DGFT Regulatory Doc

Handbook of Procedures-(Vol. I) 1st September 2004-31st March 2009 w.e.f. 1.4.2007 Website: http://dgft.gov.in Ministry of Commerce and Industry Department of Commerce Government of India

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3 TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY (PART-I, SECTION-1) GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY PUBLIC NOTICE No 1(RE-2007) /2004-09 NEW DELHI, DATED THE 19th April, 2007 In exercise of powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2004-09, the Director General of Foreign Trade hereby notifies annual supplement of the Handbook of Procedures (Volume I) incorporating Annual Supplement as updated on 19th April 2007 as contained in annexure to this Public Notice and the Appendices to the Handbook of Procedures (Vol.I) as available on the website of Directorate General of Foreign Trade at http:// dgft.gov.in. This shall come into force from 1st April, 2007. This issues in Public interest. (B. S. MEENA) Director General of Foreign Trade and Ex Officio Additional Secretary to the Government of India (Issued from File No: 01/94/180/Handbook/AM08/ PC-I)

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5 CONTENTS CHAPTER SUBJECT Page 1 INTRODUCTION 11 2 GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS 13 3 PROMOTIONAL MEASURES 45 4 DUTY EXEMPTION / REMISSION SCHEMES 53 5 EXPORT PROMOTION CAPITAL GOODS SCHEME 91 6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs) 99 7 SPECIAL ECONOMIC ZONES 117 8 DEEMED EXPORTS 119 9 MISCELLANEOUS MATTERS 123

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), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs) 99 7 SPECIAL ECONOMIC ZONES 117 8 DEEMED EXPORTS 119 9 MISCELLANEOUS MATTERS 123

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7 GLOSSARY (ACRONYMS) ACC Assistant Commissioner of Customs ACU Asian Clearing Union AEZ Agri Export Zone ANF Aayaat Niryaat Form ARO Advance Release Order ASIDE Assistance to States for Infrastructure Development of Exports BG Bank Guarantee BIFR Board of Industrial and Financial Reconstruction BoA Board of Approval BoT Board of Trade BRC Bank Realisation Certificate BTP Bio Technology Park CBEC Central Board of Excise and Customs CCP Customs Clearance Permit CEA Central Excise Authority CEC Chartered Engineer Certificate CIF Cost, Insurance & Freight CIS Commonwealth of Independent States CoD Cash on Delivery CoO Certificate of Origin CVD Countervailing Duty DA Document against Acceptance DoBT Department of Bio Technology DC Development Commissioner DEPB Duty Entitlement Pass Book Scheme DFIA Duty Free Import Authorisation DFRC Duty Free Replenishment Certificate DGCI&S Director General, Commercial Intelligence & Statistics DGFT Director General of Foreign Trade DIPP Department of Industrial Policy & Promotion DoC Department of Commerce DoE Department of Electronics DoIT Department of Information Technology DoR Department of Revenue DoT Department of Tourism DTA Domestic Tariff Area

ial Policy & Promotion DoC Department of Commerce DoE Department of Electronics DoIT Department of Information Technology DoR Department of Revenue DoT Department of Tourism DTA Domestic Tariff Area

8 EDI Electronic Data Interchange EEFC Exchange Earners’ Foreign Currency EFC Exim Facilitation Committee EFT Electronic Fund Transfer EH Export House EHTP Electronic Hardware Technology Park EIC Export Inspection Council EO Export Obligation EOP Export Obligation Period EOU Export Oriented Unit EPC Export Promotion Council EPCG Export Promotion Capital Goods EPO Engineering Process Outsourcing FDI Foreign Direct Investment FIEO Federation of Indian Export Organisation FIRC Foreign Exchange Inward Remittance Certificate FMS Focus Market Scheme FOB Free On Board FPS Focus Product Scheme FT (D&R) Act Foreign Trade ( Development & Regulation) Act, 1992 (No. 22 of 1992) FTDO Foreign Trade Development Officer FTP Foreign Trade Policy GATS General Agreement on Trade in Services GRC Grievance Redressal Committee HACCP Hazard Analysis And Critical Control Process HBP v1 Hand Book of Procedures (Vol. 1) HBP v2 Hand Book of Procedures (Vol. 2) ICD Inland Container Depot ICM Indian Commercial Mission IEC Importer Exporter Code ISO International Standards Organisation ITC (HS) Indian Trade Classification (Harmonised System) Classification for Export & Import Items, 2004-2009 ITPO India Trade Promotion Organisation LoC Line of Credit LoI Letter of Intent LoP Letter of Permit LUT Legal Under Taking MAI Market Access Initiative

fication for Export & Import Items, 2004-2009 ITPO India Trade Promotion Organisation LoC Line of Credit LoI Letter of Intent LoP Letter of Permit LUT Legal Under Taking MAI Market Access Initiative

9 MDA Market Development Assistance MEA Ministry of External Affairs MoD Ministry of Defence MoF Ministry of Finance NC Norms Committee NFE Net Foreign Exchange NOC No Objection Certificate PRC Policy Relaxation Committee PTH Premier Trading House PSU Public Sector Undertaking R&D Research and Development RA Regional Authority RBI Reserve Bank of India REP Replenishment RCMC Registration-cum-Membership Certificate RSCQC Regional Sub-Committee on Quality Complaints S/B Shipping Bill SEH Star Export House SEI CMM Software Engineers Institute’s Capability Maturity Model SEZ Special Economic Zone SFIS Served from India Scheme SIA Secretariat for Industrial Assistance SION Standard Input Output Norms SSI Small Scale Industry STE State Trading Enterprise STH Star Trading House STP Software Technology Park TEE Towns of Export Excellence TH Trading House TRQ Tariff Rate Quota VA Value Addition VKGUY Vishesh Krishi and Gram Udyog Yojana WHOGMP World Health Organisation Good Manufacturing Practices

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k TEE Towns of Export Excellence TH Trading House TRQ Tariff Rate Quota VA Value Addition VKGUY Vishesh Krishi and Gram Udyog Yojana WHOGMP World Health Organisation Good Manufacturing Practices

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11 CHAPTER-1 INTRODUCTION Notification 1.1 In pursuance of the provisions of paragraph 2.4 FTP, the Director General of Foreign Trade (DGFT) hereby notifies the compilation known as HBP v1, HBP v2 and Schedule of DEPB rates. These compilations, as amended from time to time, shall remain in force until 31st March, 2009. Objective 1.2 Objective is to implement provisions of FT (D&R) Act, Rules and Orders made thereunder and FTP (2004-09) by laying down simple, transparent and EDI compatible procedures which are easy to comply with and administer for efficacious management of foreign trade. Definition 1.3 For purpose of this Handbook, definitions and glossary contained in FT (D&R) Act, Rules and Orders made thereunder and the FTP (2004-09) shall apply.

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management of foreign trade. Definition 1.3 For purpose of this Handbook, definitions and glossary contained in FT (D&R) Act, Rules and Orders made thereunder and the FTP (2004-09) shall apply.

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13 CHAPTER-2 GENERAL PROVISIONS REGARDING EXPORTS AND IMPORTS Policy 2.1 Policy relating to general provisions regarding exports and imports is given in Chapter-2 of FTP. Countries of Imports / 2.2 Unless otherwise specifically provided, import / export will be Exports valid from / to any country. Above provisions shall, however, be subject to all conditionality, or requirement of Authorisation as required under Schedule I and / or Schedule II of ITC (HS). Application Fee 2.3 The scale of fee, mode of payment, procedure for refund of fee and categories of persons exempted from payment of fee are contained in Appendix 21B. Territorial Jurisdiction of 2.4 Every application, unless otherwise specified, shall be submitted Regional Authorities (RA) to RA concerned, as indicated in Appendix 1 of HBP v1. Filing of Application 2.5 An incomplete or unauthorised application is liable to be rejected giving specific reason for rejection. In case of manual applications, applicant would furnish a soft copy of the application in MS word format. Profile of Importer/ 2.6 Each importer / exporter shall be required to file importer / Exporter exporter profile once with RA in ANF 1. RA shall enter such information in database so as to dispense with need for asking information again.

/ exporter shall be required to file importer / Exporter exporter profile once with RA in ANF 1. RA shall enter such information in database so as to dispense with need for asking information again. In case of any change in information given in ANF 1, importer / exporter shall intimate same to RA. Self Addressed 2.7 Applicant shall furnish a self-addressed envelope of 40 x 15 cm Stamped Envelope with required postal stamp affixed for all documents required to be sent by Speed Post. IEC No: Exempted 2.8 Following categories of importers or exporters are exempted Categories from obtaining IEC number:

(i) Importers covered by clause 3(1) [except sub-clauses (e) and (l)] and exporters covered by clause 3(2) [except sub- clauses (i) and (k)] of Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993.

(ii) Ministries / Departments of Central or State Government.

(iii) Persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture.

Order, 1993.

(ii) Ministries / Departments of Central or State Government.

(iii) Persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture.

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(iv) Persons importing / exporting goods from / to Nepal, Myanmar through Indo-Myanmar border areas and China (through Gunji, Namgaya Shipkila and Nathula ports) provided CIF value of a single consignment does not exceed Indian Rs.25, 000.

However, exemption from obtaining IEC number shall not be applicable for export of Special Chemicals, Organisms, Materials, Equipments and Technologies (SCOMET) as listed in Appendix 3, Schedule 2 of ITC (HS) except in case of exports by category (ii) above.

(v) Following permanent IEC numbers shall be used by non- commercial PSUs and categories of importers / exporters mentioned against them for import / export purposes.

S.No Code Number Categories of Importers / Exporters

0100000011 All Ministries / Departments of Central Government and agencies wholly or partially owned by them.

0100000029 All Ministries / Departments of any State Government and agencies wholly or partially owned by them.

0100000037 Diplomatic personnel, Counselor officers in India and officials of UNO and its specialised agencies.

0100000045 Indians returning from / going abroad and claiming benefit under Baggage Rules.

0100000053 Persons / Institutions / Hospitals importing or exporting goods for personnel use, not connected with trade or manufacture or agriculture.

0100000061 Persons importing / exporting goods from /

3 Persons / Institutions / Hospitals importing or exporting goods for personnel use, not connected with trade or manufacture or agriculture.

0100000061 Persons importing / exporting goods from / to Nepal

0100000070 Persons importing / exporting goods from / to Myanmar through Indo-Myanmar border areas

0100000088 Ford Foundation

0100000096 Importers importing goods for display or use in fairs / exhibitions or similar events under provisions of ATA carnet.

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0100000100 Director, National Blood Group Reference Laboratory, Bombay or their authorized offices.

0100000126 Individuals / Charitable Institution / Registered NGOs importing goods, which have been exempted from Customs duty under Notification issued by Ministry of Finance for bonafide use by victims affected by natural calamity. 12. 0100000134 Persons importing / exporting permissible goods as notified from time to time, from / to China through Gunji, Namgaya Shipkila and Nathula ports. Application for Grant 2.9 An application for grant of IEC number shall be made by of IEC Number Registered / Head Office of applicant, except EOUs and SEZ units to concerned RA in ANF 2A with documents prescribed therein. Only one IEC would be issued / allowed against a single PAN number. IEC Format and 2.9.1 RA concerned shall issue an IEC number in prescribed format Statements (Appendix 18B).

ts prescribed therein. Only one IEC would be issued / allowed against a single PAN number. IEC Format and 2.9.1 RA concerned shall issue an IEC number in prescribed format Statements (Appendix 18B). A copy of such IEC number shall be endorsed to concerned banker (as per details given in ANF 2A). A consolidated statement (in Appendix 18 C) of IEC numbers issued by RA shall be sent to Exchange Control Department of RBI as given in Appendix 18D. Validity of IEC No. 2.9.2 An IEC number allotted to an applicant shall be valid for all its branches / divisions / units / factories. Duplicate Copy of IEC 2.9.3 Where an IEC Number is lost or misplaced, issuing authority Number may consider requests for grant of a duplicate copy of IEC number, on an affidavit. Surrender of IEC 2.9.4 If an IEC holder does not wish to operate allotted IEC number, Number he may surrender same by informing issuing authority. On receipt of such intimation, issuing authority shall immediately cancel it and electronically transmit it to DGFT and Customs authorities. 2.9.5 Deleted Application for Import 2.10 An application for grant of an Authorisation for import or export and Export of of items mentioned as restricted in ITC (HS) may be made to Restricted Items RA as specified under relevant Chapters of this Handbook.

or grant of an Authorisation for import or export and Export of of items mentioned as restricted in ITC (HS) may be made to Restricted Items RA as specified under relevant Chapters of this Handbook.

16 Imports under Indo- 2.11 Import of specified capital goods, raw materials and components, US Memorandum of from United States of America (USA) is subject to US Export Understanding Control Regulations. US suppliers of such items are required to obtain an export authorisation based on import certificate issued in India. The following are designated Import Certificate Issuing Authorities (ICIA):

(i) Department of Electronics (DoE), for computer and computer based systems;

(ii) Department of Industrial Policy and Promotion (DIPP), Technical Support Wing (TSW), for organised sector units registered under it, except for computers and computer based systems;

(iii) Ministry of Defence (MoD), for defence related items;

(iv) DGFT for small scale industries and entities not covered above as well as on behalf of any of the above;

(v) Embassy of India, Washington, DC, on behalf of any of the above.

A request for an import certificate shall be made in ANF 2C. Import certificate in Appendix 31 may be issued by ICIA directly to importer with a copy to (i) Ministry of External Affairs (MEA) (AMS Section), New Delhi, (ii) DoE, New Delhi;

ll be made in ANF 2C. Import certificate in Appendix 31 may be issued by ICIA directly to importer with a copy to (i) Ministry of External Affairs (MEA) (AMS Section), New Delhi, (ii) DoE, New Delhi; and (iii) DGFT. However, this import certificate will not be regarded as a substitute for an import authorisation in respect of items mentioned as restricted in ITC (HS) and an import authorisation will have to be obtained for such items. Validity Of Import 2.12 Validity of import / export Authorisation from date of issue Licence / Certificate / shall be as follows, unless specified otherwise: Authorisation / Permissions / CCPs / (i) Advance Authorisation / DFIA 24 months Export licence (including Advance Authorisation for annual requirement, and Replenishment Authorisation for Gem & Jewellery as per Chapter- 4 of FTP

(ii) EPCG Authorisation 36 months (other than spares)

(iii) EPCG Authorisation for Spares, Co- terminus with refractories, catalyst and EOP of EPCG consumables Authorisation.

pter- 4 of FTP

(ii) EPCG Authorisation 36 months (other than spares)

(iii) EPCG Authorisation for Spares, Co- terminus with refractories, catalyst and EOP of EPCG consumables Authorisation.

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(iv) Others including CCP and DEPB, 24 months unless otherwise specified

(v) Advance Authorisation / DFIA for 24 months or deemed export (including Advance Co-terminus Authorisation for annual requirement) with contracted duration of project execution whichever is later. (vi) Export Licence / Authorisation 12 months

2.12.1 Where an Authorisation expires during the month, such Authorisation shall be deemed to be valid until last day of concerned month. This proviso would be applicable even for a revalidated Authorisation.

2.12.2 Validity of an import Authorisation is decided with reference to date of shipment / dispatch of goods from supplying country as given in Paragraph 9.11 A of HBP v1 and not the date of arrival of goods at an Indian port.

2.12.3 Provisions of paragraph 2.12.2 above shall not be applicable to DEPB, Service Providers under SFIS, VKGUYand duty credit scrips issued under FMS and FPS, which are duty credit entitlements and must be valid on date on which actual debit of duty is made.

2.12.4 Similarly, EOP shall be deemed to be valid until month end. Revalidation of Import / 2.13
RA concerned may revalidate import Authorisation on merits, Export Licence / for six months from date of expiry of validity.

all be deemed to be valid until month end. Revalidation of Import / 2.13
RA concerned may revalidate import Authorisation on merits, Export Licence / for six months from date of expiry of validity. However, Export Certificate / Licence may only be revalidated by RA concerned on Authorisation / recommendation of DGFT for six months at a time and maximum Permissions upto 12 months from date of expiry of validity.

2.13.1 However, revalidation of freely transferable Authorisation and stock and sale Authorisation shall not be permitted unless validity has expired while in custody of Customs authority / RA.

2.13.2 Such revalidation (under 2.13 and 2.13.1 above) would be permitted under specific orders of Head of concerned Office and would be maximum up to extent of custody period.

2.13.3 An application for revalidation (including for restricted items), may be made to RA concerned. RA would consider such application as per government rules / notifications. Where DGFT is concerned authority, original application shall be submitted to

ricted items), may be made to RA concerned. RA would consider such application as per government rules / notifications. Where DGFT is concerned authority, original application shall be submitted to

18 RA concerned and self-attested copy of same shall be submitted to DGFT. Duplicate Copies of 2.14 Where an Authorisation is lost or misplaced, an application for Export-Import Licence / issue of a duplicate may be made along with an affidavit, as Certificate / Authorisation / given in Appendix 24, to issuing RA. Permissions / CCPs RA concerned may, on merits to be recorded, issue a duplicate after issuing an order for cancellation of original and informing customs authority where original was registered.

2.15 Duplicate copy of freely transferable Authorisation, may be issued against an application accompanied with following documents:

a. An application with fee equivalent to 10% of duty saved or duty credit (of unutilized balance).

b. A copy of FIR reporting loss.

inst an application accompanied with following documents:

a. An application with fee equivalent to 10% of duty saved or duty credit (of unutilized balance).

b. A copy of FIR reporting loss.

c. Original affidavit on notorised stamp paper.

d. Indemnity bond on a stamp paper undertaking to indemnify revenue loss, which may be caused on account of issue of such duplicate.

2.15.1 When an Authorisation has been lost by a Government agency and a proof to this effect is submitted, documents at serial nos. (a) to (d) above shall not be required. In such cases, revalidation shall be for six months from date of endorsement.

2.15.2 RA concerned shall obtain a report regarding utilization of such Authorisation from Custom authority at port of registration before issuing duplicate, for balance unutilized.

2.15.3 Validity of duplicate Authorisation shall be co-terminus with original period. No request shall be entertained if validity has expired.

2.15.4 Deleted

2.15.5 Provision of paragraph 2.15.2 and 2.15.3 shall be applicable both for cases covered under paragraph 2.14 and 2.15. Identity Cards 2.16 To facilitate collection of Authorisation and other documents from DGFT Head Quarters and RA, identity cards (as in Appendix 20B, valid for 3 years) may be issued to proprietor / partners / directors and authorised employees (not more than three), of importers and exporters, upon application as in Appendix 20A.

Appendix 20B, valid for 3 years) may be issued to proprietor / partners / directors and authorised employees (not more than three), of importers and exporters, upon application as in Appendix 20A.

19 However, in case of limited companies, RA may approve allotment of more than three identity cards per company. In case of loss of an identity card, a duplicate card may be issued on the basis of an affidavit. Common directors / partners, of a group company or in any other similar cases, RA may issue multiple identity cards after recording reasons in writing. Interviews with 2.17 Officers may grant interview at their discretion to authorised authorised Officers. representative of importer / exporter. Interviews / clarifications may also be sought through E-mails. Export of Items 2.18 Units other than small scale units are permitted to expand or Reserved for SSI Sector create new capacities in respect of items reserved for small scale sector, subject to condition that they obtain an Industrial licence under the Industries (Development and Regulation), Act, 1951, with export obligation as may be specified. Such licensee is required to furnish a LUT to RA and DGFT in this regard.

Industrial licence under the Industries (Development and Regulation), Act, 1951, with export obligation as may be specified. Such licensee is required to furnish a LUT to RA and DGFT in this regard. DGFT / RA concerned shall monitor export obligation. Warehousing Facility 2.19 Public / Private Customs Bonded Warehouses may be set up in DTA as per Chapter-IX of Customs Act, 1962, to import items in terms of paragraph 2.28 of FTP. On receipt of goods, such warehouses shall keep these goods for one year without payment of applicable customs duties. Goods can be cleared against Bill of Entry for home consumption, on payment of applicable custom duty and on submission of Authorisation wherever required, after an order for clearance of such goods for home consumption is issued by competent customs authorities. In case of clearance against duty free categories / concessional duty categories, exemption / concession from duty shall be, allowed. In case of clearance against DEPB and other duty credit scrips customs duty on imports may be adjusted. Goods can be re-exported without payment of customs duty provided (i) a shipping bill or a bill of export is presented in respect of such goods; and (ii) order for export of such goods has been made by competent customs authorities.

ayment of customs duty provided (i) a shipping bill or a bill of export is presented in respect of such goods; and (ii) order for export of such goods has been made by competent customs authorities.

