
The DTA sale by EOU/EHTP/STP/BTP units shall be subject to payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods). This reversal of Customs Duty would be as per prevailing SION norms or norms fixed by Norms Committee (where no SION norms are fixed).
(vi) Such DTA sale shall also be subject to refund of any benefits under Chapter 7 of FTP availed by the EOU/supplier as per FTP, on the goods used for manufacture of the goods cleared into the DTA.
(b)
For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of foreign exchange earned, where payment of such services is received in foreign exchange. However, sale in DTA in respect of services classified under Chapter Heading 9988 and 9989 under GST, but covered in LOP/para 9.31 of FTP as manufacturing of goods, will continue to be covered under para 6.08(a) above.

n respect of services classified under Chapter Heading 9988 and 9989 under GST, but covered in LOP/para 9.31 of FTP as manufacturing of goods, will continue to be covered under para 6.08(a) above. At the time of DTA clearance, applicable GST and compensation cess as per GST classification would apply. (c)
Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA, subject to fulfillment of positive NFE. The unit shall pay applicable GST and compensation cess along with reversal of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed as exemption, on inputs used in such jewellery.
(d)
Unless specifically prohibited in LoP, rejects may be sold in DTA on payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed as exemption on inputs on prior intimation to Customs authorities. Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE.

the Customs Tariff Act, 1975 availed as exemption on inputs on prior intimation to Customs authorities. Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE.

(e)
Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of applicable duties and/ or taxes and compensation cess. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee.
Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Scrap / waste / remnants may also be exported.
(f)
There shall be no duties / taxes on scrap / waste / remnants, in case same are destroyed with permission of Customs authorities. The expression “no duties/ taxes” shall not include applicable taxes and cess under the GST laws.
(g)
By-products included in LoP may also be sold in DTA subject to achievement of positive NFE, on payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975, if availed on inputs.
(h)
Deleted
(i)
In case of units manufacturing electronics hardware and software, NFE and DTA sale entitlement shall be reckoned separately for hardware and software.

if availed on inputs.
(h)
Deleted
(i)
In case of units manufacturing electronics hardware and software, NFE and DTA sale entitlement shall be reckoned separately for hardware and software.
(j)
Deleted
(k)
In case of new EOUs, advance DTA sale will be allowed not exceeding 50% of its estimated exports for first year, except pharmaceutical units where this will be based on its estimated exports for first two years.
(l)
Deleted
(m) Procurement of spares / components, up to 2% of the value of manufactured articles, cleared into DTA, during the preceding year, may be allowed for supply to the same consignee / buyer for the purpose of after-sale-service. The same can be cleared in DTA on payment of applicable GST and compensation cess along with reversal of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed as exemption, if any

6.09 Other Supplies
Following supplies effected from EOU / EHTP / STP / BTP units will be counted for fulfillment of positive NFE. Such supplies shall not include “marble”, except if such supply of marble is an inter unit supply as provided at Sub - Para(c) below:
(a)
Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIA under duty exemption / remission scheme / EPCG scheme.

ub - Para(c) below:
(a)
Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIA under duty exemption / remission scheme / EPCG scheme. However, printing sector EOUs (or any other sector that may be notified in HBP), can’t supply goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance Authorisation / Advance Authorisation for annual requirement.
(b)
Supplies effected in DTA against foreign exchange remittance received from overseas.
(c)
Supplies to other EOU / EHTP / STP / BTP / SEZ units, provided that such goods are permissible for procurement in terms of Para 6.01 of FTP.
(d)
Supplies made to bonded warehouses set up under FTP and / or under section 65 of Customs Act and free trade and warehousing zones, where payment is received in foreign exchange.
(e)
Supplies of goods and services to such organizations which are entitled for duty free import of such items in terms of general exemption notification issued by MoF, as may be provided in HBP.
(f)
Supplies of Information Technology Agreement (ITA-1) items and notified zero duty telecom / electronics items.
(g)
Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.

gy Agreement (ITA-1) items and notified zero duty telecom / electronics items.
(g)
Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.
(h)
Supply of LPG produced in an EOU refinery to Public Sector domestic oil companies for being supplied to household domestic consumers at subsidized prices under the Public Distribution System (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas vide notification No. E-101 20029/18/2001-

