PROCEDURAL & DOCUMENTARY

FORMALITIES
(AS PER IMPORT POLICY)
FOR
DUTY EXEMPTION SCHEME
IMPORT POLICY- Objectives

► To make necessary imported goods more

easily available, including essential capital
goods for modernizing and upgrading
technology;
► To simplify and streamline procedures for
import licensing;
► To promote efficient import substitution
and self-reliance.
DUTY EXEMPTION SCHEME
Indian import policy includes a duty exemption
scheme for registered exporters so that they may
import the inputs required for export production at
international prices and free from duty in order to
make their exports more competitive. Imported
items which are exempt from customs duty are
raw materials, components and consumables.

This not only stimulates the industrial growth and

development but also brings the foreign currency
during the final export process.
 DUTY EXEMPTION SCHEMES
► Advance Authorisation
► Duty Entitlement Pass Book (DEPB)
► Duty Free Import Authorisation (DFIA)
► EPCG scheme
► Deemed Exports
► Status Holders
► 100% EOU, SEZ, etc.
 ADVANCE AUTHORISATION
► An Advance Authorisation / Advance
Intermediate Authorisation is issued to allow
duty free import of inputs, which are physically
incorporated in the export product. In addition,
fuel, oil, energy, catalysts etc. which are
consumed in the course of their use to obtain the
export product, may also be allowed under the
scheme.
► Advance Authorisation can be issued for:-
 Physical Exports;
 Intermediate Supplies;
 Deemed Exports;
 Duty Entitlement Pass Book
(DEPB)
► The objective of DEPB is to neutralise the
incidence of Customs duty on the import content
of the export product.
► The neutralisation shall be provided by way of
grant of duty credit against the export product.
► Under the DEPB, an exporter may apply for credit,
as a specified percentage of FOB value of exports,
made in freely convertible currency
 EPCG
► The EPCG scheme allows import of capital goods for pre
production, production and post production at 3% Customs duty
subject to an export obligation equivalent to 8 times of duty saved on
capital goods imported to be fulfilled over a period of 8 years reckoned
from the date of issuance of the authorisation.

► The capital goods shall include spares (including refurbished/

reconditioned spares), tools, jigs, fixtures, dies and moulds. EPCG
Authorisation may also be issued for import of components of such
capital goods required for assembly or manufacturer of capital goods
by the authorisation holder.

► An EPCG authorisation can also be issued for import of capital goods

for supply to projects notified by the Central Board of Excise and
Customs under wherein the basic customs duty on imports is 10% with
a CVD of 14%.
 DEEMED EXPORTS
► “Deemed Exports" refers to those transactions
in which the goods supplied do not leave the
country and the payment for such supplies is
received either in Indian rupees or in free
foreign exchange

► Deemed exports are eligible for following

benefits:
• Benefit of duty free imports of inputs
• Refund of Terminal Excise Duty
DUTY EXEMPTION PROCEDURE
1. An application for grant of a Advance Licence may be
made by the Registered office or Head office or a branch
office or manufacturing unit of the eligible exporter, to
the licensing authority concerned.

2. Where the SION have been published, an application

in Appendix-11B, alongwith documents prescribed
therein, shall be submitted to the licensing authority
concerned.

3. The licensing authority may also issue Advance

licences, other than Advance Licence for annual
requirement, where SION are not fixed
4. Newcomers : In the case of newcomers who have not availed any licence
under the Policy, first Advance Licence upto Rs. 25 lakhs may be granted by
the licensing authority in accordance with the Policy.
Thereafter, Advance Licence may be granted only after verifying the bonafides
and antecedents of the applicant to ensure the genuineness and existence of
the firm

5. Standardisation of Adhoc Norms:

For standardisation of norms, an application may be made by the
manufacturer exporter or merchant-exporter, tied to supporting manufacturer,
duly filled in with complete data. Such applications shall be made to the
Advance Licensing Committee (ALC)
6. Modification of SION: An application for
modification of existing SION may be filed by
manufacturer exporter or merchant-exporter, tied
to supporting manufacturer

7. Advance Licence for Intermediate Supplies:

The application for grant of Advance License for
Intermediate supply may be made on the basis of
a tie-up agreement with the exporter holding an
Advance license for physical exports or for deemed
exports.
8. Advance Release Order against Advance Licence for
Physical Exports/ Deemed Exports/ Annual
Requirement/DFRC:

An application may be made to the Regional Licensing

Authority concerned for grant of Advance Release Order
(ARO) to procure the inputs from indigenous sources/
canalising agencies/ EOUs/ EPZ/ EHTP/ STP units.