20 Execution of Bank 2.20
Before clearance of goods through Customs, Authorisation holder Guarantee / Legal shall execute a LUT / BG with customs authorities. Undertaking for Advance Authorisation / DFIA and ”Bank Guarantee / LUT as applicable to be executed as per EPCG Authorisation relevant Customs Notification / Circular” In case of indigenous sourcing, Authorisation holder shall furnish BG / LUT to RA as prescribed below before sourcing the material: (A). Following entities shall be entitled for LUT facility: 1. All Status holders / PSUs; 2. Manufacturer exporter (except Proprietorship and Partnership firms), Registered with Central Excise authority with a minimum export turnover of Rs.1 Crore in preceding year and having exported during previous two financial years. 3. Manufacturer Exporter, registered with Central Excise Authority and having paid Central Excise Duty of Rs.1 Crore or more during preceding financial year. 4. All exporters with an export turnover of at least Rupees 5 crores in preceding licencing year and having a good track record and three years of export performance. (B) Following shall be required to furnish a Bond supported by BG to extent of 15% of duty saved on excise and education cess, if applicable: 1. Other Manufacturer Exporter not covered under (A) above (except Proprietorships and Partnership firms);

supported by BG to extent of 15% of duty saved on excise and education cess, if applicable: 1. Other Manufacturer Exporter not covered under (A) above (except Proprietorships and Partnership firms); exporting for last 3 years, or exporting in any of the last 3 years, based on Certification of their previous years’ exports from Central Excise Authorities Provided that for any of last 3 years, the unit should be registered with Excise Authorities or State Sales Tax Authorities. 2. Manufacturing companies (as per Companies Act) having not exported in each of preceding three licencing years but fulfilling following criterion: (i) Registration with Central Excise Authorities and payment of Central Excise duty (unless exempted); and

21 (ii) Registration with State Sales Tax / VAT Authorities and payment of sales tax / VAT (unless exempted); and (iii) Minimum investment of Rs 50 lakh in plant and machinery (as in audited Balance Sheet). (C) Following shall be required to furnish a Bond supported by BG to the extent of 100% of duty saved on excise and education cess, if applicable: 1. Merchant Exporter, all types of Proprietorship and Partnership firms (Other than Status Holders / PSUs and category (A) 4 above); 2. Service providers other than those in category (A) 1 and (A) 4 above (D) Manufacturer / Merchant Exporters (under (A) & (B) above) falling under any of following two categories based on their risk profile are required to execute bond supported by BG to extent of 100% of duty saved amount on excise and education cess if applicable.

lling under any of following two categories based on their risk profile are required to execute bond supported by BG to extent of 100% of duty saved amount on excise and education cess if applicable. This can be prescribed by Head of office not being below rank of Deputy DGFT by recording reasons in writing: 1. Have come under adverse notice of Customs / DGFT / Central Excise for serious irregularities; 2. Having adverse track record in terms of fulfillment of pending export obligation. In cases where Excise Duty is nil on items of indigenous procurement, BG furnished would be for 25% of basic Customs Duty on same product. BG and LUT should be valid as per terms and conditions incorporated in Appendix 25A & 25B respectively. Validity of BG / LUT is required to be extended in case of extension in EOP. Specific endorsement to this effect shall be made in the Authorisation by RA. In respect of categories (A) 3, (A) 4 & (B) 1 above, if exporter has not exported for any of the 3 preceding years, 15% BG condition shall be imposed on duty saved amount provided the CIF value does not exceed 200% of domestic turnover or 200% of FOB / FOR value of supplies of preceding licensing year, whichever is higher. Authorisation beyond 200% entitlement shall be subject to 100% BG on duty saved amount for CIF value exceeding 200% entitlement. However, entitlement may be re- credited on production of documentary evidence showing fulfillment of export obligation and realization of export / supply proceeds.

value exceeding 200% entitlement. However, entitlement may be re- credited on production of documentary evidence showing fulfillment of export obligation and realization of export / supply proceeds.

22 In respect of categories at (A) 2 and (A) 4 above, Authorisation Holder would be required to submit Export Performance Certificate issued by a Chartered Accountant as per Appendix 26. For import / domestic procurement of car under EPCG scheme, 100% BG will be required to be furnished except in case of status holders / PSUs who will furnish BG / LUT as aforesaid. BG exemption / relaxation as mentioned above shall also be available in respect of past Authorisation where Authorisation holder had earlier filed BG but as on date he is entitled for BG exemption. In case, firm has already executed BG / LUT for full value of Authorisation covering items indigenously procured, to Customs and furnishes proof of the same, no BG / LUT shall be required to be executed with RA. Corporate Guarantee 2.20.1 A Status holder or a PSU may also submit Corporate Guarantee in lieu of BG / LUT, for import and domestic sourcing as prescribed. For a non-status holder group Company, a status holder can give such guarantee. Certificate of Origin 2.21 Certificate of Origin (CoO) is an instrument to establish evidence (CoO) on origin of goods imported into any country. There are two categories of CoO viz.

such guarantee. Certificate of Origin 2.21 Certificate of Origin (CoO) is an instrument to establish evidence (CoO) on origin of goods imported into any country. There are two categories of CoO viz. (1) Preferential and (2) Non preferential. Preferential 2.21.1 Preferential arrangement / schemes under which India is receiving tariff preferences for its exports are Generalised System of Preferences (GSP), Global System Of Trade Preferences (GSTP), SAARC Preferential Trading Agreement (SAPTA), Asia-Pacific Trade Agreement (APTA), India–Sri Lanka Free Trade Agreement (ISLFTA) and Indo- Thailand Free Trade Agreement. These arrangements / agreements prescribe Rules of Origin which have to be met for exports to be eligible for tariff preference. Authorised agencies shall provide services relating to issue of CoO, including details regarding rules of origin, list of items covered by an agreement, extent of tariff preference, verification and certification of eligibility. Export Inspection Council (EIC) is agency authorised to print blank certificates. Authorised agencies may charge a fee, as approved by DoC, for services rendered. Generalised System

(a) GSP is a non-contractual instrument by which industrialized of Preferences (GSP) (developed) countries unilaterally and based on non- reciprocity extend tariff concessions to developing countries. Following countries extend tariff preferences under their GSP Scheme:

ences (GSP) (developed) countries unilaterally and based on non- reciprocity extend tariff concessions to developing countries. Following countries extend tariff preferences under their GSP Scheme:

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(i) United States (ii) New Zealand (iii) Belarus of America, (iv) European (v) Japan Union, (vi) Russia (vii) Canada, (viii) Norway (ix) Australia (x) Switzerland (xi) Bulgaria (only to LDCs)

GSP schemes of these countries detail sectors / products and tariff lines under which benefits are available, including conditions and procedures governing benefits. These schemes are renewed and modified from time to time. Normally Customs of GSP offering countries require information in Form ‘A’ (prescribed for GSP Rules Of Origin) duly filled by exporters of beneficiary countries and certified by authorised agencies. List of agencies authorised to issue GSP CoO is given in Appendix 4A. Global System of Trade

(b) Under agreement establishing GSTP, tariff concessions Preference (GSTP) are exchanged among developing countries, who have signed agreement. Presently, 46 countries are members of GSTP and India has exchanged tariff concessions with 12 countries on a limited number of products.

hanged among developing countries, who have signed agreement. Presently, 46 countries are members of GSTP and India has exchanged tariff concessions with 12 countries on a limited number of products. EIC is sole agency authorised to issue CoO under GSTP. SAARC Preferential

(c) SAPTA was signed by seven SAARC members namely Trading Agreement (SAPTA) India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives in 1993 and came into operation in 1995. Four rounds of trade negotiations have been completed and more than 3000 tariff lines are under tariff concessions among SAARC countries. List of agencies, authorised to issue CoO under SAPTA are notified under Appendix 4B. Asia- Pacific Trade

(d) APTA is a preferential trading arrangement designed to Agreement (APTA) liberalise and expand trade in goods progressively in Economic and Social Commission for Asia and Pacific (ESCAP) region through liberalization of tariff and non- tariff barriers. At present, Bangladesh, Sri Lanka, South Korea, India and China are exchanging tariff concessions under APTA. Agencies authorised to issue CoO under APTA are listed in Appendix 4B. India-Sri Lanka Free Trade
(e) Free Trade Agreement (FTA) between India and Sri Agreement (ISLFTA) Lanka was signed on 20.12.1998 and was operationalised in March, 2000 following notification of required Customs tariff concessions by Government of Sri Lanka and India. EIC is sole agency to issue CoO under ISLFTA.

n 20.12.1998 and was operationalised in March, 2000 following notification of required Customs tariff concessions by Government of Sri Lanka and India. EIC is sole agency to issue CoO under ISLFTA.

24 India Afghanistan Preferential (f) A Preferential Trade Agreement between Transitional Trade Agreement

Islamic State of Afghanistan and Republic of India was signed on 6.3.2003 and was operationalised with issuance of Customs Notification No 76/2003 dated 13.5.2003. EIC is sole agency to issue CoO under India Afghanistan Preferential Trade Agreement. Indo – Thailand Framework (g) India and Thailand have signed protocol to implement Agreement for Free Trade Area Early Harvest Scheme under India- Thailand Free Trade Agreement on 01.09.2004.Tariff preferences for imports on items of Early Harvest Scheme would be available only to those products, which satisfy Rules of Origin Criteria, notified by Department of Revenue, Ministry of Finance, vide notification No.101/2004-Customs dated 31.08.2004. EIC would be sole agency to issue CoO under Early Harvest Scheme of Framework Agreement on India-Thailand Free Trade Agreement. Non Preferential 2.21.2 Government has also nominated certain agencies to issue Non Preferential CoO in accordance with Article II of International Convention Relating to Simplification of Customs formalities, 1923. These CoOs evidence origin of goods and do not bestow any right to preferential tariffs. List of notified agencies is provided in Appendix 4C.

Relating to Simplification of Customs formalities, 1923. These CoOs evidence origin of goods and do not bestow any right to preferential tariffs. List of notified agencies is provided in Appendix 4C. In addition, agencies authorized to issue Preferential CoO as per Para 2.21.1 of HBP v1 are also authorized to issue Non-Preferential CoO. All exporters who are required to submit CoO (Non Preferential) would have to apply to any of agencies enlisted in Appendix– 4C with following documents:

(a) Details of quantum / origin of inputs / consumables used in export product.

(b) Two copies of invoices.

(c) Packing list in duplicate for concerned invoice.

(d) Fee not exceeding Rs.100 per certificate as may be prescribed by concerned agency.

The agency would ensure that goods are of Indian origin as per general principles governing rules of origin before granting CoO (non preferential). Certificate would be issued as per Format given in Annexure-II to Appendix 4C. It should be ensured that no correction/re-type is made on certificate.

Any agency desirous of enlistment in Appendix 4C may submit their application as per Annexure I to Appendix 4C to the concerned RA.

be ensured that no correction/re-type is made on certificate.

Any agency desirous of enlistment in Appendix 4C may submit their application as per Annexure I to Appendix 4C to the concerned RA.

25

In case of tea, all exporters who are required to submit CoO (Non-Preferential) shall apply to Tea Board or any Inspection Agency authorized by Tea Board and enlisted in Appendix 4C of HBP v1 with documents listed above. Automatic Licence / 2.22 Status holders shall be issued Authorisation automatically within Certificate /Authorisation / stipulated time period. Deficiency, if any, informed through Permission covering letter, shall be required to be rectified by status holders within 10 days from date of communication of deficiency. Submission of Certified 2.23 Wherever original documents have been submitted to a different Copies of Documents RA / nominated agencies or to a different division of same RA, applicant can furnish photocopy of documents duly certified by him in lieu of original. Advance Payment 2.24 In case, payment is received in advance and export / deemed exports takes place subsequently, application for an Authorisation shall be filed within specific period following the month during which exports / deemed exports are made, unless otherwise specified Payment through 2.25.1 Payment through ECGC cover would count for benefits under ECGC cover FTP. Payment through 2.25.2 Amount of General Insurance Cover for transit loss would be General Insurance treated as payment realized for exports under various export promotion schemes. Irrevocable Letter 2.25.3

through 2.25.2 Amount of General Insurance Cover for transit loss would be General Insurance treated as payment realized for exports under various export promotion schemes. Irrevocable Letter 2.25.3 In case where applicant applies for duty credit scrip / DEPB / of Credit DFIA / discharge of EO against confirmed irrevocable letter of credit (or bill of exchange which is unconditionally Avalised / Co-Accepted / Guaranteed by a bank) and this is confirmed and certified by exporter’s bank in relevant Bank Certificate of Export and Realization, payment of export proceeds shall be deemed to be realized. For status holders, irrevocable letter of credit would suffice. Export by post 2.26 In case of export by post, exporter shall submit following documents in lieu of documents prescribed for export by sea / air:

Bank Certificate of Export and Realisation as in Appendix 22A.

Relevant postal receipt

Invoice duly attested by Customs authorities. Import/ Export through 2.26.1 Imports / Exports through a registered courier service is Courier Service

permitted as per Notification issued by DoR. However, importability / exportability of such items shall be regulated in accordance with FTP.

hrough a registered courier service is Courier Service

permitted as per Notification issued by DoR. However, importability / exportability of such items shall be regulated in accordance with FTP.

26 Direct negotiation of 2.26.2 In cases where exporter directly negotiates document (not export documents through authorised dealer) with permission of RBI, he is required to submit following documents for availing of benefits under export promotion schemes:

a. Permission from RBI allowing direct negotiation of documents (not required for status holders),

b. Copy of Foreign Inward Remittance Certificate (FIRC) as per Form 10-H of Income Tax department in lieu of BRC and

c. Statement giving details of shipping bills / invoice against which FIRC was issued. Import / Export 2.27 No Authorisation shall be required for Import of bonafide of Samples technical and trade samples of items restricted in ITC(HS) except vegetable seeds, bees and new drugs. Samples of tea not exceeding Rs.2000 (CIF) in one consignment shall be allowed without an Authorisation by any person connected with Tea industry. Duty free import of samples upto Rs 75,000 for all exporters (Rs.300,000 for gems and jewellery sector) shall be allowed as per terms and conditions of Customs notification. Exports of bonafide trade and technical samples of freely exportable item shall be allowed without any limit. Import under Lease 2.28 Import under lease financing shall be available under EPCG Financing Scheme, EOU / SEZ scheme.

technical samples of freely exportable item shall be allowed without any limit. Import under Lease 2.28 Import under lease financing shall be available under EPCG Financing Scheme, EOU / SEZ scheme. Domestic supplier of capital goods to eligible categories of deemed exports shall be eligible for benefits of deemed exports as in paragraph 8.3 of FTP, even in cases where supplies are under lease financing. Exhibits Required for 2.29 Import / export of exhibits, including construction and decorative National and materials required for the temporary stands of foreign / Indian International Exhibitions exhibitors at exhibitions, fair or similar show or display for a or Fairs and period of six months on re-export / re-import basis, shall be Demonstration allowed without an Authorisation on submission of a certificate from an officer of a rank not below that of an Under Secretary/ Deputy DGFT in DoC / DGFT or an officer of Indian Trade Promotion Organization (ITPO) duly authorised by its Chairman in this behalf, to effect that such exhibition, fair or similar show or display

(i) has been approved or sponsored by DoC or ITPO; and

(ii) is being held in public interest.

by its Chairman in this behalf, to effect that such exhibition, fair or similar show or display

(i) has been approved or sponsored by DoC or ITPO; and

(ii) is being held in public interest.

27

Extension beyond six months for re-export / re-import will be considered by Customs authorities on merits. Consumables such as paints, printed material, pamphlets, literature etc. pertaining to exhibits need not be re-exported / re-imported. Import Policy 2.30 Policy relating to general provisions regarding import of capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods is given in Chapter 2 of FTP. General Procedure for 2.31 Wherever an import Authorisation, including CCP, is required Licensing of Restricted under FTP, procedure contained in this chapter shall be Goods applicable. 2.32 Import of Metallic Waste and Scrap 2.32.1 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 type of arms, ammunition, mines, shells, live or used cartridge or any other explosive material in any form either used or otherwise. 2.32.2 Import of following types of metallic waste and scrap will be free subject to conditions detailed below : Sl.No.

artridge or any other explosive material in any form either used or otherwise. 2.32.2 Import of following types of metallic waste and scrap will be free subject to conditions detailed below : Sl.No. Exim code Item description 1 720410 00 waste and scrap of cast iron 2. 72042190 Other 3. 72042920 Of High speed steel 4. 72042990 Other 5. 72043000 Waste and scrap of tinned iron or steel 6. 72044100 Turnings, shavings, chips, milling waste, saw dust, fillings, trimmings and stampings, whether or not in bundles 7. 72044900 Other 8. 72045000 Remelting scrap ingots 9. 74040010 Copper scrap 10. 74040022 Brass scrap 11. 75030010 Nickel scrap 12. 76020010 Aluminium scrap 13. 79020010 Zinc scrap 14. 80020010 Tin scrap 15. 81042010 Magnesium scrap

28 Shredded form: Import of metallic waste and scrap listed in

para 2.32.2 above in shredded form shall be permitted through

all ports of India. Import from Hodaideh, Yemen and Bandar Abbas, Iran will be in shredded form only. Unshredded compressed and loose form: Import of metallic waste, scrap listed in para 2.32.2 above in unshredded compressed and loose form shall be subject to terms and conditions as notified by DGFT. a. Preshipment inspection can be prescribed. Agencies / bodies can be registered for this purpose as per procedure prescribed by DGFT. b Import of scrap would take place only through following designated ports and no exceptions would be allowed even in case of EOUs, SEZs:- “1.Chennai, 2.Cochin, 3.Ennore, 4.JNPT, 5.Kandla, 6.Mormugao, 7.Mumbai, 8.New Mangalore, 9.Paradip, 10.Tuticorin, 11.Vishakhapatnam, 12.ICD Tughlakabad (New Delhi), 13.Pipava, 14.Mundra, 15.Kolkata, 16.ICD Ludhiana, 17.ICD Dadri (Greater Noida), 18.ICD Nagpur, 19.ICD Jodhpur, 20.ICD Jaipur, 21.ICD Udaipur, 22.CFS Mulund, 23.ICD Kanpur, 24.ICD Ahmedabad, 25.ICD Pitampur and 26.ICD Malanpur”. c. New system of import from registered sources will come into effect from 01.10.2007. However, in cases where Bill of Lading is dated 30.09.2007 or before, imports will be allowed on the basis of Pre-Shipment Inspection regime in terms of Para 2.32 of the HBP v1, notified vide Public Notice No. 1 dated 08.04.2005 and as amended from time to time, till new system of import from registered sources comes into effect.

n regime in terms of Para 2.32 of the HBP v1, notified vide Public Notice No. 1 dated 08.04.2005 and as amended from time to time, till new system of import from registered sources comes into effect. List of Pre- Shipment Agencies notified under earlier regime is available on DGFT web site. 2.32.3 However, import of other kinds of metallic waste and scrap will be allowed in terms of conditions of ITC (HS). 2.32.4 Import policy for seconds and defective, rags, PET bottles / waste, and ships is given in ITC (HS). Import of Second Hand 2.33 Import of second hand capital goods including refurbished / Capital Goods reconditioned spares, shall be allowed freely, subject to conditions for following categories: Import of second hand computers including personal computers and laptops is restricted. Import of refurbished / reconditioned

29 spares will be allowed on production of a Chartered Engineer certificate that such spares have atleast 80% residual life of original spare. In case a capital good is imported in parts at two customs stations, on account of bonafide logistical reasons, said imports may be allowed after satisfying that both consignments put together constitute a single capital good.

2.33.1 Notwithstanding provisions of Para 2.33 above, second hand computers, laptops and computer peripherals including printer, plotter, scanner, monitor, keyboard and storage units can be imported freely as donations by following category of donees:

(i) Schools run by Central or State Government or a local body,

(ii) Educational Institution run on non- commercial basis by

n be imported freely as donations by following category of donees:

(i) Schools run by Central or State Government or a local body,

(ii) Educational Institution run on non- commercial basis by any organization,

(iii) Registered Charitable Hospital,

(iv) Public Library,

(v) Public funded Research and Development Establishment,

(vi) Community Information Centre run by Central or State Government or local bodies,

(vii) Adult Education Centre run by Central or State Government or a local body,

(viii) Organization of Central or State Government or a Union Territory.

Imports under this sub Para would be subject to the condition that goods shall not be used for any commercial purpose, is non transferable and complies with all terms and conditions of relevant Customs Rules and Regulations.

2.33A Customs or any other Central or State Government authority may avail of services of Inspection and Certification Agencies in Appendix 5 of the HBP v1, for certifying residual life as well as valuation / purchase price of capital good. Import of Ammunition 2.34 Import of following types of ammunition are allowed against an by Licensed Arms Authorisation by licensed arms dealers subject to conditions as Dealers may be specified:

(i) Shotgun Cartridges 28 bore;

f following types of ammunition are allowed against an by Licensed Arms Authorisation by licensed arms dealers subject to conditions as Dealers may be specified:

(i) Shotgun Cartridges 28 bore;

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(ii) Revolver Cartridges of .450, .455 and .45 bores;

(iii) Pistol Cartridges of .25, .30 Mauser, .450 and .45 bores;

(iv) Rifle Cartridges of 6.5 mm, .22 savage, .22 Hornet, 300 Sherwood, 32/40, .256, .275, .280, 7m/m Mauser, 7 m/m Man Schoener, 9m/m Mauser, 9 m/m Man Schoener, 8x57, 8x57S, 9.3 m/m, 9.5 m/m, .375 Magnum, .405, .30.06, .270, .30/30 Winch, .318, .33 Winch,.275 Mag., .350 Mag., 400/350, .369 Purdey, .450/400, .470, .32 Win, .458 Win, .380 Rook, .220 Swift and .44 Win. bores.