PP dated 28.01.2003 (hereinafter referred to as PDS Scheme) subject to the following conditions:-
(i)
Only supply of such quantity of LPG would be eligible for which Ministry of Petroleum and Natural Gas declines permission for export and requires the LPG to be cleared in DTA; and
(ii)
The Ministry of Finance by a notification has permitted duty free imports of LPG for supply under the aforesaid PDS Scheme. 6.10 Export through others
An EOU/ EHTP/ STP/BTP unit may export goods manufactured/ software developed by it through another exporter or any other EOU/EHTP/STP/SEZ unit subject to conditions mentioned in Para 6.19 of HBP.
6.11 Entitlement for Supplies from the DTA
(a)
Supplies from DTA to EOU/EHTP/STP/ BTP units for use in their manufacture for exports will be eligible for “benefits under Chapter 7 of FTP”. DTA supplier shall be eligible for relevant entitlements under chapter 7 of FTP, besides discharge of export obligation, if any, on the supplier.

be eligible for “benefits under Chapter 7 of FTP”. DTA supplier shall be eligible for relevant entitlements under chapter 7 of FTP, besides discharge of export obligation, if any, on the supplier. The refund of GST paid on such supply from DTA to EOU would be available to the supplier subject to such conditions and documentations as specified under GST rules and notifications issued there under.
(b)
Suppliers of precious and semi-precious stones, synthetic stones and processed pearls from DTA to EOU shall be eligible for grant of Replenishment Authorisations at rates and for items mentioned in HBP.
(c)
In addition, EOU / EHTP / STP / BTP units shall be entitled to following:-
(i)
Reimbursement of Central Sales Tax (CST) on goods manufactured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in Para 9.10 (b) of HBP).

ured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in Para 9.10 (b) of HBP).

(ii)
Exemption from payment of Central Excise Duty on goods, falling in Fourth Schedule of Central Excise Act, procured from DTA on such goods manufactured in India.
(iii) Deleted
(iv) Deleted
6.12 Other Entitlements
Other entitlements of EOU/EHTP/STP/BTP units are as under:
(a)
Exemption from industrial licensing for manufacture of items reserved for SSI sector.
(b)
Export proceeds will be realized within nine months.
(c)
Units will be allowed to retain 100% of its export earnings in the EEFC account.
(d)
Unit will not be required to furnish bank guarantee at the time of import or going for job work in DTA, where:
(i)
The unit has turnover of Rs. 5 crore or above;
(ii)
The unit is in existence for at least three years; and
(iii) The unit:
(1)
has achieved positive NFE / export obligation wherever applicable;

it has turnover of Rs. 5 crore or above;
(ii)
The unit is in existence for at least three years; and
(iii) The unit:
(1)
has achieved positive NFE / export obligation wherever applicable;
(2)
has not been issued a show cause notice or a confirmed demand, during the preceding 3 years, on grounds other than procedural violations, under the penal provision of the Customs Act, the Central Excise Act, the Foreign Trade (Development & Regulation) Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder, on account of fraud / collusion / wilful mis-statement / suppression of facts or contravention of any of the provisions thereof;

(e)
100% FDI investment permitted through automatic route similar to SEZ units.
(f)
Deleted
(g)
The Units Approval Committee may consider on a case-to-case basis request for sharing of infrastructural facilities among EOUs and it shall forward its recommendation to the Board of Approval for its consideration. While accepting such proposals, the NFE obligations of the Units shall not be altered. Such facilities will be available to Units in EHTP / STP after getting approval from IMSC. However, sharing of facilities between EOUs and SEZ Units shall not be permitted.

ts shall not be altered. Such facilities will be available to Units in EHTP / STP after getting approval from IMSC. However, sharing of facilities between EOUs and SEZ Units shall not be permitted.
6.13 Inter Unit Transfer
(a)
Transfer of manufactured goods from one EOU/ EHTP/STP/BTP unit to another EOU / EHTP/ STP/ BTP unit is allowed on payment of applicable GST and compensation cess with prior intimation to concerned Development Commissioners of the transferor and transferee units as well as concerned Customs authorities, as per following procedure for movement of goods:
i.
The supplier EOU shall endorse on usual commercial documents, such as, tax invoice and delivery challan, the amount of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption on inputs used in the manufacture of such finished goods (including byproducts, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods) supplied to another EOU. The recipient EOU shall pay such endorsed Customs duty besides his own liability of reversal of Customs duty as provided in Para 6.08 above, before clearance of such finished goods in DTA and as provided under DoR notifications/circulars/ guidelines in this regard.
ii.
Upon receipt of goods, the recipient EOU shall submit endorsed copies of tax invoice to their jurisdictional Customs authority as well as to the jurisdictional Customs authorities of the supplier EOU.

receipt of goods, the recipient EOU shall submit endorsed copies of tax invoice to their jurisdictional Customs authority as well as to the jurisdictional Customs authorities of the supplier EOU. (b)
Capital goods may be transferred or given on loan to other EOU / EHTP / STP / BTP / SEZ units, with prior intimation to concerned DC and