The application shall specify (i) the name, description and

quantity of the items and (ii) the individual value of items
to be procured
9. Back to Back Inland Letter of Credit (LC):
An Advance Licence holder, except for an intermediate
supply, may approach a bank for opening an inland
letter of credit (LC) in favour of an indigenous supplier.

After opening the inland LC, the bank shall make the
following endorsement on:
► The Exchange Control copy of the Advance Licence for
Physical Exports/ Deemed Exports/ Annual Requirement;
► The Customs copy of the Advance Licence for Physical
Exports/ Deemed Exports/ Annual Requirement; and
► On the DEEC book
10. Facility Of Supporting Manufacturers
The licence holder has the option to have
the material processed through any other
manufacturer including a jobber

11. Facility of Co- Licensing

If the applicant desires to have the name of
any manufacturer or jobber added to the
licence, he may apply for such endorsement
12. Port Of Registration
The licence and the DEEC book for the Advance Licence shall be issued for the purpose
of import and export through one of the sea ports or airports or ICDs specified below:

 Sea Ports: Mumbai, Calcutta, Cochin, Kandla, Mangalore, Marmagoa, Chennai,

Nhavasheva, Paradeep, Tuticorin Vishakhapatnam, Kakinnada, Surat(Magdalla), Sikka
and Pipavav


Air-ports: Ahmedabad, Bangalore, Mumbai, Calcutta, Delhi, Jaipur, Varanasi, Srinagar,
Trivandrum, Hyderabad, Chennai, Coimbatore Air Cargo Complex, and Bhubaneshwar

 ICDs: Bangalore, Coimbatore, Delhi, New Gauhati Goods Shed, Moradabad, Ludhiana,
Hyderabad, Pimpri (Pune), Kanpur Pitampur (Indore), Agra, Faridabad, Jaipur, Guntur,
Nagpur Varanasi, and Surat, Jodhpur, Salem, Tirupur, Singanalur, Waluj, Mallanpur
13. Imports And Exports:
The accountability of imports and exports shall be restricted in relation
to the individual categories of advance licences issued under this
scheme. The export obligation may also be fulfilled by exporting to the
party other than the party which has initially placed the order on the
basis of which licence has been issued.

14. Enhancement/ Reduction In the Value of Licence:

The licensing authority may consider a request for enhancement/
reduction in the CIF value of the licence, provided the value addition
after such enhancement does not fall below the stipulated minimum
value addition and provided there is no change in the input- output
norms and the Policy under which the licence was issued
15. Export Obligation Period:
The period of fulfillment export obligation under an Advance Licence
shall commence from the date of issuance of licence. The export
obligation shall be fulfilled within a period of 18 months except in the
case of supplies under Advance Licence for Deemed Exports/ Advance
Licence to the projects/turnkey projects in India/abroad where the
export obligation must be fulfilled during the contracted duration of
execution of the project/turnkey project

16. Revalidation Of Licence

The regional licensing authority may consider a request of the original
licence holder and grant one revalidation for a period of six months
from the date of expiry of the original licence.
17. Monitoring Of Obligation:
The licensing authority, with whom the Undertaking is
executed by the Advance Licence holder, shall maintain a
proper record in a master register indicating the starting
and closing dates of obligation period and other particulars
to monitor the export obligation.

18. Fulfillment Of Export Obligation: The licence holder

shall furnish the following documents in support of having
fulfilled the export obligation:
► DEEC
► Bank Certificate of Exports and Realisation
19. Maintenance of Proper Accounts:
Every licence holder shall maintain a true and proper
account of licence-wise consumption and utilisation of
imported goods

20. Duty Entitlement Passbook Scheme:

The duty credit under the scheme shall be calculated by
taking into account the deemed import content of the said
export product as per SION and the basic custom duty and
surcharge thereof payable on such deemed imports. The
value addition achieved by export of such product shall
also be taken into account while determining the rate of
duty credit under the scheme.
21. Duty Free Replenishment Certificate:
The exporter exporting under DFRC shall be
required to give a declaration in the EP copy of the
Shipping Bill indicating the serial number and
product group of SION of the export product. In
addition, he shall also give a declaration regarding
the quality, technical characteristics and
specifications of inputs used in the export product.