An import Authorisation shall be issued at 5% of value of annual average sales turnover of ammunition (whether indigenous or imported) during preceding three licensing years subject to a minimum of Rs. 2000. An application for grant of an Authorisation for items listed above may be made to RA in ANF 2B along with documents prescribed therein. Restricted Items 2.35 Items mentioned as restricted for imports in ITC (HS) required Required By Hotels, by hotels, restaurants, travel agents and tour operators may be Restaurants, Travel allowed against an Authorisation, based on recommendation of Agents, Tour Operators Director General, Tourism, Government of India. And Other Specified Categories

2.35.1 Hotels, including tourist hotels, recognised by Director General of Tourism, Government of India or a State Government shall

ral, Tourism, Government of India. And Other Specified Categories

2.35.1 Hotels, including tourist hotels, recognised by Director General of Tourism, Government of India or a State Government shall be entitled to import Authorisation upto a value of 25% of foreign exchange earned by them from foreign tourists during preceding licensing year, for import of essential goods related to hotel and tourism industry.

2.35.2 Travel agents, tour operators, restaurants, and tourist transport operators and other units for tourism, like adventure / wildlife and convention units, recognized by Director General of Tourism, Government of India, shall be entitled to import authorisation up to a value of 10% of foreign exchange earned by them during preceding licensing year, for import of essential goods which are restricted for imports related to travel and tourism industry, including office and other equipment required for their own professional use.

2.35.3 Import entitlement under paragraphs 2.35.1 and 2.35.2 of any one licensing year can be carried forward, either in full or in part, and added to import entitlement of two succeeding licensing years and shall not be transferable except within the group company or to managed hotels.

n be carried forward, either in full or in part, and added to import entitlement of two succeeding licensing years and shall not be transferable except within the group company or to managed hotels.

31

2.35.4 Deleted

2.35.5 Such imported goods may be transferred after 2 years with permission of DGFT. No permission for transfer will be required in case the imported goods are re-exported. However, re-export shall be subject to all conditionality, or requirement of licence, or permission, as may be required under Schedule II of ITC (HS).

2.35.6 An application for grant of an Authorisation under paragraphs 2.35.1 and 2.35.2 may be made in ANF 2B to DGFT through Director of Tourism, Government of India who will forward application to RA concerned along with their recommendations. Import of Other 2.36 ITC (HS) contains list of restricted items. An application for Restricted Items import of such items may be made, in ANF 2B along with documents prescribed therein. Original application along with Treasury Receipt (TR) / Demand Draft shall be submitted to RA concerned and self-attested copy of same shall be submitted to DGFT in duplicate along with proof of submission of application to concerned RA. EXIM Facilitation 2.37 Restricted item Authorisation may be granted by DGFT or any Committee other RA authorised by him in this behalf. DGFT / RA may take assistance and advice of a Facilitation Committee.

cilitation 2.37 Restricted item Authorisation may be granted by DGFT or any Committee other RA authorised by him in this behalf. DGFT / RA may take assistance and advice of a Facilitation Committee. The Assistance of technical authorities may also be taken by seeking their comments in writing. Facilitation Committee will consist of representatives of Technical Authorities and Departments / Ministries concerned. Gifts of Consumer 2.38 In terms of provisions contained in paragraph 2.19 of FTP, an or Other Goods application for grant of CCP for import as gifts of items appearing as restricted for imports in ITC (HS) shall be made to the DGFT as in ANF 2B along with documents prescribed therein. Where recipient of a gift is a charitable, religious or an educational institution registered under any law in force, and gift sought to be imported has been exempted from payment of customs duty by such import shall be allowed by customs authorities without a CCP. Import under Govt. 2.39 Import of goods under Government to Government agreements to Govt. Agreements may be allowed without an Authorisation or CCP on production of necessary evidence to satisfaction of Customs authorities Import of Cheque Books/ 2.40 Indian branches of foreign banks, insurance companies and travel Ticket Forms etc. agencies may import chequebooks, bank draft forms and

isfaction of Customs authorities Import of Cheque Books/ 2.40 Indian branches of foreign banks, insurance companies and travel Ticket Forms etc. agencies may import chequebooks, bank draft forms and

32 travellers cheque forms without a CCP. Similarly, airlines / shipping companies operating in India, including persons authorised by such airlines / shipping companies, may import passenger ticket forms without a CCP. Import of Reconditioned / 2.41 Import Authorisation for reconditioned / second hand aircraft Second Hand Aircraft spares is not needed on recommendation of Director General of Spares Civil Aviation, Government of India (DGCA). Import of Replacement 2.42 Goods or parts thereof on being imported and found defective Goods or otherwise unfit for use or which have been damaged after import may be exported without an Authorisation, and goods in replacement thereof may be supplied free of charge by foreign suppliers or imported against a marine insurance or marine-cum- erection insurance claim settled by an insurance company.

n, and goods in replacement thereof may be supplied free of charge by foreign suppliers or imported against a marine insurance or marine-cum- erection insurance claim settled by an insurance company. Such goods shall be allowed clearance by the customs authorities without an import Authorisation provided that:

(a) Shipment of replacement goods is made within 24 months from date of clearance of previously imported goods through Customs or within guarantee period in case of machines or parts thereof where such period is more than 24 months; and

(b) No remittance shall be allowed except for payment of insurance and freight charges where replacement of goods by foreign suppliers is subject to payment of insurance and / or freight by importer and documentary evidence to this effect is produced while making remittance.

2.42.1 In case of short-shipment, short-landing or loss in transit, import of replacement goods will be permitted based on certificate issued by customs authorities without an import Authorisation. This procedure shall also apply to cases in which short-shipment of goods is certified by foreign supplier, who has agreed to replace free of cost.

2.42.2 Cases not covered by above provisions will be considered on merits by DGFT for grant of Authorisation for replacement of goods for which an application may be made in ANF. Transfer of Imported 2.43 Freely importable goods can be transferred by sale or otherwise Goods by importer freely.

Authorisation for replacement of goods for which an application may be made in ANF. Transfer of Imported 2.43 Freely importable goods can be transferred by sale or otherwise Goods by importer freely. Transfer of imported goods, which are subject to Actual User condition and have become surplus to needs of Actual User, shall be made only with prior permission of RA concerned. Following information alongwith supporting documents shall be furnished with request for grant of permission for transfer, to RA concerned:

(i) Reasons for transfer of imported material;

33

(ii) Name, address, IEC number and industrial Authorisation registration, if any, of transferee;

(iii) Description, quantity and value of goods imported and those sought to be transferred;

(iv) Copies of import Authorisation and bills of entry relating to imports made;

(v) Terms and conditions of transfer as agreed upon between buyer and seller.

2.43.1 Prior permission of RA shall not, however, be necessary for transfer or disposal of goods, which were imported with Actual User condition, provided such goods are freely importable without Actual User condition on date of transfer.

2.43.2 Prior permission of RA shall also not be required for transfer or disposal of imported goods after a period of two years from the date of import.

t Actual User condition on date of transfer.

2.43.2 Prior permission of RA shall also not be required for transfer or disposal of imported goods after a period of two years from the date of import. However, transfer of imported firearms by the importer / Authorisation holder shall be permitted only after 10 years of import with approval of DGFT. Sale of Exhibits 2.44 (i) Sale of exhibits of restricted items, mentioned in ITC (HS), imported for an international exhibition / fair organized / approved / sponsored by ITPO may also be made, without an Authorisation within bond period allowed for re-export, on payment of applicable customs duties, subject to a ceiling limit of Rs.5 lakhs (CIF) for such exhibits for each exhibitor. However, sale of exhibits of items, which were freely imported shall be made, without an Authorisation, within bond period allowed for re-export on payment of applicable customs duties.

(ii) If goods brought for exhibition are not re-exported or sold within bond period due to circumstances beyond control of importer, customs authorities may allow extension of bond period on merits. Import of Overseas 2.45 On winding up of overseas offices, set up with approval of RBI, Office Equipment used office equipment and other items may be imported without Authorisation. 2.46 Deleted Prototypes 2.47 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

totypes 2.47 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

34 industrial licence / 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. Restricted items for R&D 2.48 All restricted items and items permitted to be imported by STEs, except live animals, required for R&D purpose may be imported without an Authorisation by Government recognized Research and Development units. Export Policy 2.49 Policy relating to Exports is given in Chapter-2 of FTP. Further, Schedule 2, Appendix 1 of ITC (HS) specifies list of items, which may be exported without an Authorisation but subject to terms and conditions specified. Application for Grant 2.50 An application for grant of Export Authorisation in respect of of Export Licence / items mentioned in Schedule 2 of ITC (HS) may be made in Certificate / Permission ANF 2D (2E for SCOMET items) to DGFT along with documents prescribed therein.

ation in respect of of Export Licence / items mentioned in Schedule 2 of ITC (HS) may be made in Certificate / Permission ANF 2D (2E for SCOMET items) to DGFT along with documents prescribed therein. EFC shall consider applications on merits for issue of export Authorisation. An Inter-Ministerial Working Group in DGFT shall consider applications for export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) as specified in Appendix 3 to Schedule 2 of ITC (HS) based on guidelines given below. Applications for licences to export items or technology on SCOMET List are considered case-by-case, based inter alia on the following general criteria: - I. Following factors, among others, are taken into account in the evaluation of applications for export of items on SCOMET List : a. Credentials of end-user, credibility of declarations of end-use of the item or technology, integrity of chain of transmission of item from supplier to end- user, and on potential of item or technology, including timing of its export, to contribute to end- uses that are not in conformity with India’s national security or foreign policy goals and objectives, objectives of global non-proliferation, or its obligations under treaties to which it is a State party. b. Assessed risk that exported items will fall into hands of terrorists, terrorist groups, and non-State actors;

al non-proliferation, or its obligations under treaties to which it is a State party. b. Assessed risk that exported items will fall into hands of terrorists, terrorist groups, and non-State actors;

35 c. Export control measures instituted by recipient State; d. The capabilities and objectives of programmes of recipient State relating to weapons and their delivery; e. Assessment of end-uses of item(s); f. Applicability to an export licence application of relevant bilateral or multilateral agreements to which India is a party. II. A condition for consideration of an application for an export licence is submission of stipulated certifications to effect, inter alia, that: a. The item will be used only for stated purpose and that such use will not be changed, nor items modified or replicated without consent of Government of India; b. Neither the items nor replicas nor derivatives thereof will be re-transferred without consent of Government of India; c. End-user shall facilitate such verifications as are required by Government of India. Government of India may also require additional formal assurances, as appropriate, including on end-use and non-retransfer, from State of recipient. III. Licensing authority for items in Category 0 in Appendix 3 to Schedule 2 of ITC(HS) is Department of Atomic Energy. Applicable guidelines are notified by that Department under Atomic Energy Act, 1962.

Licensing authority for items in Category 0 in Appendix 3 to Schedule 2 of ITC(HS) is Department of Atomic Energy. Applicable guidelines are notified by that Department under Atomic Energy Act, 1962. For certain items in Category 0, formal assurances from recipient State will include non-use in any nuclear explosive device. Licences for export of certain items in Category 0 will not be granted unless transfer is additionally under adequate physical protection and is covered by appropriate International Atomic Energy Agency (IAEA) safeguards, or any other mutually agreed controls on transferred items. IV. Additional end-use conditions may be stipulated in licences for export of items or technology that bear possibility of diversion to or use in development or manufacture of, or use as, systems capable of delivery of weapons of mass destruction.

36 V. Applications for transfer of “Technology” for any item on the List will be considered as an application for export of item itself. VI. Licences for export of items in this List (other than those under Category 0, 1 and 2) solely for purposes of display or exhibition shall not require any end-use or end-user certifications.

self. VI. Licences for export of items in this List (other than those under Category 0, 1 and 2) solely for purposes of display or exhibition shall not require any end-use or end-user certifications. No export licence for display or exhibition shall be issued for ‘Technology’ in any category or for items under Categories 0, 1, and 2. VII. Export of items not on SCOMET List may also be regulated under provisions of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005. Note 1: Export or attempt to export in violation of any of conditions of licence shall invite civil and/or criminal prosecution. Note 2: Licences for export of items in this List for display or exhibition abroad are subject to a condition of re- import within a period not exceeding six months. Exporters are entitled to apply for an export licence for such items exhibited abroad if exhibitor intends to offer that item for sale during exhibition abroad. Such sale shall not take place without a valid licence. Note 3: Export of items in Category 2 of this list may also be controlled by other applicable guidelines issued from time-to-time.

tion abroad. Such sale shall not take place without a valid licence. Note 3: Export of items in Category 2 of this list may also be controlled by other applicable guidelines issued from time-to-time. Exporters of items in this category are advised to seek guidance from DGFT. Note 4: Exporters are entitled to apply for a ‘destination licence’ for countries and / or groupings of countries for export to which only re-transfer conditions need be imposed. Note 5: Exporters are entitled to request that only such conditions need be imposed as are subject of government- to-government instruments of accord over export of items on SCOMET List. Note 6: ‘Technology’ (see also entry ‘Technology’ in glossary in Appendix 3 to Schedule 2 of ITC (HS)): Approval of export of an item on the SCOMET List also authorizes the export to same end-user of minimum ‘technology’ required for installation, operation, maintenance and repair of the item.

37

DGFT in association with Administrative Ministries / Departments and Trade Associations will organize Industry Outreach Programme on regular basis for an effective awareness among the exporters /importers dealing with trade, in particular, in SCOMET items.

DGFT may also issue, on application, Free Sale and Commerce Certificate for export of items not covered under Drugs & Cosmetics Act, 1940, which have usage in hospitals, nursing homes and clinics, for medical and surgical purposes and are not prohibited for export. Validity of such certificate shall be two years from date of issue unless otherwise specified. Export Of Items under 2.51

clinics, for medical and surgical purposes and are not prohibited for export. Validity of such certificate shall be two years from date of issue unless otherwise specified. Export Of Items under 2.51 An application for export of items mentioned in ITC (HS) under State Trading Regime STR regime may be made to DGFT. (STR) Exports Of Samples/ 2.52 An application for export of samples or exhibits, which are Exhibits restricted for export, may be made to DGFT. Free of Cost Exports 2.52.1 Status holders shall be entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rs.10 lakh or 2% of average annual export realisation during preceding three licensing years whichever is higher. Gifts / Spares / 2.53 For export of gifts, indigenous / imported warranty spares and Replacement Goods replacement goods in excess of ceiling / period prescribed in paragraphs 2.32, 2.33 and 2.37 respectively of FTP, an application may be made to DGFT. Furnishing of Returns 2.54 All exports made in non physical form by using communication in respect of Exports links including high speed data communication links, internet, in non Physical form telephone line or any other channel which do not involve Customs authorities has to be compulsorily reported on quarterly basis to concerned EPC (Para 3.6 of FTP) as given in Appendix 19C. These provisions shall be applicable to all exporting units located anywhere in country including those located in STP, SEZ, EHTP and under 100% EOU scheme. Duty Free Import of 2.55

in Appendix 19C. These provisions shall be applicable to all exporting units located anywhere in country including those located in STP, SEZ, EHTP and under 100% EOU scheme. Duty Free Import of 2.55 Duty free import of goods (as specified in list 28 of Customs R&D Equipment for notification No.21/2002 dated 1.3.2002, as amended from time Pharmaceuticals and to time) upto 25% of FOB value of exports during preceding Bio-technology Sector licensing year, shall be allowed. The eligible unit may furnish an application given in Appendix 15A to RA concerned duly countersigned by Chartered Accountant.

38

2.55.1 Duty free imports of goods as specified in list 28A of Customs notification No. 21/2002 dated 1.3.2002, upto 1% of FOB value of exports made during preceding licensing year, shall be allowed to agro chemicals sector unit having export turnover of Rs. 20 crore or above during preceding licensing year. The eligible unit shall apply in form given in Appendix 15B to RA concerned duly countersigned by Chartered Accountant. Conversion of E.P. 2.56 If Customs Authorities, after recording reasons in writing, permit copy of shipping bill conversion of an E.P.

15B to RA concerned duly countersigned by Chartered Accountant. Conversion of E.P. 2.56 If Customs Authorities, after recording reasons in writing, permit copy of shipping bill conversion of an E.P. copy of any scheme-shipping bill on which from one scheme benefit of that scheme has not been availed, exporter would be to Another entitled to benefit under scheme in which shipment is subsequently converted. Relocation of Industries 2.57 Deleted. Offsetting of Export 2.58 Subject to specific approval of RBI, any payables, or equity Proceeds investment made by an Autorisation holder under any export promotion scheme, can be used to offset receipts of his export proceeds. In such cases, offsetting would be equal to realisation of export proceeds and exporter would have to submit following additional documents:

a) Appendix 22D in lieu of Bank Realisation Certificate.

b) Specific permission of RBI. Quality Certification 2.59 It has been a constant endeavor to promote quality standards in export product / units manufacturing export product.

2.59.1 One of salient features incorporated in FTP as per paragraph 3.5.2 Note.1 for promotion of quality standards is grant of Export / Trading House status on achievement of a lower threshold limit for units having ISO-9000 (series), ISO-14000 (Series) or HACCP certification or WHOGMP or SEI CMM level-2 & above status / certification.

2.59.2 List of such agencies authorised to grant quality certification is given in Appendix 6. Any agency desirous of enlistment in Appendix –6 may submit

M level-2 & above status / certification.

2.59.2 List of such agencies authorised to grant quality certification is given in Appendix 6. Any agency desirous of enlistment in Appendix –6 may submit their application as per Annexure I to Appendix 6 to concerned RA.

2.59.3 Deleted. 2.60 Deleted. Procedure for import 2.61 Attention is invited to Government of India, Ministry of Finance Under the Tariff Rate (Department of Revenue), Notification No. 21/2002-Customs

39 Quota Scheme dated 01.03 2002. As per it, import of four items viz., (1) Skimmed and whole milk powder, milk food for babies etc. (0402.10 or 0402.21) (2) Maize (corn): other (1005.90) (3) Crude sunflower seed or safflower oil or fractions thereof (1512.11) and (4) Refined rape, colza or mustard oil, other (1514.19 or 1514.99) is allowed in a financial year, up to quantities as well as such concessional rates of customs duty as indicated below: S. ITC Code No. & Item Quantity Concessional No. of Quota duty 1. Tariff Code No. 0402.10 10,000 MTs 15% or 0402.21 Skimmed and whole Milk Powder. Milk Food for babies etc. 2. Tariff Code No. 1005.90 5,00,000 MTs 15% Maize (Corn): other 3. Tariff Code No. 1512.11 150,000 MTs 50% Crude Sunflower seed or safflower oil or fractions thereof 4. Tariff Code No. 1514.19 & 1514.99 Rape, Colza or Mustard Oil, Other (Refined) 150,000 MTs 45% Eligible entities for 2.61.1 (a) Milk Powder (Tariff Code No.

d or safflower oil or fractions thereof 4. Tariff Code No. 1514.19 & 1514.99 Rape, Colza or Mustard Oil, Other (Refined) 150,000 MTs 45% Eligible entities for 2.61.1 (a) Milk Powder (Tariff Code No. 0402.10 or 0402.21): allocation of quota: National Dairy Development Board (NDDB), State Trading Corporation (STC), National Cooperative Dairy Federation (NCDF), National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), Minerals and Metals Trading Corporation (MMTC), Projects & Equipment Corporation of India Limited (PEC) and Spices Trading Corporation Limited (STCL) (b)
Maize (corn)(Tariff Code No. 1005.90): National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED), State Trading Corporation (STC), Minerals and Metals Trading Corporation (MMTC), Projects & Equipment Corporation of India Limited(PEC), Spices Trading Corporation Limited (STCL) and State Cooperative Marketing Federations (c) Crude sunflower seed or safflower oil or fractions thereof (Tariff Code No. 1512.11) and Refined rape, colza or mustard oil, other (Tariff Code No. 1514.19 or 1514.99): National Dairy Development Board (NDDB), State

eed or safflower oil or fractions thereof (Tariff Code No. 1512.11) and Refined rape, colza or mustard oil, other (Tariff Code No. 1514.19 or 1514.99): National Dairy Development Board (NDDB), State

40 Trading Corporation (STC), National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED) Spices Trading Corporation Limited (STCL) and Central Warehousing Corporation (CWC) State Cooperative Marketing Federation & State Cooperative Civil Supplies Corporation (d) Deleted. All eligible entities are eligible to avail quotas as per request of applicants received. All eligible entities desiring availment of quota as mentioned above, may make application to EFC in ANF to DGFT, Udyog Bhavan, New Delhi – 110 011. Completed application forms along with prescribed documents must reach on or before 1st March of each financial year preceding to the year of quota e.g. Applications for TRQ for 2007-2008 must reach DGFT by 01.03. 2007. Imports have to be completed before 31st March of financial year i.e. consignments must be cleared by customs authorities before this date. Since import of maize (corn) is through STEs, the allottes of quota i.e. designated agencies in para 1 (b) above for this item shall also be granted an import Authorisation for allotted quantities as indicated at Sl. No. 21(b) of Customs Notification No.

tes of quota i.e. designated agencies in para 1 (b) above for this item shall also be granted an import Authorisation for allotted quantities as indicated at Sl. No. 21(b) of Customs Notification No. 21/ 2002 dated 1.3.2002 in terms of para 2.11 of FTP, 2004-2009, if they do not wish to make imports through FCI. Application fee for these applications shall be paid according to procedure contained in Appendix 21 B to HBP-v1. EFC in DGFT will evaluate and allot quota among applicants by 31st March of each financial year preceding to year of quota e.g. for 2007-08, EFC will allot quota by 31st March 2007. Issuance of scrips 2.62 In case where EP copy of Shipping Bill / original BRC has been against lost EP copy lost, claim under VKGUY/ FMS/ FPS can be considered subject of the Shipping Bills to submission of following documents: - and / or original Bank Realisation Certificate a) A duplicate /certified copy of concerned document issued by Customs Authority / Bank in lieu of original; b) An application fee equivalent to 2% of relevant entitlement. However, no fee shall be charged when such document is lost by Government agencies and a documentary proof to this effect is submitted;

An application fee equivalent to 2% of relevant entitlement. However, no fee shall be charged when such document is lost by Government agencies and a documentary proof to this effect is submitted;

41 c) An affidavit by exporter about loss of document and an undertaking to surrender it immediately to concerned RA, if found subsequently. d) An indemnity bond by exporter to effect that he would indemnify Government for financial loss if any on account of duty credit issued against lost Shipping Bills / BRC. Customs Authority, before allowing clearance, shall ensure that benefit / duty credit against such shipping bill has not been availed. 2.62.1 Claim against lost Shipping Bill / BRC shall be preferred within a period of six months from date of release of duplicate copy of Shipping Bill / on date of realization of export proceeds. Any application received thereafter shall be rejected. 2.63 Deleted Export Promotion 2.64 A list and product category of EPCs, including CB is given in Council (EPC), includes Appendix 2. Commodity Boards function as EPCs for products Commodity Boards (CB) allotted to them.

romotion 2.64 A list and product category of EPCs, including CB is given in Council (EPC), includes Appendix 2. Commodity Boards function as EPCs for products Commodity Boards (CB) allotted to them. EPC is authority issuing RCMC. Non-Profit, Autonomous 2.65 EPCs are non-profit organizations registered under Companies and Professional Bodies Act or Societies Registration Act.