Customs authorities on payment of applicable GST and compensation cess. Such transferred goods may also be returned by the second unit to the original unit in case of rejection or for any reason on payment of applicable GST and compensation cess.
(c)
Goods supplied by one unit of EOU/EHTP/STP/ BTP to another unit shall be on payment of applicable GST and compensation cess as per following procedure for movement of goods:
(i)
The supplier EOU shall endorse on usual commercial documents, such as, tax invoice and delivery challan, the amount of duties of Customs leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption on such goods supplied to another EOU. The recipient EOU shall pay such endorsed Customs duty and applicable GST and compensation cess before clearance of such goods or finished goods manufactured or produced from such goods in DTA.
(ii)
Upon receipt of goods, the recipient EOU shall submit endorsed copies of tax invoice to their jurisdictional Customs authority as well as to the jurisdictional Customs authorities of the supplier EOU.

receipt of goods, the recipient EOU shall submit endorsed copies of tax invoice to their jurisdictional Customs authority as well as to the jurisdictional Customs authorities of the supplier EOU.
(d)
In respect of a group of EOUs / EHTPs / STPs / BTP Units which source inputs centrally in order to obtain bulk discount and / or reduce cost of transportation and other logistics cost and / or to maintain effective supply chain, inter unit transfer of goods and services may be permitted on a case-to-case basis by the Unit Approval Committee. In case inputs so sourced are imported and then transferred to another unit, then value of the goods so transferred shall be taken as inflow for the unit transferring these goods and as outflow for the unit receiving these goods, for the purpose of calculation of NFE.
6.14 Sub-Contracting
(a) (i) EOU/EHTP/STP /BTP units, including gems and jewellery units, may on the basis of annual permission from Customs authorities,
sub-contract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in DTA.

al permission from Customs authorities,
sub-contract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in DTA.

(ii)
These units may sub–contract upto 50% of overall production of previous year in value terms in DTA with permission of Customs authorities.
(b) (i)
EOU may, with annual permission from Customs authorities,
under take job work for export, on behalf of DTA exporter, provided that goods are exported directly from EOU and export document shall jointly be in name of DTA/ EOU. For such exports, DTA units will be entitled for refund of duty paid on inputs by way of brand rate of duty drawback. However, such brand rate of drawback shall be as per Customs and Central Excise Duties Drawback Rules, 2017 and shall be limited to Customs duties and Central Excise Duties (in respect of eligible items covered under Schedule IV of Central Excise Act, 1944).
(ii) Import of goods for execution of export order placed on EOU by foreign supplier on job work basis, would be allowed with or without payment of duties and/or taxes as provided under Para 6.01(d)(ii) above subject to condition that no DTA clearance shall be allowed.
(iii) Sub-contracting of both production and production processes may also be under taken without any limit through other EOU/EHTP/ STP/ BTP/ SEZ units, on the basis of records maintained in unit.

iii) Sub-contracting of both production and production processes may also be under taken without any limit through other EOU/EHTP/ STP/ BTP/ SEZ units, on the basis of records maintained in unit.
(iv) EOU/EHTP/STP/BTP units may sub-contract part of production process abroad and send intermediate products abroad as mentioned in LoP. No permission would be required when goods are sought to be exported from sub - contractor premises abroad. When goods are sought to be brought back, prior intimation to concerned DC and Customs authorities shall be given.
(c)
Scrap/waste/remnants generated through job work may either be cleared from job worker’s premises on payment of applicable duty and/or taxes, as provided under Para 6.08 above on transaction value or destroyed in presence of Customs authority or returned to unit. Destruction shall not apply to gold, silver, platinum, diamond, precious and semi-precious stones.

(d)
Sub-contracting/ exchange by gem sand jewellery EOUs through other EOUs or SEZ units or units in DTA, shall be as per procedure indicated in HBP.
6.15 Sale of Unutilized Material
(a)
In case an EOU / EHTP/ STP/BTP unit is unable to utilize goods and services, imported or procured from DTA, it maybe:
(i)
Transferred to another EOU / EHTP / STP / BTP / SEZ unit; or
(ii)
Disposed of in DTA with intimation to Customs authorities on payment of applicable duties and/ or taxes and compensation cess.