2.65.1 EPCs shall be autonomous and shall regulate their own affairs. However, if Central Government frames uniform bylaws for constitution and / or for transaction of business for EPCs, they shall adopt the same with such modifications as Central Government may approve having regard to special nature or functioning of such EPC. Concerned Administrative Ministry would interact with Managing Committee of EPC concerned at least twice a year.

2.65.2 Deleted 2.66 Deleted Registering Authorities 2.67 A status holder has option to obtain RCMC from Federation of issuing RCMC Indian Exporters Organization (FIEO). Exporters of minor forest produce and their value added products shall obtain RCMC from SHEFEXIL, EPC. Software exporters shall register themselves with Electronic and Software EPC. Exporters of 13 specific services as listed in Sl. No. 34 of Appendix 2 of HBP v1, are required to register themselves with Services EPC. Other service exporters shall

h Electronic and Software EPC. Exporters of 13 specific services as listed in Sl. No. 34 of Appendix 2 of HBP v1, are required to register themselves with Services EPC. Other service exporters shall

42 register themselves with FIEO. In respect of exporters having their head office / registered office in State of Orissa, RCMC may be obtained from FIEO office in Bhubaneshwar irrespective of product being exported by them.

2.67.1 In addition, an exporter has option to obtain RCMC from FIEO or any other relevant EPC if products exported by him relate to those EPC’s.

2.67.2 If export product is such that it is not covered by any EPC, RCMC in respect thereof may be issued by FIEO. Registration cum- 2.68 An exporter may, on application given in Appendix 19A, register Membership and become a member of EPC. On being admitted to Certificate (RCMC) membership, applicant shall be granted forthwith Registration- cum-Membership Certificate (RCMC) of EPC concerned, in format given in Appendix 19B.

er of EPC. On being admitted to Certificate (RCMC) membership, applicant shall be granted forthwith Registration- cum-Membership Certificate (RCMC) of EPC concerned, in format given in Appendix 19B. In case an exporter desires to get registration as a manufacturer exporter, he shall furnish evidence to that effect. Prospective / potential exporters may also, on application, register and become an associate member of an EPC . Validity Period of RCMC 2.68.1 RCMC shall be deemed to be valid from 1st April of licensing year in which it was issued and shall be valid for five years ending 31st March of licensing year, unless otherwise specified. Intimation Regarding 2.69 In case of change in ownership, constitution, name or address Change In Constitution of an exporter, it shall be obligatory on part of RCMC holder to intimate such change to registering authority within a period of one month from date of such change. Registering authority, however, may condone delays on merits. Furnishing Of Returns 2.70 Exporter shall furnish quarterly returns / details of his exports of different commodities to concerned registering authority. However, status holders shall also send quarterly returns to FIEO in format specified by FIEO. De-Registration 2.71 Registering authority may de-register an RCMC holder for a specified period for violation of conditions of registration. Before such de-registration, RCMC holder shall be given a show cause notice by registering authority, and an adequate and reasonable opportunity to make a representation against the proposed de- registration.

ch de-registration, RCMC holder shall be given a show cause notice by registering authority, and an adequate and reasonable opportunity to make a representation against the proposed de- registration. Upon de–registration, concerned EPC shall intimate the same to all RAs. Appeal Against 2.72 A person aggrieved by a decision of registering authority in De-registration respect of any matter connected with issue of RCMC may

43 prefer an appeal to DGFT or an officer designated in this behalf within 45 days against said decision and decision of appellate authority shall be final. Directives of DGFT 2.73 DGFT may direct any registering authority to register or de- register an exporter or otherwise issue such other directions to them consistent with and in order to implement provisions of FT (D&R) Act, Rules and Orders made there under, FTP or this Handbook.

2.74 Electronic Data Interchange 2.74.1 Role and functions of EDI are defined in Para 2.45 of FTP. Basic purpose of EDI Initiatives is to improve services for DGFT user community thereby achieving greater transparency of operations and reducing transaction costs by decreasing processing time for obtaining Authorisation from DGFT. These EDI initiatives have made our exports competitive in international markets. Eligibility 2.74.2 Facility of electronic filing of applications shall be available to all exporters. Procedure 2.74.3 An exporter would be able to file his application on DGFT website at http://dgft.gov.in/.

ty 2.74.2 Facility of electronic filing of applications shall be available to all exporters. Procedure 2.74.3 An exporter would be able to file his application on DGFT website at http://dgft.gov.in/. Application will then be processed in accordance with prevalent rules and regulations. Applicant will have to visit concerned office to hand-over hard copy of application along with requisite documents including application fee. Authorisation shall be issued on receipt of hard copies of documents as mentioned above after due scrutiny as prescribed in HBP v1. Fiscal Incentives for EDI 2.74.4 Following deductions in Application Fee would be admissible for applications signed digitally and / or where application fee is paid electronically through EFT (electronic fund transfer) : Sr. Mode of Application Fee Deduction No. (as a % of normal application fee) 1 Digitally signed 25% 2 Application fee payment vide EFT 25% 3 Both digitally signed as well as use 50% of EFT for payment of application fee

on Fee Deduction No. (as a % of normal application fee) 1 Digitally signed 25% 2 Application fee payment vide EFT 25% 3 Both digitally signed as well as use 50% of EFT for payment of application fee

44 Benefits 2.74.5 Facility will reduce unnecessary physical interface with DGFT. It will enable faster processing, speedier communication of deficiencies, if any, and on-line availability of application processing status.

2.74.6 Authorisation issued using DGFT Electronic Application System shall be transmitted electronically to Customs through EDI Mode. This shall also obviate need for verification of Authorisations before allowing clearance. New EDI Initiatives 2.74.7 To further improve quality of services some new EDI Initiatives are being taken by DGFT. In order to simplify ‘Aayaat Niryaat Form’ (ANF), Scheme specific ANF has been introduced this year. This is downloadable from DGFT website.

45 CHAPTER-3 PROMOTIONAL MEASURES Status Certificates 3.1 Policy for status holder is given in Chapter 3 of FTP. Application for Grant 3.2 Application for grant of status shall be filed by 31st March, in of Status Certificate ANF 3A. An existing status holder shall be automatically treated to be an equivalent status holder as given hereinunder: Status as per FTP (2004-09) Converted Status as per FTP (RE 2006) (2004-09) (RE 2007) One Star Export House Export House Two Star Export House Star Export House Three Star Export House Trading House Four Star Export House Star Trading House Five Star Export House Premier Trading House

3.2.1

Export House Export House Two Star Export House Star Export House Three Star Export House Trading House Four Star Export House Star Trading House Five Star Export House Premier Trading House

3.2.1 Application shall be filed with jurisdictional RA / Development Commissioner (DC). However, in cases where export performance of EOUs / SEZs is clubbed together with company or firm / Group Company in DTA, the same will be considered by jurisdictional RA only.

3.2.2 All newly issued Status certificates shall be valid from 1st April of the year during which application for recognition was filed. For renewals, application filed before expiry of current validity, renewals shall have a validity commencing from 1st April of next licensing year, otherwise validity period shall be 1st April of year during which application was filed. However all Status Certificates shall lapse on 31.03.2009.

3.2.3 Deleted to 3.2.5 Maintenance of Accounts 3.3 Status holder shall maintain true and proper accounts of its exports and imports based on which such recognition has been granted. Record shall also be maintained during validity period and for a minimum period of three years thereafter. These accounts shall be made available for inspection to RA concerned or any authority nominated by DGFT.

lso be maintained during validity period and for a minimum period of three years thereafter. These accounts shall be made available for inspection to RA concerned or any authority nominated by DGFT.

46 Refusal / Suspension / 3.4 Status certificate may be refused or suspended or cancelled by Cancellation of Certificate RA concerned, if status holder or any agent or employee or authorized representative acting on his behalf:

(a) Fails to discharge export obligation imposed;

(b) Tampers with Authorisations;

(c) Misrepresents or has been a party to any corrupt or fraudulent practice in obtaining any Authorisation;

(d) Commits a breach of FT (D& R) Act, or Rules, Orders made there under and FTP; or

(e) Fails to furnish information required by this Directorate.

3.4.1 A reasonable opportunity shall be given to status holder before taking any action under above paragraph. Appeal 3.5 An applicant, who is not satisfied with decision taken to suspend or cancel status certificate, may file an appeal to DGFT within 45 days. Decision of DGFT shall be final thereon. 3.6 to Deleted 3.12 3.12.1 Deleted 3.12.1.1 Deleted 3.12.2 to Deleted 3.12.4 3.13 to Deleted 3.17 3.17.1 to Deleted 3.17.7 3.18 SERVED FROM INDIA SCHEME (SFIS) (a) Policy for SFIS is given in Chapter 3 of FTP. (b) A single consolidated application for Duty Credit scrip shall be filed with jurisdictional RA in ANF 3B along with documents prescribed therein. (c) to Deleted (f)

is given in Chapter 3 of FTP. (b) A single consolidated application for Duty Credit scrip shall be filed with jurisdictional RA in ANF 3B along with documents prescribed therein. (c) to Deleted (f)

47 (g) Service provider shall within one month of completion of imports made or expiry of validity of Duty Credit scrip whichever is earlier, submit a statement of imports made under it to jurisdictional RA with a copy to jurisdictional Excise authorities (service tax cell) wherever applicable. (h) & (i) Deleted Ineligible Remittances 3.18.1 Foreign exchange remittances other than those that are earned and Services for rendering of 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. For calculation of entitlement, following shall not be taken into account. (a) Foreign Exchange remittances: I. related to Financial Services Sector 1. Raising of all types of foreign currency Loans; 2. Export proceeds realization of clients; 3. Issuance of Foreign Equity through ADRs / GDRs or other similar instruments; 4. Issuance of foreign currency Bonds; 5. Sale of securities and other financial instruments; 6. Other receivables not connected with services rendered by financial institutions; and II. earned through contract / regular employment abroad (e.g.

e of securities and other financial instruments; 6. Other receivables not connected with services rendered by financial institutions; and II. earned through contract / regular employment abroad (e.g. labour remittances); (b) Payments for services received from EEFC Account; (c) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc. (However, remittances received on account of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible); (d) Foreign exchange turnover by Educational Institutions like equity participation, donations etc. (However remittances

48 received on account of the course fees and consultancy provided by the institution shall be eligible); (e) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units; (f) Clubbing of turnover of services rendered by SEZ / EOU / EHTP / STPI / BTP units with turnover of DTA Service Providers; and (g) Export of Goods. 3.18.2 Deleted. 3.19 VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) 3.19.1 Policy pertaining to VKGUY is given in Chapter 3 of FTP. Appendix 37A contains the list of VKGUY items. Application for grant of Duty Credit scrip under VKGUY for export made from 1.4.2007 onwards shall be made to RA concerned in ANF 3C along with documents prescribed therein. Applicant may file one or more applications subject to condition that each application shall contain not more than 50 shipping bills.

o RA concerned in ANF 3C along with documents prescribed therein. Applicant may file one or more applications subject to condition that each application shall contain not more than 50 shipping bills. All shipping bills in any one application must relate to exports made from one Customs House only, which shall be the port of registration for Duty Credit Scrip. Application for obtaining Duty Credit scrip shall be filed within a period of twelve months from date of exports or within six months from date of realization or within three months from date of printing / release of shipping bill, whichever is later, in respect of shipments for which claim is being filed. 3.19.2 Deleted. 3.19.3 For direct as well as third party exports, the Export documents viz Export Order, Invoice, GR form, Bank Realization Certificate should be in the name of applicant only. 3.19.4 to Deleted. 3.19.9

49 FOCUS MARKET SCHEME (FMS) 3.20 Policy pertaining to FMS is given in Chapter 3 of FTP. Notified Markets are listed in Appendix 37C. 3.20.1 A single consolidated application for all exports through EDI enabled ports shall be filed with RA concerned in ANF 3D along with documents prescribed therein. Application shall be filed on a six monthly basis, i.e. April– September Period and October – March Period where realization has been made during period of application.

documents prescribed therein. Application shall be filed on a six monthly basis, i.e. April– September Period and October – March Period where realization has been made during period of application. In case of Advance Payment (and in cases where Para 3.23.3 of HBP v1 applies), date of exports shall be taken into account for inclusion in period of application. Application for claiming Duty Credit scrip shall be submitted within a period of six months from last date of period of application (i.e. for April-September 2007 Period, last date shall be March 2008 and for October-March 2008 Period, last date shall be Sept. 2008). As FMS has been launched for exports w.e.f 1.4.2006, applications for grant of benefits for exports w.e.f 1.4.2006 shall be considered as under: (a) In respect of application for April–September 2006 period, last date for filing application shall be 31st March 2008. This shall include only those shipments exported on or after 1.4.2006 but for which realization has been received till 30.09.2006. (b) In respect of application for October–March 2007 period, last date for filing application shall be 31st March 2008. This shall include all shipments exported on or after 1.4.2006, but for which realization has been received till 31.3.2007. Exporters can file only one supplementary claim each, in case some shipments have not been included in original claim for April– September and October–March periods. This shall attract supplementary cut on claim amount, after ensuring that shipment has not been included in earlier claim.

n included in original claim for April– September and October–March periods. This shall attract supplementary cut on claim amount, after ensuring that shipment has not been included in earlier claim. In case supplementary claim is filed late, late cut shall also be imposed. This shall apply even to exports made w.e.f 1.4.2006. 3.20.2 For direct as well as third party exports, the Export documents viz. Export Order, Invoice, GR form, Bank Realization Certificate should be in the name of applicant only. 3.20.3 Applicant shall be required to submit proof of landing of export consignment in specified market.

50 Duty Credit scrip shall be granted on FOB value realized as per BRC / FIRC. 3.20.4 to Deleted 3.20.8 FOCUS PRODUCT SCHEME (FPS) 3.21 Policy pertaining to FPS is given in Chapter 3 of FTP. Notified Products are listed in Appendix 37D. 3.21.1 A single consolidated application for all exports through EDI enabled ports shall be filed with RA concerned in ANF 3E along with documents prescribed therein. Application shall be filed on a six monthly basis, i.e. April– September Period and October – March Period where realization has been made during period of application. In case of Advance Payment (and in cases where

Para 3.23.3 of HBP v1 applies), date of exports shall be taken

into account for inclusion in period of application. Application for claiming Duty Credit scrip shall be submitted within a period of six months from last date of period of application (i.e. for April-September 2007 Period, last date shall be March 2008 and for October-March 2008 Period, last date shall be Sept. 2008). As FPS has been launched for exports w.e.f 1.4.2006, applications for grant of benefits for exports w.e.f 1.4.2006 and for supplementary claims shall be the same as under FMS: 3.21.2 For direct as well as third party exports, the Export documents viz Export Order, Invoice, GR form, Bank Realization Certificate should be in the name of applicant only. 3.21.3 Duty Credit scrip shall be granted on FOB value realized as per BRC / FIRC. 3.21.4 to Deleted 3.21.8 3.22 HIGH-TECH PRODUCTS EXPORT PROMOTION SCHEME (HTPEPS) 3.22.1 Policy pertaining to HTPEPS is given in Chapter 3 of FTP. Notified High Tech Products are listed in Appendix 37E. 3.22.2 Application for grant of Duty Credit scrip under HTPEPS shall be made to RA concerned in ANF 3F along with documents prescribed therein.

otified High Tech Products are listed in Appendix 37E. 3.22.2 Application for grant of Duty Credit scrip under HTPEPS shall be made to RA concerned in ANF 3F along with documents prescribed therein.

51 Application for obtaining Duty Credit scrip for incremental growth in exports during current licensing year 2007-08 shall be filed within a period of twelve months after expiry of current licensing year. 3.23 COMMON PROCEDURAL FEATURES FOR PROMOTIONAL SCHEMES, APPLICABLE TO ALL SCHEMES IN THIS CHAPTER, UNLESS SPECIFICALLY PROVIDED FOR: Jurisdictional RA / 3.23.1 Applicant shall have option to choose Jurisdictional RA on the RA Concerned basis of Corporate Office, Registered Office, Branch Office address endorsed on IEC. However, once opted, no change would be allowed. 3.23.2 Provisions contained in Chapter 2, 9 of HBP v1 shall apply to all Promotional Schemes. Port of Registration 3.23.3 Duty Credit scrip (including splits) shall be issued with a single port of registration as per choice of applicant. Before registration, authorities shall verify genuineness of Duty Credit scrip, from RA concerned, until EDI system of message exchange is put in place. However, applicant may use Duty Credit scrip for imports from any other port (that includes ICD / LCS) after obtaining TRA from authorities at port of registration. Facility for Split Scrips 3.23.4 Split certificates of Duty Credit scrip subject to a minimum of Rs 5 lakh each and multiples thereof may also be issued, on request at the time of application with different port of registration.

3.4 Split certificates of Duty Credit scrip subject to a minimum of Rs 5 lakh each and multiples thereof may also be issued, on request at the time of application with different port of registration. A fee of Rs 1000/- each shall be paid for each split certificate. After issue, request of splits shall be permitted with same port of registration as appearing on the original scrip. Import from private / 3.23.5 Entitlement can be used for import from private / public bonded public bonded warehouses warehouses subject to fulfillment of paragraph 2.28 of FTP and terms and conditions of DoR notification. Re-export of defective / 3.23.6 Goods imported and are found defective or unfit for use, may unfit goods be re-exported, as per DoR guidelines. Where Duty Credit scrip has been used for imports, Customs shall issue a certificate containing particulars of scrip used, date of import of re-exported goods and amount debited while importing such goods. Based on this certificate, upon application, a fresh Scrip shall be issued by concerned RA to the extent of 98% of debited amount, with

52 same port of registration and valid for a period equivalent to balance period available on date of import of the defective / unfit goods. Validity Period & 3.23.7 Duty Credit scrip shall be valid for a period of 24 months. Revalidation Revalidation of Duty Credit scrip shall not be allowed.

te of import of the defective / unfit goods. Validity Period & 3.23.7 Duty Credit scrip shall be valid for a period of 24 months. Revalidation Revalidation of Duty Credit scrip shall not be allowed.

53 CHAPTER-4 DUTY EXEMPTION / REMISSION SCHEME Policy 4.1 Policy relating to Duty Exemption / Remission Scheme is prescribed in Chapter 4 of FTP. General Provision 4.2 An application for grant of an Advance Authorisation / Advance Authorisation for Annual Requirement / DEPB / DFIA may be made by Registered office or Head office or a branch office or manufacturing unit of eligible exporter, to RA concerned.

4.3 Where applicant is branch office or manufacturing unit(s) of an exporter, it shall furnish self certified copy of valid RCMC where name of branch office or manufacturing unit is given. Advance Authorisation 4.4 Where SION have been published, an application in ANF 4A, along with documents prescribed therein, shall be submitted to RA concerned.

4.4.1 In case of export of gold / silver / platinum jewellery and articles thereof, quantity, wastage and value addition norms shall be as prescribed in paragraph 4A of FTP and HBP v1.

4.4.2 In case where norms have not been published, an application in ANF 4B, along with prescribed documents, shall be furnished to concerned Norms Committee (NC) at DGFT Headquarter for fixation of Norms. In such cases, original copy of application along with prescribed fee shall be filed with RA concerned and a self attested copy of same shall be filed with NC.

DGFT Headquarter for fixation of Norms. In such cases, original copy of application along with prescribed fee shall be filed with RA concerned and a self attested copy of same shall be filed with NC. Authorisation in such cases shall be issued by RA as NC recommends.

NC shall also function as a recommendatory authority for SION. DGFT may notify such norms. 4.4.3 Applications, where Acetic Anhydride, Ephedrine and Pseudo- ephedrine is required as an input for import, shall be filed with RA concerned. Copies of such applications shall also be simultaneously endorsed to the Drug Controller of India, Nirman Bhawan, New Delhi, Narcotics Commissioner, Central Bureau of Narcotics, Gwalior and respective Zonal Director of Narcotics Control Bureau, alongwith a declaration that applicant will maintain prescribed records and also submit prescribed returns.

54 4.4.4
RA, while issuing Advance Authorisation for import of Acetic Anhydride, Ephedrine and Pseudo- ephedrine, shall endorse a condition that before effecting imports, NOC shall be obtained from Narcotics Commissioner of India, Central Bureau of Narcotics, Gwalior and shall also endorse a copy of Authorisation to Drug Controller, Nirman Bhawan, New Delhi and concerned Zonal Director of Narcotics Control Bureau.

4.4.5 Deleted Advance Authorisation 4.5 Transfer of any duty free material imported or procured against for applicants with Advance Authorisation from one unit of company to another for multiple units manufacturing purpose shall be done with prior intimation to

ree material imported or procured against for applicants with Advance Authorisation from one unit of company to another for multiple units manufacturing purpose shall be done with prior intimation to jurisdictional Excise Authorities with a clear understanding that no benefit of CENVAT shall be claimed on such transferred inputs. In case of non-excisable company / products, units should maintain a proper record. However to avail facility, all such units should be available in IEC certificate and follow rules and regulation of Central Excise for job work. Large Taxpayer Units (LTUs) having multiple units, may not follow above job work procedure, after fulfillment of EO. Advance Authorisation 4.6 For policy in paragraph 4.1.8, a specific endorsement shall be for Free of Cost and
made on exchange control copy of Advance Authorisation Paid Material disallowing remittances for material being supplied free of cost. All inputs imported shall be utilised in manufacturing of product except wastage. Self Declared 4.7 RA may also issue Advance Authorisations, where SIONs are Authorisations where not fixed, based on self declaration and an undertaking by SION does not exist applicant for a final adjustment as per Adhoc / SION fixed by NC. However, no Advance Authorisation shall be issued under this paragraph for import of following products:- 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.

e / 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 duty of more than 30%, classified under Chapter- 9 and 12 of ITC (HS) book; iv. All types of fruits/vegetables having a duty of more than 30%, classified under Chapter 7 and 8 of ITC (HS) book; and

55 v. Horn, hoof and any other organ of animal. For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no Authorisation shall be issued by RA and applicants may apply under Para 4.4.2 above. Where export and / or import of biotechnology items are involved, Authorisation under this paragraph shall be issued by RA only on submission of a “No Objection Certificate” from Department of Biotechnology. Entitlement 4.7.1 CIF value of one or more such authorisations shall be maximum 500% of FOB and / or FOR value of preceding year exports and / or supplies in case of status holders and Rs.

echnology. Entitlement 4.7.1 CIF value of one or more such authorisations shall be maximum 500% of FOB and / or FOR value of preceding year exports and / or supplies in case of status holders and Rs. 5 crore or 500% of the FOB and / or FOR value of preceding year exports and / or supply, whichever is more, for others. However, in cases where NC has already ratified norms for same export and import products in respect of an Authorisation obtained under paragraph 4.7, such norms shall be valid for a period of six months reckoned from date of ratification. In such cases Authorisations shall be issued by RA concerned under “Adhoc Norms Fixed” category and application copies need not be forwarded to NC for fixation / ratification of norms. Authorisation holder in such cases shall be entitled for further authorisation(s) as per norms ratified by NC without need for subsequent ratification by NC. In such cases applicant would file application under “Adhoc Norms Fixed” category. However, NC should ensure that such adhoc norm(s), if not notified already, are notified within a period of one month after six months of ratification of such adhoc norm(s).

4.7.2 Once norms are fixed by NC, value limits mentioned in above paragraph would not be applicable to advance authorisations issued under this paragraph. Such authorisations, subsequent to fixation of norms by NC, may be enhanced. It is mandatory for industry to provide production data etc.

icable to advance authorisations issued under this paragraph. Such authorisations, subsequent to fixation of norms by NC, may be enhanced. It is mandatory for industry to provide production data etc. as may be required by DGFT / EPC for fixation of SION. Otherwise, applicant shall not be allowed to take benefit of Advance Authorization scheme for taking repeat advance authorizations on self-declared basis. Authorisation in Excess 4.7.3 An applicant shall be entitled for authorisation in excess of of Entitlement entitlement mentioned in paragraph 4.7.1 subject to furnishing of 100% Bank Guarantee to Customs authority to cover exemption from customs duties. A specific endorsement to this effect shall be made on authorisation.

56 Application 4.7.4 Original application with prescribed documents shall be submitted to concerned RA. RA shall forward a copy of application within 7 days from Authorisation issue date to NC for fixation of norms within prescribed time. Undertaking 4.7.5 Applicant shall give an undertaking that he shall abide by norms fixed by NC and accordingly pay duty, together with interest, on unutilised inputs as per norms fixed by NC. However Authorisation holder has option to undertake additional EO in proportion to excess unutilized inputs.

rdingly pay duty, together with interest, on unutilised inputs as per norms fixed by NC. However Authorisation holder has option to undertake additional EO in proportion to excess unutilized inputs. In case application is rejected by NC, authorization holder shall pay customs duty saved along with interest on imported inputs, as notified. In addition, an amount as per Para 4.28(i)(b) below has to be deposited. 4.7.6 In such cases, where norms are not finalised by NC within four months from Authorisation issue date, norms as applied for shall be treated as final and no adjustment will be made. However, where application for fixation of adhoc / SION is rejected on account of non-furnishing of required documents / information, Authorisation holder shall be liable for penalty as stated in above paragraph. In case SION for the said product is notified, SION would be made applicable for deciding wastage norm and EO. In such cases, where export obligation is completed pending fixation of norms by NC, entitlement for authorisation as given in paragraph 4.7.1 may be re-credited upon production of documentary evidence (copies of Shipping bill / bill of export / Central Excise certified copies of invoices) showing fulfillment of export obligation in respect of previous authorisations. However, bond waiver / redemption shall not be allowed pending fixation of norms in such cases. Financial Powers 4.8 Financial powers of RA and NC are given in table below: On published norms and under paragraph 4.7 of HBP v1 RA RA on recommendation of DGFT Hqr (SION cases) / NC (adhoc Norms cases).

ial Powers 4.8 Financial powers of RA and NC are given in table below: On published norms and under paragraph 4.7 of HBP v1 RA RA on recommendation of DGFT Hqr (SION cases) / NC (adhoc Norms cases). Category of Petroleum / Others Petroleum / Others Application Petrochemical products Petrochemical products & Advance Authorisation & Advance Authorisation for Annual Requirements for Annual Requirements CIF value of Upto Rs. 500 crore Upto Rs. Rs. 500 crore or above Rs. 100 crore Authorisation 100 crore or above

57 Standardisation of 4.9 For standardization of norms, an application may be made by Adhoc Norms manufacturer exporter or merchant exporter tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to NC in ANF 4B. Import of fuel may also be allowed under SION by NC subject to following : - (a) Facility of import of fuel shall be allowed only to manufacturer having captive power plant. (b) In cases where SION specifically allows fuel, same shall be permitted under advance Authorisation. However, If fuel is not covered specifically under SION, it may be allowed as per general fuel Policy for products covered under SION or under paragraph 4.7 above. (c) Fuel should be allowed only against an actual user Authorisation.

ecifically under SION, it may be allowed as per general fuel Policy for products covered under SION or under paragraph 4.7 above. (c) Fuel should be allowed only against an actual user Authorisation. However in case of DFIA, fuel can only be transferred to agencies granted marketing rights by the Ministry of Petroleum and Natural Gas. (d) Deleted (e) Applications of fixation for fuel entitlement for new sectors and modification of the existing entitlement as per General Note for Fuel in HBP v2 would be made to NC along with requisite data in ANF 4C pertaining to “Data Sheet for Fuel Rate”. Modification of SION 4.10 An application for modification of existing SION may be filed before the NC by manufacturer exporter or merchant-exporter, tied to supporting manufacturer, in form given in ANF 4B. Amendment of Export 4.10.1 An application for amendment of an export item or inputs under item and inputs SION or under Adhoc Norms may be filed by any manufacturer or merchant exporter as per ANF 4B. Applicant would give justification for seeking amendment and same would be considered by Regional Office with specific approval of Head of Office. In case of any major change in input or request for more wastage to that allowed under SION or adhoc norm, same should be referred to NC for ratification. Revision of SION by NC 4.10.2 NC may identify SIONs which in its opinion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry / exporter(s) to provide production and consumption data etc.

ion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry / exporter(s) to provide production and consumption data etc. as may be required by DGFT / EPC for revision of SION.

58 Otherwise, applicant shall not be allowed to take benefit of Advance Authorization scheme. Description of an 4.11 An Advance Authorisation shall specify: Advance Authorisation (a) names and description of items to be imported and exported / supplied; (b) quantity of each item to be imported or wherever quantity cannot be indicated, value of item shall be indicated. However, if in SION, quantity and value of individual inputs is a limiting factor, same shall be applicable. (c) aggregate CIF value of imports; and (d) FOB / FOR value and quantity of exports / supplies. Exports in Anticipation 4.12 Exports / supplies made from date of EDI generated file number of Authorisation for an Advance Authorisation, may be accepted towards discharge of EO. Shipping / Supply document(s) should be endorsed with File Number or Authorisation Number to establish co-relation of exports / supplies with Authorisation issued. If application is approved, authorisation shall be issued based on input / output norms in force on the date of receipt of application by RA in proportion to provisional exports / supplies already made till any amendment in norms is notified.

be issued based on input / output norms in force on the date of receipt of application by RA in proportion to provisional exports / supplies already made till any amendment in norms is notified. For remaining exports, Policy / Procedures in force on authorisation issue date shall be applicable.

4.12.1 Exports / supplies made in anticipation of grant of an Advance Authorisation shall be entirely on risk and responsibility of exporter.

4.12.2 Conversion of duty free shipping bills to drawback shipping bills may also be permitted by customs authorities in case application for an Advance Authorisation is rejected or modified by RA. Advance Authorisation 4.13 Application for grant of Advance Authorisation or DFIA for or DFIA for Intermediate Intermediate supply may be made on the basis of a tie-up Supplies agreement with exporter (physical / deemed) holding an Advance Authorisation or DFIA. RA concerned shall consider such requests. Advance Authorisation or DFIA for Intermediate supply shall be issued after making Authorisation invalid for direct import of items to be supplied by intermediate manufacturer. In such cases, a copy of the invalidation letter will be given to Authorisation holder and copy thereof will be sent to intermediate supplier as

of items to be supplied by intermediate manufacturer. In such cases, a copy of the invalidation letter will be given to Authorisation holder and copy thereof will be sent to intermediate supplier as

59 well as RA of intermediate supplier. Authorisation holder in such case has an option either to supply intermediate product to holder of Advance Authorisation DFIA or to export (physical / deemed) directly. However, once Electronic message transfer facility among the RAs becomes fully operational, sending copy of invalidation letter / ARO to jurisdictional RA shall not be required. Facility of Advance Authorisation shall be available even in cases where intermediate supplier has supplied or intend to supply material subsequent to fulfilment of EO by exporter holding Advance Authorisation / DFIA from where invalidation letter was issued. Advance Release Order 4.14 An application may be made to RA concerned for grant of ARO to procure inputs from indigenous sources / STEs. 4.14.1 Application shall specify: (i) name, description and quantity of items; and (ii) individual value of items to be procured. An ARO may be issued along with Advance Authorisation / DFIA or subsequently, and its validity shall be co-terminus with validity of Advance Authorisation / DFIA. An ARO issued for procurement of an individual item shall be automatically valid for procurement from one or more indigenous sources. Back to Back Inland 4.15 Exporter may alternatively avail facility of a back to back inland Letter of Credit (L/C) letter of credit from banks.

id for procurement from one or more indigenous sources. Back to Back Inland 4.15 Exporter may alternatively avail facility of a back to back inland Letter of Credit (L/C) letter of credit from banks. An Advance Authorisation / DFIA holder may approach a bank for opening an inland letter of credit (L/C) in favour of an indigenous supplier. 4.15.1 Before opening the L/C, bank will ensure that necessary BG / LUT has been executed by Advance Authorisation / Non Transferable DFIA holder and an endorsement to that effect has been made on the Authorisation. However, execution of BG / LUT shall not be required against transferable DFIA. After opening inland L/C, bank shall make following endorsement on Exchange Control and Customs copy of Advance Authorisation/ DFIA; Value of this Advance Authorisation / DFIA stands reduced by a sum of Rs. ________ , being value of inland L/C No.________ opened today by authorisation holder in favour of M/s _______________ (name and address of indigenous supplier).

DFIA stands reduced by a sum of Rs. ________ , being value of inland L/C No.________ opened today by authorisation holder in favour of M/s _______________ (name and address of indigenous supplier).

60 4.15.2 Authorisation shall be invalidated by bank for direct import only in respect of full quantity and value of item being sourced indigenously. 4.15.3 Original Letter of credit (L/C) may be retained by bank for negotiation and only non-negotiable copy of L/C may be given to indigenous supplier. 4.15.4 Responsibility of bank shall be confined to making endorsement. Bank shall not be liable for any misrepresentation or false statement made by authorisation holder while requesting bank to make endorsement. Inland L/C opened by bank in favour of indigenous supplier shall not be cancelled for any reason whatsoever. 4.15.5 Non negotiable copy of inland L/C together with photocopy of Advance Authorisation / DFIA duly carrying endorsements made by bank shall be sufficient for indigenous supplier to claim deemed export benefits. L/C issued shall be entitled to benefits given in paragraph 8.3 (b) and (c) of FTP. 4.15.6 Where import is permitted as an input under this scheme, gold / silver can be sourced through nominated agencies as given in FTP (Chapter 4) for supply against the Advance Authorisations/ DFIA issued.

here import is permitted as an input under this scheme, gold / silver can be sourced through nominated agencies as given in FTP (Chapter 4) for supply against the Advance Authorisations/ DFIA issued. Before supply of material, nominated agencies should follow same procedure as given in paragraph 4.15.1 above. Facility of Supporting 4.16 Imported material may be used in any unit of holder of Advance Manufacturers / Authorisation or Non Transferable DFIA or jobber / supporting Jobber / co-licensee manufacturer provided same is endorsed on authorisation by RA. If applicant desires to have name of any manufacturer or jobber added to authorisation, he may apply. Such endorsement shall be mandatory where prior import before export is a condition for availing Advance Authorisation / DFIA scheme and authorisation holder desires to have material processed through any other manufacturer or jobber. Upon such endorsement made by RA, authorisation holder and co- authorisation holder shall jointly and severally be liable for completion of EO. Any one of co-authorisation holders may import goods in his name or in joint names. BG/LUT shall also be furnished in their joint names. However if authorisation holder is registered with Central Excise, he has an option of getting names of jobber endorsed by Central Excise as per Central Excise Rules in lieu of RA’s endorsement. In case manufacturer exporter holding authorisation is not registered / not required to be registered with Central Excise

d by Central Excise as per Central Excise Rules in lieu of RA’s endorsement. In case manufacturer exporter holding authorisation is not registered / not required to be registered with Central Excise

61 authority, job work may be allowed as per Central Excise Rules and regulations without insisting for endorsement of supporting manufacturer’s name. However, authorisation holder shall be solely responsible for imported items and fulfillment of EO. In case BG / LUT has been redeemed, advance authorization holder can get duty free inputs processed from any manufacturer under Actual User condition as per job work regulations prescribed under Central Excise Rules. However such restriction shall not be applicable in case of transferable DFIA holder. Facility Of Co-Licensee 4.17 Deleted. Acceptance of BG / LUT 4.18 At the time of issue of authorisation, acceptance of undertaking given by applicant to RA concerned in relevant ANF will be endorsed on the reverse of Advance Authorisation. Authorisation holder shall execute Bank Guarantee / Legal Undertaking, as the case may be, in terms of para 2.20 of HBP v1. Port of Registration 4.19 Advance Authorisation shall be issued for purpose of import and export through one of sea ports or airports or ICDs or LCS specified below. Authorisation holder shall register authorisation at the port specified in authorisation and thereafter all imports against said authorisation shall be made only through that port, unless the authorisation holder obtains permission from customs authority concerned to import through any other specified port.

ports against said authorisation shall be made only through that port, unless the authorisation holder obtains permission from customs authority concerned to import through any other specified port. However, exports may be made through any of the specified ports. Sea Ports : Mumbai, Kolkata, Cochin, Kakinada, Kandla, Mangalore, Marmagoa, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Dahej, Nagapattinam, Okha, Mundhra , Surat (Magdalla), Jamnagar, Nhava Sheva, Bedi (including Rozi-Jamnagar), Muldwarka, Porbander, Dharamtar and Vadinar. Air-ports : Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur, Chennai, Raja Sansi (Amritsar) and Lucknow (Amausi). ICDs : Agra, Bangalore, Coimbatore, Delhi, Faridabad, Gauhati (Amingaon), Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad, Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur(Nainital), Dighi (Pune), Vadodara, Daulatabad, (Wanjarwadi and

d, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad, Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur(Nainital), Dighi (Pune), Vadodara, Daulatabad, (Wanjarwadi and

62 Maliwada), Waluj (Aurangabad), Anaparthy, Salem Mallanpur, Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry, Garhi Harsaru Bhatinda, Dappar, Chheharata (Amritsar), Karur, Miraj, Rewari, Bhusawal, Jamshedpur, Surajpur and Dadri, Tuticorin, Bhadoi, Raipur, Mandideep (Distt. Raisen), Durgapur (Export Promotion Industrial Park) and Babarpur. LCS : Ranaghat , Singhabad , Raxaul, Jogbani, Nautanva (Sonauli), Petrapole, Mahadipur, Hilly, Chengrabanda, Dawki, Atari, Nepalganj Road, Agartala, Sutrakhandi, Amritsar Rail Cargo and Atari Road. SEZ : As notified by Central Government any SEZ can be a specified port for import and export. 4.19.1 Commissioner of Customs may permit imports and exports from any other seaport / airport / ICD or LCS . 4.19.2 In such cases, where authorisation has not been registered at specified port (in Authorisation) and no import has taken place, request for change in Port of Registration may be considered by RA provided the Authorisation has not been redeemed. 4.19.3 For imports from Airport / Seaport / ICD / LCS other than port of registration, a TRA shall also be issued by the customs authority at the port of registration to customs authority at port of import. Facility of Clubbing 4.20 Facility of clubbing shall be available only for redemption / regularisation of cases and no further import or export shall be

ration to customs authority at port of import. Facility of Clubbing 4.20 Facility of clubbing shall be available only for redemption / regularisation of cases and no further import or export shall be allowed. For this facility, authorisations are required to have been issued under similar Customs notification even pertaining to different financial years. However in case of Authorisations issued in 2004-09 period, Advance Authorisations with different customs notification can be clubbed. 4.20.1 RA, under whose jurisdiction authorisation is issued or NC in other cases, shall consider a request in ANF 4D for clubbing all imports and exports of more than one Advance Authorisation provided imported inputs are properly accounted for as per norms. Value addition of the authorisations so clubbed shall be average of minimum value addition prescribed in FTP and Procedure laid thereunder, imposed on individual authorisations. Upon clubbing, authorisations shall, for all purposes, be deemed to be one Authorisation and thereafter shortfall, if any, shall be regularized in terms of para 4.28 of HBP v1.

idual authorisations. Upon clubbing, authorisations shall, for all purposes, be deemed to be one Authorisation and thereafter shortfall, if any, shall be regularized in terms of para 4.28 of HBP v1.