Transferred to another EOU / EHTP / STP / BTP / SEZ unit; or
(ii)
Disposed of in DTA with intimation to Customs authorities on payment of applicable duties and/ or taxes and compensation cess. In addition, exemption of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed, if any on the goods , at the time of import will also be payable and submission of import Authorisation; or
(iii) Exported.
Such transfer from EOU/EHTP/ STP/ BTP unit to another such unit would be treated as import for receiving unit.
(b)
Capital goods and spares that have become obsolete/ surplus, may be exported or transferred to SEZ unit, transferred to another EOU/EHTP/STP/BTP/on payment of applicable GST and compensation cessor disposed of in DTA on payment of applicable GST and compensation cess and duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975. Benefit of depreciation will be available in case of disposal in DTA only when the unit has achieved positive NFE taking into consideration the depreciation allowed. No duty shall be payable other than the applicable taxes under GST laws incase capital goods, raw material consumables, spares, goods manufactured, processed or packaged, and scrap/ waste/remnants /rejects are destroyed within unit after intimation to Customs authorities or destroyed outside unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semiprecious stones.

toms authorities or destroyed outside unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semiprecious stones.
(c)
In case of textile sector, disposal of left over material/ fabrics upto 2% of CIF value or quantity of import, whichever is lower, on payment of

duty on transaction value, may be allowed, subject to certification of Central Excise/Customs officers that these are left over items.
(d)
Disposal of used packing material will be allowed on payment of duty on transaction value.
6.16 Reconditioning/Repair and Re-engineering
(a)
EOUs shall be set up with approval of UAC to carry out reconditioning, repair, remaking, testing, calibration, quality improvement, upgradation of technology and re-engineering activities for export in foreign currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and Para 6.29(a), (b), (c) and (d) of HBP shall not, however, apply to such activities.
(b)
EHTP/STP/BTP units shall be set up with approval of IMSC to carry out reconditioning, repair, remaking, testing, calibration, quality improvement, upgradation of technology and re-engineering activities for export in foreign currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and Para 6.29(a), (b), (c) and (d) of HBP shall not, however, apply to such activities.

ring activities for export in foreign currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and Para 6.29(a), (b), (c) and (d) of HBP shall not, however, apply to such activities.
6.17 Replacement / Repair of Imported / Indigenous Goods
(a) General provisions of FTP relating to export /import of replacement/repair of goods would also apply equally to EOU/EHTP/STP/BTP units. Cases not covered by these provisions shall be considered on merits by DC.
(b)
Goods sold in DTA and not accepted for any reasons, maybe brought back for repair/replacement, under intimation to concerned jurisdictional customs authorities.
(c)
Goods or parts thereof, on being imported / indigenously procured and found defective or otherwise unfit for use or which have been damaged or become defective subsequently, may be returned and replacement obtained or destroyed. In the event of replacement, goods may be brought back from foreign suppliers or their authorized agents in India or indigenous suppliers. The unit can take free of cost replacement (duty paid) from the authorized agents in India of foreign suppliers, provided the defective part is re–exported or destroyed. However,

genous suppliers. The unit can take free of cost replacement (duty paid) from the authorized agents in India of foreign suppliers, provided the defective part is re–exported or destroyed. However,

destruction shall not apply to precious and semi-precious stones and precious metals.
6.18 Exit from EOU Scheme
(a)
With approval of DC, an EOU may opt out of scheme. Such exit shall be subject to payment of applicable Excise and Customs duties and on payment of applicable IGST/ CGST/ SGST/ UTGST and compensation cess, if any, and industrial policy in force.
(b)
If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.
(c)
In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gems and other materials available for manufacture of jewellery, shall be handed over to an agency nominated by DoC, at price to be determined by that agency.
(d)
An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit from the scheme at any time on payment of applicable duties and taxes and compensation cess on capital goods under the prevailing EPCG Scheme for DTA Units. This will be subject to fulfillment of positive NFE criteria under EOU scheme, eligibility criteria under EPCG scheme and standard conditions indicated in HBP.
(e)
Unit proposing to exit out of EOU scheme shall intimate DC and Customs authorities in writing. Unit shall assess duty liability arising out of exit and submit details of such assessment to Customs authorities.

ng to exit out of EOU scheme shall intimate DC and Customs authorities in writing. Unit shall assess duty liability arising out of exit and submit details of such assessment to Customs authorities. Customs authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has achieved positive NFE, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain “No Dues Certificate” from Customs authorities. On the basis of “No Dues Certificate” so issued by the Customs authorities, unit shall apply to DC for

Verbatim extracted text (OCR/PDF). Older scans and tables may show extraction artifacts — verify against the original for anything you act on.

Analysis

No analysis generated for this document yet (analysis runs over brief docs + on-demand). Run build_analysis.py --ids 15905 --apply.