63 4.20.2 Accountability of imports and exports shall be restricted in relation to individual categories of Advance Authorisations including Advance Authorisation for annual requirements. 4.20.3 Facility is available only for Advance Authorisation(s) where there is shortfall in fulfillment of EO, and which is sought to be clubbed with an advance Authorisation(s) which is valid for imports. For expired Authorisation(s) with EO shortfall and which is sought to be clubbed with an advance Authorisation(s) which is valid for imports, applicant shall pay composition fee for EO period extension as per paragraph 4.22 below. 4.20.4 Wherever exports are effected beyond EO extension period (allowed vide paragraph 4.22 below) of earlier authorisation, no clubbing shall be permitted. 4.20.5 Notwithstanding provisions of para 4.20.3 and 4.20.4 above, Clubbing of all expired Authorisations may also be permitted provided all expired Authorisations have been issued during Exim Policy period 1992-1997 & 1997-2002 i.e., 1st April 1992 to 31st March, 2002.

bing of all expired Authorisations may also be permitted provided all expired Authorisations have been issued during Exim Policy period 1992-1997 & 1997-2002 i.e., 1st April 1992 to 31st March, 2002. However clubbing of erstwhile Value Based Advance licences shall not be allowed. Enhancement / Reduction 4.21 In respect of an Advance Authorisation, RA concerned (as per in the Value of their financial powers) may consider a request for: Authorisation (a) enhancement / reduction in CIF value of advance authorisation; (b) enhancement / reduction in CIF value, quantity of inputs, FOB value and quantity of exports of an advance authorisation; provided VA after such enhancement does not fall below minimum VA stipulated in FTP and HBP v1 laid thereunder and there is no change in input-output norms and FTP under which advance authorisation was issued. 4.21.1 Deleted. 4.21.2 Request for prorata enhancement in value and quantity may be made either before or after exports. In such cases where there is a change in SION prior to export of said product, pro-rata enhancement shall be given after calculating entitlement on revised SION. 4.21.3 The application for the enhancement / reduction in the value of Authorisation shall be made in ANF 4E.

duct, pro-rata enhancement shall be given after calculating entitlement on revised SION. 4.21.3 The application for the enhancement / reduction in the value of Authorisation shall be made in ANF 4E.

64 Application fee for 4.21.4 Application fee leviable for enhancement would be on the enhancement difference in CIF values of original and final Authorisation. However, no application fee would be charged if value of Authorisation is being reduced or applicant has paid maximum fee of Rs 150,000 (for manual applications) and Rs 75,000 (for digitally signed applications) respectively in original application for Advance Authorisation. Export Obligation (EO) 4.22 Fulfillment Period of EO under an Advance Authorisation shall Period and its Extension commence from Authorisation issue date. EO shall be fulfilled within 24 months except in case of supplies to projects / turnkey projects in India / abroad under deemed exports category where EO must be fulfilled during contracted duration. In case of Spices {(covered by chapter 9 of ITC (HS)}, EO shall be fulfilled within 90 days from the date on which first import consignment is cleared by Customs Authorities. However, in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days. EO Period for import of drugs (with a specific export order and pre-import condition) and for import of tea shall be 6 months. 4.22.1 Request for extension in EOP may be made in ANF 4E.

hin 120 days. EO Period for import of drugs (with a specific export order and pre-import condition) and for import of tea shall be 6 months. 4.22.1 Request for extension in EOP may be made in ANF 4E. RA shall grant one extension for six months from expiry date with payment of composition fee of 2% of duty saved on all unutilized imported items as per Authorisation. Request for a further extension of six months may be considered by RA with payment of composition fee of 5% of duty based on all unutilized imported items as per Authorisation. Facility of extension of EOP shall not be allowed in case of advance authorisation wherein import of penicillin and its salts (ITC (HS) Code No. 29411010) and 6 – APA (ITC (HS) Code No. 29411 050) have been allowed as an input and also for import of spices and tea. RA shall make an endorsement in advance authorisation to this effect. Such extensions would not be permitted in erstwhile Value Based Advance Authorisations (VABALs). Additionally, no extension in EO would be allowed in respect of Authorisations where misrepresentation / fraud has come to notice of RA. Further, in respect of Authorisations where adjudication orders have already been passed, no extension in EOP shall be admissible.

isations where misrepresentation / fraud has come to notice of RA. Further, in respect of Authorisations where adjudication orders have already been passed, no extension in EOP shall be admissible.

65 4.22.2 Customs may allow provisional clearance of export consignment as and when Authorisation holder produces documentary evidence of having applied for EO extension to concerned RA. Revalidation of 4.23 RA may consider a request of original Authorisation holder and Authorisation grant one revalidation for six months from expiry date. Request(s) for revalidation of Authorisation shall be made in ANF 4I. Monitoring of Obligation 4.24 RA, with whom undertaking is executed by Advance Authorisation holder, shall maintain a proper record in a master register indicating starting and closing dates of obligation period and other particulars to monitor EO. Within two months from date of expiry of period of obligation, Authorisation holder shall submit requisite evidence in discharge of export obligation in accordance with paragraph 4.25 below. However, in respect of shipments where six months period (one year in case of status certificate holder) for realisation of foreign exchange has not become due, RA shall not take action for non submission of bank certificate of exports and realisation provided other document substantiating fulfillment of EO have been furnished. 4.24.1 In case Authorisation holder fails to complete EO or fails to submit relevant information / documents, RA shall take action by refusing further Authorisations, enforce condition of

furnished. 4.24.1 In case Authorisation holder fails to complete EO or fails to submit relevant information / documents, RA shall take action by refusing further Authorisations, enforce condition of Authorisation and Undertaking and also initiate penal action as per law. Advance Authorisation for 4.24A (a) Exporters eligible for such Authorisations shall file an Annual Requirement application in ANF 4A to RA concerned. All provisions as to Advance Authorisation given above would apply except the following: (i) RA while issuing Authorisation shall mention technical characteristics quality and specifications in respect of such inputs:- Alloy steel including stainless steel, copper alloy, synthetic rubber, bearings, solvents, perfumes/ essential oils / aromatics chemicals, surfactants, relevant fabrics and marble. (ii) Authorisation holder shall have flexibility to export any product falling under export product group using duty exempted material.

aromatics chemicals, surfactants, relevant fabrics and marble. (ii) Authorisation holder shall have flexibility to export any product falling under export product group using duty exempted material.

66 (iii) Within eligible entitlement, an exporter may apply for one or more than one authorisations in a licensing year, subject to condition that against one port of registration only one authorisation can be issued for same product group. One time enhancement / reduction of the authorisation shall be available in terms of paragraph 4.21 above. (iv) On completion of EO against one or more authorisations, all issued in same licensing year, entitlement of an exporter for that licensing year shall be deemed to be revived by an amount equivalent to EO completed against authorisation(s).

(b) to (g) Deleted. 4.24B Deleted. Fulfillment Of Export 4.25 Authorisation holder shall furnish prescribed documents in Obligation ANF 4F in support of fulfillment of EO. A (i) to Deleted. (iv) B (i) to Deleted. (iv) Redemption / 4.26 In case EO has been fulfilled, RA shall redeem the case. After No Bond Certificate redemption, RA shall forward a copy of redemption letter indicating shipping bill number(s), date(s), FOB value in Indian rupees as per shipping bill(s) and description of export product in respect of shipment which were taken into account for the purpose of fulfillment of EO to Customs authority at port of registration.

ry and excess value addition achieved in case of plain jewellery and articles. (iii) Provision of paragraph 4A.1.1 to 4A.1.4 will also be applicable for Gem Rep Authorisations. Agency Commission 4A.5 Exporter availing scheme of gold / silver / platinum jewellery are allowed to pay agency commission. Value addition shall be calculated after deducting agency commission. Wherever such agency commission is paid, value addition shall be correspondingly increased by percentage of agency commission. Endorsement on shipping 4A.6 During export of jewellery, shipping bill and invoice presented Bill and Invoice to customs authorities shall contain description of item, its purity, weight of gold / silver / platinum content, wastage claimed thereon, total weight of gold / silver / platinum content plus wastage claimed and its equivalent quantity in terms of 0.995/0.999 fineness for gold/ silver and in terms of 0.9999 fineness for platinum and its value, fob value of exports and value addition achieved. If purity of gold / silver / platinum used is same in respect of all or some of items made out from each of these metals for export, exporter may give total weight of gold/silver/ platinum and other details of such similar items which are of same purity. In case of studded items, shipping bill shall also contain description, weight and value of precious / semi-precious stones / diamonds / pearls used in manufacture, and weight / value of any other precious metal used for alloying gold / silver.

also contain description, weight and value of precious / semi-precious stones / diamonds / pearls used in manufacture, and weight / value of any other precious metal used for alloying gold / silver.

79 Conditions of Exports 4A.7 Exports shall be allowed by customs authorities provided endorsement made on shipping bill and invoice are correct and value addition achieved is not below minimum prescribed in FTP. Proof of Exports 4A.8 Exporter has to furnish the proof of exports, wherever required for export of gold / silver / platinum jewellery and articles thereof, by furnishing following documents: (a) E.P copy of the shipping bill; (b) Customs attested invoice; (c) Bank certificate of export as in Appendix 22A showing that documents have been sent for negotiation / collection; and (d) A declaration on following lines: “ I / We declare that outstanding realisation of export proceeds beyond 180 days does not exceed 10% of average exports of preceding three licensing years.

and (d) A declaration on following lines: “ I / We declare that outstanding realisation of export proceeds beyond 180 days does not exceed 10% of average exports of preceding three licensing years. I/We further declare that no export proceeds are outstanding beyond one year or such extended period for which RBI permission has been obtained.” In case of Personal carriage of jewellery by foreign buyer, following documents should be submitted by the exporter/seller as proof of exports for claiming export entitlements: (a) Copy of shipping bill filed by Indian Seller; (b) A copy of Currency Declaration Form filed by Foreign Buyer with Customs at the time of his arrival; and (c) Foreign Exchange Encashment Certificate from Bank. In addition to this, Personal Carriage on Documents Against Acceptance (DA) / Cash On Delivery (COD) basis is also allowed. Exporter will have to furnish following documents as proof of exports for claiming export entitlements: (i) Copy of Shipping Bill filed by Indian Seller; and (ii) Bank Certificate of Export and Realisation Instructions issued by Customs Department in this regard should be followed mutatis mutandis.

s: (i) Copy of Shipping Bill filed by Indian Seller; and (ii) Bank Certificate of Export and Realisation Instructions issued by Customs Department in this regard should be followed mutatis mutandis.

80 Conversion of Purity / 4A.9 For conversion of quantity of gold / silver / platinum in terms of Fineness equivalent quantity in terms of fineness, following formula shall be used: (i) Where items of gold has been exported in terms of carats, quantity of gold shall be multiplied by number of carat of gold exported, divided by 24 and thereafter again divided by 0.995 / 0.999 / 0.900 to arrive at equivalent quantity of gold in terms of fineness of 0.995 / 0.999 / 0.900 respectively; and (ii) Wherever purity of item of export is expressed in terms of fineness, the quantity of gold/silver/platinum shall be multiplied by fineness of gold/silver/platinum exported and thereafter divided by 0.995 / 0.999 / 0.900 to arrive at equivalent quantity of gold / silver / platinum in terms of 0.995 / 0.999 / 0.900 fineness respectively’. Release of Gold / Silver / 4A.10 Gold / silver / platinum shall be released to exporter of jewellery Platinum by Nominated by nominated agencies/RBI authorised banks in multiples of Agencies 10 gms or in Ten Tola Bars in respect of golds. However, silver shall be released to exporters in multiples of 1 Kg only. Any balance of gold / silver / platinum shall be available to exporter along with his future entitlement.

n respect of golds. However, silver shall be released to exporters in multiples of 1 Kg only. Any balance of gold / silver / platinum shall be available to exporter along with his future entitlement. Gold / silver shall be released by the nominated agencies in terms of 0.995 fineness or more and platinum in terms of 0.900 fineness or more. Terms of payment 4A.11 Export of gold / silver / platinum jewellery and articles thereof shall be against irrevocable letter of credit, payment of cash on delivery basis, Documents Against Acceptance (DA) basis or advance payment in foreign exchange. Port of Export 4A.12 Exports under schemes of gold / silver / platinum jewellery and articles thereof shall be allowed by airfreight and Foreign Post Office through the Customs House at Mumbai, Calcutta, Chennai, Cochin, Delhi, Jaipur, Bangalore, Kochi, Coimbatore, Ahmedabad, Dabolin Airport, Goa and Hyderabad. Export by courier shall also be allowed through Custom Houses at Mumbai, Calcutta, Chennai, Cochin, Coimbatore, Delhi, Jaipur, Bangalore, Ahmedabad and Hyderabad upto FOB value of Rs.20 lakhs per consignment. Export by Post 4A.13 Policy for export of gems and jewellery parcel by post is in paragraph 4A.17 of FTP. At the time of exports, exporter shall submit following documents: (i) Shipping bills or invoice presented at foreign Post Office;

of gems and jewellery parcel by post is in paragraph 4A.17 of FTP. At the time of exports, exporter shall submit following documents: (i) Shipping bills or invoice presented at foreign Post Office;

81 (ii) Certificate from nominated agencies indicating price at which gold / silver / platinum was booked or given on outright sale basis or loan basis; (iii) Three copies of invoice. 4A.14 Deleted Export Against Supply 4A.15 Before clearance of each consignment of import supplied by By Foreign Buyer foreign buyer, nominated agency shall execute a bond with Customs, undertaking to export within stipulated period in contract, gold / silver / platinum jewellery or articles equivalent to entire import quantity of gold / silver / platinum, mountings and findings etc excluding admissible wastage. In case of direct supply of gold / silver / platinum, alloys, findings and mountings of gold / silver / platinum and plain semi-finished gold / silver / platinum jewellery to status holder / exporter, Status Holder / exporter shall furnish a Bank Guarantee / LUT, as per Customs Rules and regualtions to Customs equivalent to Customs Duty leviable on imported gold / silver / platinum, alloys, findings and mountings of gold / silver / platinum and plain semi- finished gold/ silver / platinum jewellery etc. BG / LUT, executed with Customs shall be valid for one year. In case of direct supply to Status Holder / exporter, exports shall be completed within 90 days.

d gold/ silver / platinum jewellery etc. BG / LUT, executed with Customs shall be valid for one year. In case of direct supply to Status Holder / exporter, exports shall be completed within 90 days. In case of non-fulfillment of EO / non-achievement of stipulated value addition, Customs Department shall proceed to recover custom duty alongwith interest which may include enforcement of BG / LUT. Besides importer will be liable to penal action under Customs Act

4A.15.1 Nominated agency / Status Holder / exporter shall be liable to pay customs duty leviable on that quantity which is proved to have been not exported.

4A.15.2 Goods shall be cleared through Customs by nominated agency Status Holder / exporter. Even where export order is received by an Associate, goods shall be cleared through Customs by nominated agency only and not Associate. Associate shall, in such cases, authorise nominated agency to act as its agent to file Bill of Entry and shipping bill.

4A.15.3 At time of export, shipping bill presented to Customs shall also contain the following: (i) Name and address of associate / Status Holder / exporter;

file Bill of Entry and shipping bill.

4A.15.3 At time of export, shipping bill presented to Customs shall also contain the following: (i) Name and address of associate / Status Holder / exporter;

82 (ii) An endorsement by nominated agency that export is made against an order received by concerned associate, its date of registration with nominated agency. In case of exports by Status Holder / exporter, a Self Declaration shall be provided to this effect; (iii) Name of Customs House through which gold / silver / platinum / plain semi-finished gold / silver / platinum jewellery was imported and corresponding Bill of Entry No. and date and date of import. 4A.15.4 Each shipping bill shall be valid for exports only through Customs House located at the place where office of nominated agency / Status Holder / exporter concerned is situated. It shall be valid for shipment for a period of seven days including the date on which endorsement was made by nominated agency in case of exports through nominated agency. If exports cannot be made within this period, exporter shall file a fresh shipping bill. 4A.15.5 At the time of export, exporter shall submit following documents: (i) Shipping bill with two extra copies where exports are made from a Customs House other than Customs House through which corresponding import of gold / silver / platinum / plain semi-finished gold / silver / platinum jewellery was effected.

re exports are made from a Customs House other than Customs House through which corresponding import of gold / silver / platinum / plain semi-finished gold / silver / platinum jewellery was effected. In other cases, shipping bill with an extra copy; (ii) Three copies of invoice; (iii) Certificate from nominated agency indicating quantity and value of items supplied by foreign buyer. 4A.15.6 Customs authorities shall return two copies of shipping bill and connected invoice duly attested. One copy shall be sent to person who presented documents and the other copy shall be sent by Customs to office of nominated agency / Status holder / exporter. 4A.15.7 In case of exports through nominated agency, exporter shall submit proof of exports to nominated agency within 15 days of exports, who shall, after verifying documents, release admissible quantity of the gold / silver / platinum etc. to exporter. 4A.15.8 Exporter may also obtain, in advance, gold / silver / platinum etc. supplied by foreign buyer by furnishing a BG / LUT for an amount equal to international price of such items plus customs duty payable thereon. BG / LUT shall be redeemed only when the exporter has furnished proof of exports to nominated agency

LUT for an amount equal to international price of such items plus customs duty payable thereon. BG / LUT shall be redeemed only when the exporter has furnished proof of exports to nominated agency

83 and accounted for the use of items supplied in advance in export product. 4A.15.9 For redemption of bond / BG / LUT executed with Customs, nominated agency / Status Holder / exporter shall furnish a statement indicating items, its quantity and value supplied by foreign buyer, corresponding Bill of Entry number and date, number of each of shipping bills against which corresponding exports was made. Maintenance of Accounts 4A.16 Nominated agency shall maintain complete account, consignment- wise, of the gold, silver, platinum, mountings, findings / plain semi- finished gold / silver / platinum jewellery etc. imported for execution of each export order, exports effected and quantity of gold, silver, platinum mountings, findings etc. released against such exports. For direct exports, similar accounts shall also be maintained by Status Holder. Such accounts shall be maintained for a minimum period of three years from date of exports. Export Through 4A.17 Nominated agencies shall produce to Customs Authorities letter Exhibitions / Export in original or its certified copy, containing Government’s approval Promotion Tours / Export for holding exhibition / export of branded jewellery. Any other of Branded Jewellery person shall produce to Asst.

nal or its certified copy, containing Government’s approval Promotion Tours / Export for holding exhibition / export of branded jewellery. Any other of Branded Jewellery person shall produce to Asst. Commissioner, customs letter in original or its certified copy containing GJEPC’s approval for holding exhibitions / export promotion tour / export of branded jewellery. In case of re-import, such items, on arrival, shall be verified alongwith export documents before clearance. 4A.18 (a) Exports under this scheme shall be subject to following conditions for following modes of export: (i) Export of Gems and Jewellery for holding / participating in overseas exhibition. Exports under this scheme shall be subject to the following conditions: Items not sold abroad shall be re-imported within 60 days of close of exhibition. However in case exporter is participating in more than one exhibition within 45 days of close of first exhibition, then 60 days shall be counted from date of close of last exhibition. In case of personal carriage of gems and jewellery for holding /participating in overseas exhibitions, value of such gems and jewellery shall not exceed US $ 2 million. Gold / silver / platinum content on items sold in such exhibitions may be imported as replenishment.

pating in overseas exhibitions, value of such gems and jewellery shall not exceed US $ 2 million. Gold / silver / platinum content on items sold in such exhibitions may be imported as replenishment.

84 Exporter shall take replenishment from nominated agency within 120 days from the close of the exhibition gold / silver / platinum for replenishment content against items sold abroad in exhibition. (ii) Personal Carriage of gems & jewellery or export through airfreight / post parcel route for Export Promotion Tours /photo shoots / fashion shows overseas. Personal carriage / export through airfreight / post parcel route of gold / silver / platinum jewellery, cut and polished diamonds, precious, semi- precious stones, beads and articles as samples upto US$ 100,000 for export promotion tours / photo shoots / fashion shows and temporary display / sale abroad is also permitted with approval of Gem & Jewellery & Jewellery EPC subject to the condition that promoter would bring back jewellery / goods or repatriate sale proceeds within 45 days from date of departure through normal banking channel. In case of personal carriage for export promotion tours, exporter shall declare personal carriage of such samples to Customs while leaving country and obtain necessary endorsement on Export Certificate issued by Jewellery Appraiser of Customs.

otion tours, exporter shall declare personal carriage of such samples to Customs while leaving country and obtain necessary endorsement on Export Certificate issued by Jewellery Appraiser of Customs. In such cases exporter shall book with nominated agency, within 120 days after export promotion tour or expiry of stipulated period of 45 days, whichever is earlier, gold / silver / platinum for replenishment content against items sold abroad. (iii) Export of branded jewellery. Export of branded jewellery is also permitted with approval of Gem & Jewellery and Jewellery EPC for display / sale in permitted shops set up abroad or in showroom of their distributors / agents. Items not sold abroad within 180 days shall be re- imported within 45 days. Exporter shall book with nominated agency within 120 days after the end of stipulated period of 180 days, gold / silver / platinum for replenishment content against items sold abroad. (b) Following documents shall be submitted for claiming such replenishment: (i) Customs attested invoice;

d of 180 days, gold / silver / platinum for replenishment content against items sold abroad. (b) Following documents shall be submitted for claiming such replenishment: (i) Customs attested invoice;

85 (ii) Copy of the approval letter issued by Government / GJEPC; (iii) Certificate from nominated agency / GJEPC as in Appendix 22F. (c) In case of exhibitions organised by nominated agencies, gold / silver / platinum shall be imported as replenishment by nominated agencies within 60 days from close of exhibition. 4A.19 Nominated agencies shall maintain a complete account of exports made, goods sold abroad, goods re-imported, and metals purchased abroad and imported into India. Such account shall be maintained for a minimum period of three years from date of close of exhibition. Export Against Supply 4A.20 Exporter may obtain gold / silver / platinum on following basis:- By Nominated Agencies (i) Replenishment basis after completion of exports; (ii) Outright purchase basis in advance; (iii) Loan basis. Replenishment Basis 4A.21 Exporter may apply to nominated agency for booking of precious metal gold / silver / platinum. Quantity of precious metal booked with nominated agency shall be equivalent to precious metal content in the export product and admissible wastage.

4A.21.1 Applicant shall at the time of booking deposit an earnest money for a minimum amount of 20% of notional price of precious metal, which shall be adjusted at actual sale. 4A.21.2 Exporter may also export jewellery on a notional rate based on certificate provided by Bank.

minimum amount of 20% of notional price of precious metal, which shall be adjusted at actual sale. 4A.21.2 Exporter may also export jewellery on a notional rate based on certificate provided by Bank. Exporter must fix price within credit terms allowed to buyer and realise proceeds within the due date of the credit terms or 180 days, whichever is earlier. Exporter exporting on a notional basis under Replenishment Scheme must book the same quantity of gold with Nominated Agency on same rate that he may have booked with buyer. Nominated agencies shall purchase precious metal on behalf of exporter at the rate so fixed and thereafter issue a purchase certificate bearing a serial number to exporter indicating quantity of gold / silver / platinum and CIF value, in dollars including the Rupee equivalent. Price shall be actual price at which gold / silver / platinum is purchased by nominated agencies plus permitted service charges levied by nominated agencies shall be included with the price of gold / silver / platinum for value addition. Duplicate and triplicate

purchased by nominated agencies plus permitted service charges levied by nominated agencies shall be included with the price of gold / silver / platinum for value addition. Duplicate and triplicate

86 copies of exporter’s application together with copies of purchase certificate for exporter shall be sent by nominated agencies to concerned Custom House as well as to the negotiating bank who will confirm realization at which gold has been purchased. Exporter exporting under notional rate will get replenishment only after proceeds are realised. 4A.21.3 Exports shall be effected within a period of 120 days from date of booking and drawal of precious metal shall be completed within a period of 150 days from date of booking or within 30 days from date of export whichever is later. Outright Purchase Basis 4A.22 Exporter may obtain required quantity of precious metal in in Advance advance on outright purchase basis subject to furnishing of BG / LUT to nominated agencies for an amount as may be prescribed by nominated agency. On failure to effect exports within period prescribed, the nominated agencies shall enforce BG / LUT, as the case may be.

4A.22.1 Exports shall be effected within a maximum period of 90 days from date of outright purchase of precious metal. Loan Basis 4A.23 Exporter may obtain required quantity of precious metal on loan basis subject to furnishing of BG / LUT, for customs duty to nominated agencies for an amount as may be prescribed by nominated agencies.

porter may obtain required quantity of precious metal on loan basis subject to furnishing of BG / LUT, for customs duty to nominated agencies for an amount as may be prescribed by nominated agencies. On failure to effect exports within period prescribed, the nominated agencies shall enforce the BG / LUT. 4A.23.1 Exporter has to pay interest on gold taken on loan basis at the rate as may be specified. 4A.23.2 Export has to be completed within a maximum period of 90 days from date of release of gold on loan basis. No extension for fulfillment of EO shall be allowed. 4A.23.3 Exporter shall be permitted to export jewellery on the basis of a notional rate certificate to be issued by nominated agency / GJEPC. This rate will be based on prevailing Gold / USD rate and the USD / INR rate in notional rate certificate. Certificate issued by nominated agency / GJEPC should not be older than 7 working days of date of shipment. Value addition will have to be achieved on rate as may be got fixed with buyer and Nominated Agency. Exporter shall have flexibility to fix the price and repay Gold Loan within 180 days from date of export. This price shall be communicated to nominated agencies who will issue a certificate

Agency. Exporter shall have flexibility to fix the price and repay Gold Loan within 180 days from date of export. This price shall be communicated to nominated agencies who will issue a certificate

87 showing final confirmation of the rate to the bank negotiating documents, to ensure export proceeds are realized at this rate. 4A.24 Nominated agencies may accept payment in dollars towards cost of import of precious metal from EEFC account of exporter. Exports against Advance 4A.25 Procedure applicable to Advance Authorisations under Authorisation Chapter-4 of HBP v1 shall generally apply to this scheme except norms for value addition, EO period and regularization of default.

4A.25.1 EO will be required to be fulfilled within 120 days from date of import of each consignment against Authorisation. However EO period shall be 180 days from date of import of findings, mountings made of gold, platinum and silver and export of jewellery. No further extension in EO period will be allowed. Advance Authorisation holder may also import gold as replenishment after completion of exports. 4A.25.2 Advance Authorisation holder may obtain gold / silver / platinum from nominated agencies in lieu of direct imports.

n holder may also import gold as replenishment after completion of exports. 4A.25.2 Advance Authorisation holder may obtain gold / silver / platinum from nominated agencies in lieu of direct imports. In such a case, nominated agency shall make, both exchange control copy and customs purpose copy of Authorisation invalid for direct imports. Diamond Imprest 4A.26 Policy for Diamond Imprest Authorisation is prescribed in Authorisation paragraph 4A.14 of FTP. Application 4A.26.1 For the scheme, an application in ANF 4J, alongwith prescribed documents therein shall be submitted to RA concerned. Export Obligation 4A.26.2 EO against each consignment shall be fulfilled within a period of five months from date of clearance of such consignment through Customs. However, at no point of time, importer shall be required to maintain records of individual import consignments nor will they be required to co-relate export consignments with corresponding import consignments towards fulfilment of EO. Regularistion of 4A.27 Cases of bonafide default in fulfillment of EO by an exporter Bonafide Default who has obtained precious metals from nominated agencies may be regularised provided exporter has paid customs duty alongwith interest thereon as notified to Customs. However, in case of Advance Authorisation, the provisions as given in paragraph 4.28 above shall apply.

sed provided exporter has paid customs duty alongwith interest thereon as notified to Customs. However, in case of Advance Authorisation, the provisions as given in paragraph 4.28 above shall apply. This shall be without prejudice to any action that may be taken against exporter under FT(D&R) Act, Order or Rules issued thereunder. Replenishment 4A.28 A Replenishment Authorisation for duty free import of Authorisation for Import consumables, tools, machinery and equipments for metals other of Consumables etc. than Gold, Platinum equal to 2% and for Gold and Platinum

88 equal to 1% of FOB value of exports of the preceding year may be issued on production of Chartered Accountant’s Certificate indicating export performance. However, in case of rhodium-finish silver jewellery, entitlement will be 3% of such jewellery. This Authorisation shall be non-transferable and subject to actual user condition. This Replenishment Authorisation shall be valid for duty free import of consumables, tools, machinery & equipments as notified by Customs. Application for import of consumables as given above may be made to the concerned RA in ANF 4I. Personal Carriage of 4A.29 Personal Carriage of gems & jewellery parcels by Foreign Bound Gems & Jewellery Passengers from all EOU / SEZ units and all firms in DTA through Export Parcels Airports in Delhi, Mumbai, Kolkata, Chennai, Cochin, Coimbatore, Bangalore, Hyderabad, Jaipur is permitted. Procedure for Personal Carriage of exports shall be as prescribed by Customs. Export proceeds shall, however, be realised through normal banking channel.

e, Bangalore, Hyderabad, Jaipur is permitted. Procedure for Personal Carriage of exports shall be as prescribed by Customs. Export proceeds shall, however, be realised through normal banking channel. For claiming Replenishment in case of Personal Carriage of Exports by Foreign Bound passenger, documents shall be same as mentioned under paragraph 4A.21.2 above. Authorised Courier Companies are also permitted to operate on the above lines. Personal Carriage of 4A.30 Personal carriage of gems & jewellery import parcels by an Gems & Jewellery Indian importer / Foreign National may be permitted into all Import Parcels EOUs / SEZ units and all firms in DTA through airports in Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad Jaipur. Procedure will be same as for import of goods by air-freight except that parcels shall be brought to Customs by Importer / Foreign National for examination and release. Clearance of imports under this scheme shall be as per normal customs clearance procedure. Duty free import 4A.31 Duty free import of gems and jewellery samples upto Rs 3 lakhs of samples or 0.25% of the average of last three years export turnover of gems and jewellery items, whichever is lower, shall be allowed in a financial year as per Customs notification. Re-import of rejected 4A.32 An exporter of plain / studded precious metal jewellery shall be jewellery allowed to re-import duty free jewellery rejected and returned by buyer upto 2% of FOB value of exports in preceding licencing year with refund of any duty exemption / refund / replenishment

ewellery allowed to re-import duty free jewellery rejected and returned by buyer upto 2% of FOB value of exports in preceding licencing year with refund of any duty exemption / refund / replenishment benefit availed on inputs used as per customs rules and regulations.

4A.32.1 However, an exporter desirous of re-importing plain/ studded precious metal jewellery for re-export shall submit a CA certified copy of export of his preceding year to jurisdictional Customs

89 Authorities and also execute a bond with them to re-export equivalent quantity of plain / studded jewellery of same quantity (equivalent weight of gold & value of studdings that were re- imported) within 60 days of re-import. Diamond & Jewellery 4A.33 Policy for Diamond and Jewellery Dollar Accounts is given in Dollar Accounts paragraph 4A.19 of FTP. Detailed procedure for its operation will be notified separately. Import of precious metal 4A.34 Policy for Import of precious metal scrap/used jewellery for scrap / used jewellery for melting and re-export of jewellery is given in paragraph 4A.21 melting and re-export of FTP.

ecious metal 4A.34 Policy for Import of precious metal scrap/used jewellery for scrap / used jewellery for melting and re-export of jewellery is given in paragraph 4A.21 melting and re-export of FTP. Procedure is laid as under: of jewellery. Imported precious metal scrap / used jewellery shall be allowed to be cleared by Customs subject to the condition: a) that importer files a bond along with Bank Guarantee for a sum equivalent to one and half times customs duty leviable on said used jewellery / precious metal scrap; b) importer fulfils the export obligation and value addition as notified by Central Government; c) such import will not be allowed through Hand Baggage. Detailed procedure including value addition requirement and export obligation etc. for operationalisation of the facility under this paragraph shall be notified separately by DGFT. Export of Diamond & 4A.35 Policy for export of diamond and jewellery on consignment basis Jewellery on is given in paragraph 4A.23 of FTP. consignment basis Detailed procedure in this regard shall be governed as per the relevant Customs Rules & Regulations. Re-import of these items (either in complete or partial lot) exported on consignment basis shall be subject to condition that exporter follows prescribed provisions of relevant customs notification to establish that goods are the same which were exported.

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exported on consignment basis shall be subject to condition that exporter follows prescribed provisions of relevant customs notification to establish that goods are the same which were exported.

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91 CHAPTER-5 EXPORT PROMOTION CAPITAL GOODS ( EPCG) SCHEME Policy 5.1 Policy relating to EPCG Scheme is given in Chapter 5 of FTP. Application Form 5.2 An application for grant of an authorization, upto Rs.50 Crore of duty saved amount may be made to RA concerned in ANF 5A along with documents prescribed therein. Consideration of 5.3 For cases wherein duty saved amount is above Rs. 50 crores, Applications applicant may apply to DGFT Headquarters directly with a copy endorsed to concerned RA. In such cases, concerned RAs will issue EPCG authorisation according to directions from DGFT.

5.3.1 RA concerned shall, on the basis of nexus certificate from an Independent Chartered Engineer (CEC) submitted by applicant in Appendix 32A, issue EPCG authorization.

5.3.2 Authorisation holder shall produce to concerned RA a certificate from jurisdictional Central Excise authority or an independent Chartered Engineer (CEC) confirming installation of Capital goods at factory premises of authorization holder or his supporting manufacturer(s) vendor(s) within six months from date of completion of imports.

5.3.3 EPCG authorization shall be issued with a single port of registration mentioned in paragraph 4.19 of HBP v1 for imports. However, exports can be made from any port specified in

paragraph 4.19.

5.3.4 (i) An applicant may also apply for import of spares, tools, spare refractories and catalyst as are required for installation and maintenance of capital Goods. Application shall contain list of plant / machinery installed in factory / premises of applicant for which spares, tools, spare refractories and catalyst are required, duly certified by Chartered Engineer or Jurisdictional Central Excise authorities. In such cases EPCG authorization shall not specify list of spares but shall indicate:-

(a) Name of plant / machinery for which spares are required.

(b) Value of duty saved allowed under authorization.

92

(c) Description of product to be exported with value of export obligation as per FTP.

(ii) Deleted

(iii) Further at the time of final redeemption of export obligation, authorization holder shall submit certificate from Independent Chartered Engineer confirming use of spares tools, spare refractories and catalyst so imported in the installed capital goods on the basis of stock & consumption register maintained by authorization holder. Conversion of EOU / 5.4 An EOU / a relocated SEZ unit may apply for an EPCG Relocated SEZ authorization in ANF alongwith documents prescribed therein. Units to EPCG Scheme “No Objection Certificate” should be produced from concerned DC. Indigenous Sourcing 5.5 EPCG authorization holder intending to source capital goods of Capital Goods indigenously, either alongwith application or after issuance of EPCG authorisation, shall request to RA for invalidation of EPCG

uthorization holder intending to source capital goods of Capital Goods indigenously, either alongwith application or after issuance of EPCG authorisation, shall request to RA for invalidation of EPCG authorization for direct import / issue of ARO, alongwith name and address of source person of the capital goods.

5.5.1 RA concerned will issue such invalidation letter / ARO, in duplicate.

5.5.2 Indigenous manufacturer intending to supply capital goods to EPCG authorization holder may apply to RA in ANF for issuance of Advance authorization for import of inputs including components required for manufacture of capital goods to be supplied to EPCG authorization holder. 5.5.3 Deleted Leasing of Capital Goods 5.6 An EPCG authorization holder may, source capital goods from a domestic leasing company. In such cases, the Bill of Entry of imported capital goods or commercial invoice of indigenous capital goods, shall be signed jointly by EPCG authorization holder and leasing company. However, EPCG authorization holder shall alone be fully responsible for fulfillment of export obligation. Condition for Fulfilment 5.7 In addition to conditions mentioned in paragraph 5.4 of FTP of Export Obligation following conditions shall also be applicable for fulfillment of export obligation.

5.7.1 EPCG authorisation holder shall export either directly or through third party(s). If a merchant exporter is EPCG authorisation holder, name of supporting manufacturer shall also be indicated

5.7.1 EPCG authorisation holder shall export either directly or through third party(s). If a merchant exporter is EPCG authorisation holder, name of supporting manufacturer shall also be indicated

93 on shipping bills. At the time of export, EPCG authorisation No. and date shall be endorsed on shipping bills which are proposed to be presented towards discharge of export obligation.

5.7.2 Export proceeds shall be realised in freely convertible currency except for deemed exports.

5.7.3 Deleted.

5.7.3.1 Supplies made to Oil and Gas sector also may be counted towards discharge of export obligation against an EPCG Authorisation provided it has been issued on or before 31.3.2000 and no benefit under paragraph 8.3 of FTP has been claimed on such supplies.

5.7.4 Exports made to former USSR or to such countries as notified by DGFT shall not be counted for fixing average level of exports.

5.7.5 Exports under EPCG scheme shall also be entitled for benefits under Chapter 4 of FTP.

5.7.6 In case of export of goods relating to handicraft, handlooms, cottage, tiny sector, agriculture, aqua-culture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture shall not be required to maintain average level of exports. Goods excepting tools imported under EPCG scheme by such sectors shall not be allowed to be transferred for a period of five years from date of imports even in cases where export obligation has been fulfilled.

pting tools imported under EPCG scheme by such sectors shall not be allowed to be transferred for a period of five years from date of imports even in cases where export obligation has been fulfilled. However, transfer of capital goods would be permitted within the group companies or managed hotels under intimation to RA and jurisdictional Central Excise Authority in case of manufacturer/merchant exporters and to RA only in case of Service providers.

5.7.7 Deleted.

5.7.8 Wherever more than one EPCG authorisations are issued simultaneously or concurrently, fresh EPCG authorisation would build upon last average export obligation only, notwithstanding actual achievements. 5.8 Deleted. 5.8.1 Deleted.

to 5.8.3

5.8.4 EPCG Authorisations issued upto 31.3.2000 shall be governed

94 by provisions laid down in paragraph 6.11 in HBP v1 (RE-99). Notwithstanding the same in HBP v1 (RE-99), authorisation holder shall not have to surrender Special Import licence in case of value wise shortfall. Authorisations issued from 1st April, 2000 upto 31st March, 2002 shall be governed by provisions of Chapter 6 of HBP v1 (RE-01) as amended from time to time. Authorisations issued from 1st April, 2002 upto 31st August, 2004 shall be governed by provisions of para 5.8 of HBP v1 (RE-02) as amended from time to time.

v1 (RE-01) as amended from time to time. Authorisations issued from 1st April, 2002 upto 31st August, 2004 shall be governed by provisions of para 5.8 of HBP v1 (RE-02) as amended from time to time. However, provision of clubbing even in case of old licences would be as per current provision of para 5.18 of this Handbook. 5.8.5 Deleted. 5.8.6 In case of an existing export obligation under EPCG scheme a fresh EPCG authorisation can only be issued provided average of last obligation (including increased amount due to duty saved in last EPCG) has been maintained. Monitoring of Export 5.9.1 Authorization holder shall submit to RA concerned by 30th April Obligation of every year, report on fulfillment of export obligation. Such report shall also be submitted electronically on DGFT website. RA concerned may issue partial EO fulfillment certificate, provided export performance is proportionately adequate to fulfillment of export obligation. Automatic Reduction / 5.10 If authorization issued has actually been utilized for import of a Enhancement upto 10% value in excess upto 10% of CIF value / duty saved amount of of CIF value and Prorata authorization, authorization shall be deemed to have been Reduction / Enhancement enhanced by that proportion.

0% value in excess upto 10% of CIF value / duty saved amount of of CIF value and Prorata authorization, authorization shall be deemed to have been Reduction / Enhancement enhanced by that proportion. Customs shall automatically allow in Export Obligation clearance of goods in excess upto 10% of authorization value / duty saved amount without endorsement by concerned RA. In such cases, authorization holder shall furnish additional fee to cover excess imports effected in terms of CIF value / duty saved amount to RA concerned within one month of excess imports taking place. Export obligation shall automatically stand enhanced proportionately.

5.10.1 Similarly, if EPCG authorization holder has utilised authorization less than the value earmarked in authorization, his export obligation shall stand reduced on prorata basis with reference to actual utilisation of authorization. Extension of Export 5.11 Concerned RA, may consider one or more request for grant of Obligation Period extension in export obligation period, on payment of

ce to actual utilisation of authorization. Extension of Export 5.11 Concerned RA, may consider one or more request for grant of Obligation Period extension in export obligation period, on payment of

95 composition fee of 2% of total duty saved under authorization or an enhancement in export obligation imposed to the extent of 10% of total export obligation imposed under authorization, as the case may be, at the choice of exporter, for each year of extension sought. Such extension can be for a maximum period of 2 years. Extension in EO period beyond two years’ period available above, may be considered, for a further extension upto 2 years with a condition that 50% of duty payable in proportion to the unfulfilled export obligation is paid by authorization holder to Custom authorities before an endorsement of extension is made on EPCG authorization by RA concerned. In such cases, no composition fee is to be paid or additional EO is to be imposed as prescribed in the Para above.

es before an endorsement of extension is made on EPCG authorization by RA concerned. In such cases, no composition fee is to be paid or additional EO is to be imposed as prescribed in the Para above. In case the firm is still not able to complete the export obligation duty already deposited will be deducted from total duty plus interest to be paid for EO default. Extension in export obligation period shall also be subject to such terms and conditions as may be prescribed by competent authority.

5.11.1 The firm / company, which is applying for registration with BIFR / Rehabilitation Department of State Government shall also intimate DGFT with regard to relief sought for EPCG authorization, if any, within 30 days of receipt of application by agency concerned. DGFT, thereafter shall take up the matter with agency concerned to safeguard government interest on account of default in fulfillment of export obligation imposed on EPCG authorization obtained by such firm / companies. DGFT may consider such application for grant of period of extension upto 12 years or as per rehabilitation package prepared by operating agency and approved by BIFR board / state authority. 5.11.2 Waiver of EO may be considered where, because of force majeure or other unforeseen circumstances / reasons, exporter is unable to fulfill export obligation. Such requests shall be considered by a committee comprising representative(s) of DoC and DoR under DGFT.

r other unforeseen circumstances / reasons, exporter is unable to fulfill export obligation. Such requests shall be considered by a committee comprising representative(s) of DoC and DoR under DGFT. Decision of this committee shall be notified by DoR for implementation. Export Obligation 5.12 RA concerned may condone shortfall upto 5% in export Shortfall obligation arising out of duty saved amount. Redemption 5.13 As evidence of fulfillment of export obligation, authorization

96 holder shall furnish application in ANF 5B with documents prescribed therein.

(a) to (c) Deleted. On being satisfied, RA concerned shall issue a certificate of discharge of export obligation to the EPCG authorization holder and send a copy to customs authorities with whom BG / LUT has been executed.

RA shall ensure disposal of such applications within 30 days. Shortcomings, if any, shall be pointed out in one go. All correspondence, thereafter, shall relate to these deficiencies only. Fresh correspondence, if necessary, shall be within 15 days. Once documents are complete EO will be discharged within 30 days of receipt of complete documents / information. Process of issue of final discharge certificate / rejection shall be completed within a period of 90 days from date of receipt of initial request.

days of receipt of complete documents / information. Process of issue of final discharge certificate / rejection shall be completed within a period of 90 days from date of receipt of initial request. Applications that remain outstanding beyond a period of 90 days shall be reported to DGFT alongwith reasons thereof, immediately thereafter. Regularisation of 5.14 In case EPCG authorization holder fails to fulfill prescribed Bonafide Default export obligation, he shall pay duties of Customs plus interest as prescribed by Customs authority. Such facilities can be availed by EPCG authorisation holder to exit at his option. Maintenance of Records 5.15 Every EPCG authorization holder shall maintain, for a period of 3 years from date of redeemption, a true and proper account of exports / supplies made and services rendered towards fulfillment of export obligation. Re-Export of Capital 5.16 Capital Goods imported under EPCG scheme, which are found Goods Imported Under defective or unfit for use, may be re-exported back to foreign EPCG Scheme supplier within three years from the date of payment of duty on importation thereof with permission of RA / Customs Authority. Consequently, EO would be refixed. Replacement of 5.16.1 Capital Goods imported and found defective or otherwise unfit Capital Goods for use may be exported and Capital Goods in replacement thereof be imported under EPCG scheme.

ixed. Replacement of 5.16.1 Capital Goods imported and found defective or otherwise unfit Capital Goods for use may be exported and Capital Goods in replacement thereof be imported under EPCG scheme. In such cases, while allowing export, Customs shall credit duty benefit availed which can be debited again at the time of import of such replaced Capital Goods. Penal Action 5.17 In case of failure to fulfill export obligation or any other condition of authorization, authorization holder shall be liable for action under FT(D&R) Act, Orders and Rules made there under, provisions of FTP and Customs Act, 1962.

97 Clubbing of EPCG 5.18 Clubbing of two or more EPCG authorizations of same authorizations authorization holder would be permitted.

5.18.1 Deleted.

5.18.2 An application for clubbing can be made only to RA concerned in ANF 5D. Clubbing shall not be permitted in case authorisations issued by different RAs.

(a) to (c) Deleted.

5.18.3 Total export obligation would be refixed taking into account total of duty saved or total of CIF value of imports.

5.18.4 On clubbing, authorizations for all purposes shall be deemed to be a single EPCG authorization. Export obligation period for clubbed authorization shall be reckoned from first authorization issue-date.

clubbing, authorizations for all purposes shall be deemed to be a single EPCG authorization. Export obligation period for clubbed authorization shall be reckoned from first authorization issue-date. However, in cases where clubbed CIF / duty saved value exceeds Rs 100 crore, no corresponding benefit of increase in export obligation period shall be admissible.

5.18.5 Average export obligation for clubbed authorizations would be highest of average export obligations endorsed on individual authorizations so clubbed.

5.18.6 No clubbing would be permitted after expiry of EOP. Refixation of Export 5.19 (a) EPCG authorization holder can apply for refixation of Obligation upon export obligation as given in para 5.4 (i) of FTP in conversion from CIF ANF 5C. based to duty based EO (b) Deleted.

(c) For all EPCG authorizations, authorization holder should have fulfilled mandated (original or amended) block wise export obligation, till previous block to application date. In all such cases, refixed export obligation would be computed as under: (% export obligation unfulfilled) x (8) x (duty saved on authorization issue-date )

(d) Deleted.

(e) There would be no change in average export obligation fixed or export obligation period of original authorization.

(f) Deleted.

(duty saved on authorization issue-date )

(d) Deleted.

(e) There would be no change in average export obligation fixed or export obligation period of original authorization.

(f) Deleted.

98 Technological Upgradation 5.20 Application for technological upgradation of the capital goods of Capital Goods would be made in ANF 5A. Import of Refurbished / 5.21 Import of refurbished spares shall be permitted under EPCG Reconditioned Spares Scheme. and Tools However such refurbished / reconditioned spares must have a residual life not less than 80% of life of original spare which would be certified by EPCG authorization holder. The tools imported under EPCG Scheme may be transferred to any of units or group companies of applicant.

5.22 Revalidation of authorizations issued under EPCG scheme shall not be allowed.

99 CHAPTER-6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) SCHEME AND BIO-TECHNOLOGY PARKS(BTPS). Scheme 6.1 Policy relating to EOUs, EHTPs, STPs and BTPs Schemes is given in Chapter 6 of FTP. 6.2 Deleted Approval / Application 6.3.1 For setting up an EOU, three copies of application as in and renewal of Appendix 14-I-A may be submitted to Development Application Commissioner (DC). 6.3.2 Applications for setting up units under EOU scheme other than proposals for setting up of unit in service sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by

ther than proposals for setting up of unit in service sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by Units Approval Committee within 15 days as per criteria indicated in Appendix 14-I-B and sector specific conditions relating to approval as in Appendix 14-I-C. In other cases, approval may be granted by DC after clearance by Board of Approval (BoA). 6.3.3 Proposals for setting up EOU requiring industrial licence may be granted approval by DC after clearance of proposal by BoA (as per Appendix 14-I-D) and Department of Industrial Policy and Promotion (DIPP) within 45 days on merits. 6.3.4.1 STP / EHTP complexes can be set up by Central Government, State Government, Public or Private Sector Undertakings or any combination thereof, duly approved by Inter-Ministerial Standing Committee (IMSC) in Ministry of Communication and Information Technology (Department of Information Technology). Application for setting up EHTP / STP unit shall be in format prescribed by Ministry of Communication and Information Technology (Department of Information Technology - DoIT) and shall be submitted to officer designated by DoIT . 6.3.4.2 BTP can be set up by Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. Application for setting up of BTP shall be submitted to Department of Bio-Technology (DoBT) and such applications which meet guidelines prescribed by DoBT will be approved and recommended to DGFT for notification.

r setting up of BTP shall be submitted to Department of Bio-Technology (DoBT) and such applications which meet guidelines prescribed by DoBT will be approved and recommended to DGFT for notification. Application for setting up of BTP unit shall be submitted to Officer designated by DoBT.

100 6.3.6 LOP / LOI shall specify item(s) of manufacture / service activity, annual capacity, projected annual export for first five years in dollar terms, Net Foreign Exchange (NFE) earnings, limitations, if any, regarding sale of finished goods, by-products and rejects in DTA and such other matter as may be necessary and also impose such conditions as may be required. 6.3.7 LoP/LoI issued to EOU / EHTP / STP / BTP units by concerned authority would be construed as an authorization for all purposes. Standard format for LoP for EOU units is given in Appendix 14- I-E. 6.3.8 EOUs shall have separate earmarked premises for separate LoP. Similarly, EOUs may be approved on leased premises provided lease has been obtained from Government Department / Undertaking / Agency. However, in case lease is obtained from private parties, it shall have a validity period of five years from date of LUT and DC shall satisfy himself of genuine nature of lease. 6.3.9 On completion of approval period as provided for in paragraph 6.6 of FTP, it shall be open to unit to continue under scheme or opt out of scheme.

all satisfy himself of genuine nature of lease. 6.3.9 On completion of approval period as provided for in paragraph 6.6 of FTP, it shall be open to unit to continue under scheme or opt out of scheme. If no intimation in this regard is received from unit within a period of six months of expiry of approval period, DC will take action, suo moto, to cancel approval under EOU scheme and take further action in this regard. Where unit opts to continue, DC concerned will extend approval period. Legal Undertaking (LUT) 6.4.1 Approved EOU / EHTP / STP / BTP unit shall execute a LUT with DC / Designated Officer concerned as in Appendix 14- I-F. 6.4.2 All EOU / EHTP / STP / BTP units should have permanent e-mail address. No LUT for new units shall be executed unless unit has its permanent e-mail address and digital signature on said e-mail ID. In event of an EOU not having permanent e-mail address and digital signature, further imports and DTA sale shall not be permitted by DC. Export of goods 6.5.1 Software units may undertake exports using data communication and services links or in form of physical exports (which may be through courier service also), including export of professional services. 6.5.2 EOUs shall be permitted to export jewellery on basis of a notional rate certificate issued by nominated agency. This rate will be based on prevailing Gold / US$ rate and US$ / INR rate in notional rate certificate. Certificate issued by nominated agency should not be older than 3 working days of date of shipment.

rate will be based on prevailing Gold / US$ rate and US$ / INR rate in notional rate certificate. Certificate issued by nominated agency should not be older than 3 working days of date of shipment.

101 6.5.3 Exporter shall have flexibility to fix price and repay gold loan within 180 days from date of export. Price shall be communicated to nominated agencies who will issue a certificate showing final confirmation of rate to bank negotiating document, to ensure export proceeds are realized at this rate. 6.5.4 Gem & Jewellery and Jewellery EOUs may re-export imported goods and export domestically procured goods, including goods generated out of partial processing / manufacture. Besides, supply of unsuitable / broken cut and polished diamonds, precious and semi-precious stones upto 5% of value of imported or indigenously procured goods to DTA against valid Gem & Jewellery REP as applicable on payment of appropriate duty is also permitted. Import / Domestic 6.6.1 Goods permitted to be imported / procured from DTA shall Procurement of Goods include: (a) Raw materials, components, consumables, intermediates, spares and packing materials; (b) Capital goods, whether new or second-hand, including inter-alia following and their spares: (i) DG sets, captive power plants, transformers and accessories for all above. (ii) Pollution control equipment. (iii) Quality assurance equipment. (iv) Material handling equipment, like fork lifts and overhead cranes, mobile cranes, crawler cranes, hoists and stackers. (v) Un-interrupted Power Supply System (UPS),

Quality assurance equipment. (iv) Material handling equipment, like fork lifts and overhead cranes, mobile cranes, crawler cranes, hoists and stackers. (v) Un-interrupted Power Supply System (UPS), Special racks for storage, storage systems, modular furniture, computer furniture, anti-static carpet, teleconference equipment, Servo Control System, Air-conditioners / Airconditioning system, panel for electricals and special data transmission cable. (vi) Security Systems. (vii) Tools, jigs, fixtures, gauges, moulds, dyes, instruments and accessories. (c) Raw material for making capital goods for use within unit. (d) Others including:

102 (i) Prototypes and technical samples for existing product(s) and product diversification development or evaluation. (ii) Drawings, blue prints, charts, microfilms and technical data. (iii) Office equipment, including PABX, Fax machines, projection system, Computers, Laptop, Server. (e) Spares and consumables for above items. (f) Any other items not mentioned above with approval of BOA. 6.6.2 EOUs may import plain / studded gold / platinum or silver jewellery for export after repairs / remaking. Conditions of Import 6.7 Import of goods by EOU / EHTP / STP / BTP units shall be subject to following conditions: (a) Goods shall be imported into EOU / EHTP / STP / BTP premises.

pairs / remaking. Conditions of Import 6.7 Import of goods by EOU / EHTP / STP / BTP units shall be subject to following conditions: (a) Goods shall be imported into EOU / EHTP / STP / BTP premises. However, agriculture and allied sectors and granite sector units in EOU may supply / transfer capital goods and inputs in farm / fields / quarries with prior intimation to jurisdictional Customs / Central Excise authorities, provided ownership of goods rests with EOU units. Granite sector would also be allowed to take spares upto 5% of value of Capital Goods to quarry site. (b) Procedure as prescribed under Customs / Excise rules for EOUs and units in EHTP / STP / BTP will be followed and appropriate bond executed with Customs / Excise authorities. (c) Goods, except capital goods and spares, shall be utilised by EOU / EHTP / STP / BTP units within a period of three years or as may be extended by Customs authorities. However, imported tea shall be utilized within a period of 6 months from date of import. Similarly, export obligation against import of items [covered by chapter 9 of ITC (HS)] shall be fulfilled within a period of 90 days from date on which first import consignment is cleared by Customs authorities. However in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days.

spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days.

103 (d) Goods already imported / shipped / arrived before issue of LoP / LoI are also eligible for duty free clearance under EOU / EHTP / STP / BTP scheme provided customs duty has not been paid and goods have not been cleared from Customs. Fax machines / laptop 6.8.1 EOU / EHTP / STP / BTP units may install one fax machine at a computers outside place of its choice, outside premises of unit, subject to intimation approved premises of its location to concerned Customs / Central Excise authorities. 6.8.2 EOU / EHTP / STP / BTP units may, temporarily take out of premises of unit duty free laptop computers and video projection systems for working upon by authorized employees. 6.8.3 EOU / EHTP / STP / BTP units may install personal computers not exceeding two in number, imported / procured duty free in their registered / administrative office subject to DoR guidelines. 6.8.4 For IT and IT enabled services, persons authorized by software units may access facility installed in EOU / EHTP / STP / BTP unit through communication links. Leasing of Capital Goods 6.9 Value of imported capital goods financed through leasing companies or obtained free of cost and / or on loan / lease basis shall also be taken into account for purpose of calculation of NFE as defined in FTP. Net Foreign Exchange 6.10.1 EOU / EHTP / STP / BTP unit shall be a positive net foreign (NFE) Earnings

ase basis shall also be taken into account for purpose of calculation of NFE as defined in FTP. Net Foreign Exchange 6.10.1 EOU / EHTP / STP / BTP unit shall be a positive net foreign (NFE) Earnings exchange earner. Net Foreign Exchange (NFE) Earnings shall be calculated cumulatively for a block of five years from commencement of production according to formula given below. Items of manufacture for export specified in Letter of Permission (LoP) / Letter of Intent (LoI) alone shall be taken into account for calculation of NFE. Positive NFE = A – B > 0 Where ‘NFE’ is Net Foreign Exchange; ‘A’ is FOB value of exports by EOU / EHTP / STP / BTP unit; ‘B’is sum total of CIF value of all imported inputs and CIF value of all imported capital goods, and value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings / high sea sales during first five year period or any other charges. “Inputs” mean raw materials, intermediates, components, consumables, parts and packing materials.

interest on external borrowings / high sea sales during first five year period or any other charges. “Inputs” mean raw materials, intermediates, components, consumables, parts and packing materials.

104 6.10.2 If any goods are obtained from another EOU / EHTP / STP / SEZ / BTP unit, or procured from an international exhibition held in India, or bonded warehouses or precious metals procured from nominated agencies value of such goods shall be included under ‘B’. 6.10.3 If any capital goods imported duty free or leased from a leasing company, received free of cost and / or on loan basis or transfer, CIF value of capital goods shall be included pro-rata, under ‘B’ for period it remains with units. 6.10.4 For annual calculation of NFE value of imported capital goods and lumpsum payment of foreign technical know-how fee s hall be amortized as under: 1st – 10th year 10%. Maintenance of accounts 6.11.1 EOU / EHTP / STP / BTP unit shall maintain proper account, and shall file digitally signed quarterly and annual report as prescribed in Annexure to Appendix 14-I-F to DC / Designated Officer in DOIT / DOBT and Customs and Central Excise authorities. 6.11.2 Unit shall be able to account for entire quantity of each category of homogenous goods imported / procured duty free, by way of exports, sales / supplies in DTA or transfer to other SEZ / EOU / EHTP / STP / BTP units and balance in stock.

e quantity of each category of homogenous goods imported / procured duty free, by way of exports, sales / supplies in DTA or transfer to other SEZ / EOU / EHTP / STP / BTP units and balance in stock. However, at no point of time units shall be required to correlate every import consignment with its exports, transfer to other SEZ / EOU/ EHTP / STP / BTP units, sales in DTA and balance in stock. Any matter for clarification as to whether goods are homogenous or not shall be decided by Units Approval Committee. Monitoring of NFE 6.12.1 Performance of EOUs shall be monitored by Units Approval Committee as per guidelines given in Appendix –14-I-G. Performance of EHTP / STP / BTP shall be monitored by DoIT / DoBT jointly with jurisdictional Central Excise / Customs authority. 6.12.2 Failure to ensure positive NFE or to abide by any of terms and conditions of LoP / LoI / IL / LUT shall render unit liable to penal action under provisions of FT (D&R) Act, 1992 and Rules and Orders made there under without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL. Conversion of Scrap / 6.13 Scrap / dust / sweeping of gold / silver / platinum may be sent to dust / sweeping of Gold / Government of India Mint / Private Mint from EOU / EHTP / silver / platinum into STP units and returned to them in standard bars in accordance standard Bars with procedure prescribed by Customs authorities or may be permitted to be sold in DTA on payment of applicable customs

to STP units and returned to them in standard bars in accordance standard Bars with procedure prescribed by Customs authorities or may be permitted to be sold in DTA on payment of applicable customs

105 duty, on basis of gold / silver / platinum content, as may be notified by Customs authorities. DTA supplies 6.14 Not withstanding provision of DTA sales in Para 6.8 of FTP, such DTA sales shall not affect application to any goods of any other prohibition or regulation affecting import thereof in force at time when such goods are imported. This also does not confer any immunity, exemption or relaxation at any time from any commitment or compliance with any requirements to which importer may be subject to under other laws or regulations. Supplies to other EOU / 6.15 Supplies to other EOU / SEZ / EHTP / STP / BTP units shall be EHTP / STP / SEZ / counted towards NFE provided that such goods are permissible BTP units for procurement by these units. Transfer of Power from 6.16 Transfer of power from Captive Power plants (DG Sets) from one unit to another one unit of EOU / EHTP / STP / BTP to another is permitted as prescribed in sector specific condition in Appendix 14-I-C. Supply of precious / 6.17 Supplier of precious and semi-precious stones, synthetic stones semiprecious / Synthetic and processed pearls from DTA to EOUs shall be eligible for stones from DTA grant of Replenishment Authorisation at rates and for items mentioned in HBP v1 .

synthetic stones semiprecious / Synthetic and processed pearls from DTA to EOUs shall be eligible for stones from DTA grant of Replenishment Authorisation at rates and for items mentioned in HBP v1 . Procedure for submission of application for grant of Replenishment Authorisation as contained in relevant Chapter of HBP v1 shall be applicable. However, application shall be made to DC concerned. Such supplies to EOUs are not treated as deemed exports for purpose of any of deemed export benefits. Application for grant 6.18 Application for grant of all entitlements may be made to DC of entitlements concerned. Export through 6.19 An EOU / EHTP / STP / BTP unit may export goods other exporters manufactured/ software developed by it through other exporter or any other EOU / EHTP / STP / SEZ / BTP unit subject to condition that: (a) Goods shall be produced in EOU / EHTP / STP / BTP unit concerned. (b) Level of NFE or any other conditions relating to imports and exports as prescribed shall continue to be discharged by EOU / EHTP / STP unit concerned. (c) Export orders so procured shall be executed within parameters of EOU / EHTP / STP / BTP schemes and goods shall be directly transferred from unit to port of shipment. (d) Fulfillment of NFE by EOU / EHTP / STP / BTP units in

shall be executed within parameters of EOU / EHTP / STP / BTP schemes and goods shall be directly transferred from unit to port of shipment. (d) Fulfillment of NFE by EOU / EHTP / STP / BTP units in

106 regard to such exports shall be reckoned on basis of price at which goods are supplied by EOUs to other Exporter or other EOU / EHTP / STP / BTP / SEZ unit. (e) All export entitlements, including recognition as Status Holder would accrue to exporter in whose name foreign exchange earnings are realized. However, such export shall be counted towards fulfillment of obligation under EOU / EHTP / STP / BTP scheme only. Other Entitlements 6.20.1 FOB value of export of an EOU / EHTP / STP / BTP unit can be clubbed with FOB value of exports of its parent company in DTA or vice versa for purpose of according Export House and Trading House status. 6.20.2 Sectoral norms as notified by Government shall apply to FDI in service activities. 6.20.3 Software units may also use computer system for training purpose (including commercial training) subject to condition that no computer terminal shall be installed outside bonded premises for this purpose. 6.20.4 Export of iron ore shall be subject to decision of Government . Requirements of other conditions of exports like minimum export price / export in consumer pack etc. as per ITC(HS) shall apply in case raw materials are sourced from DTA and exported