Annual Supplement 2006 07

8/8/2019 Annual Supplement 2006 07

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FOREIGN TRADE POLICY &HANDBOOK OF PROCEDURES

2004-2009 (ANNUAL SUPPLEMENT FOR 2006-07 )

This Annual Supplement is the second in the series supplementing

the Foreign Trade Policy 2004-09. The new revised Foreign TradePolicy Annual Supplement announced by the Hon'ble Minister ofCommerce & Industry on 7th April 2006.

Following are the highlights of the Foreign Trade Policy and Hand

Book of Procedures 2006 revised up to 2009, with particularreference to Gems and Jewellery. Following are the only briefs ofthe Foreign Trade Policy and Procedures. For details kindly refer

the relevant paragraphs and chapters mentioned in these highlights.

Major highlights of Policy are as under: -

i. Introduction of Focus Market and Focus Product Schemes, which

allows 2.5% credit facility of the FOB value subject to the terms andconditions of the scheme.

ii. Feature of Transfer of both the scrip and the imported inputs havebeen added to Served from India Scheme with other aspects.

iii. Value addition norms for Gems and Jewellery have been reducedfrom 7% to 4.5% with other relaxations.

iv. Features of the Advance Licence scheme and DFRC have beenclubbed to evolve a new scheme to named Duty FreeAuthorisation Scheme. The scheme allows import of inputs beforeexports. It further allows the transferability of scrip once the exportobligation is completed.

v. Incidence of Service tax and FBT shall be factored in various dutyneutralisation and remission schemes.

vi. Delay in refunds would be liable for interest.vii. Flexibility in relation to maintenance of average export obligation

under EPCG Scheme with extension of period of export obligation by2 years subject to the conditions in the scheme.

Because of rich tradition of craftsmanship, enterprise and

availability of skilled, low cost manpower India has the potential to

become an international hub for Gems and Jewellery.

This number of measures introduced for facilitating export of valueadded products catering to changing needs of the market and

facilitating easier product movement across the borders andallowing import of precious metal scrap for refining are as under:-

(a) With a view to ensure productive utilization of the large unutilisedmelting, refining and jewellery-making production capacity,import of precious metal scrapand used jewellerywill now


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be allowed for melting, refining and re-export of jewellery.However, such import will not be allowed through hand baggage.

(b) Gems & Jewellery exporters will now be allowed to re-import therejected precious metal jewellerysubject to refund of dutye xemption benefits on the inputs only and not the duty onjewellery as was being done earlier.

(c) Jewellery unsold in the foreign markets because of changingdesigns and other such factors, the Gems & Jewellery exporterswill now be allowed to export jewellery on consignment basis.

(d) Gems & Jewellery exporters will now be allowed to export cutand polished precious and semi- precious stones fortreatmentto enhance the quality and afford higher value in theinternational market. However such cut and polished preciousand semi-precious stones will subsequently be required to be re-imported within a period of 120 days.

(e) With the increase of gold and silver prices in the international market over thepast few years, the present value addition norms on export of gold & silver

jewellery appear highly unrealistic. The value addition norm for gold & silver

jewellery has been reduced from 7% to 4.5%.

Further the following additions/amendments have beenannounced to boost the exports of our industry.

CHAPTER 2Particulars

FTP/PRO

Headingsand Para

Amendments and Additions2006-07

Foreign Trade Policy2005-06

Second HandGoods Para 2.17

of FTP

Addition of anew PARA

Import of second hand capitalgoods, including refurbished/ re-

conditioned spares shall beallowed freely. However, secondhand personal computers/laptops, photocopier machines,air conditioners, dieselgenerating sets will only beallowed against a license issuedin this behalf.

Import of re-manufacturedgoods shall be allowed only

against a licence issued in thisbehalf.

Import of second handcapital goods, including

r e f u r b i s h e d / r e -condit ioned sparesshall be allowed freely.


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Easing OfDocumentationRequirement

Para2.47 of FTP

-Restoration ofEarlier Para

Pending the finalisation of SingleCommon Document (SCD) forinternational trade, theGovernment Departments dealingwith exports and imports willhonour the permissionlicense/certificate issued by theother Government departmentsbased on the verification of theexport documents Like shippingbi ll, bank realization certificate,Packing list, bill of lading etc .andwill not insist upon freshsubmission of these documents.

Deleted

Chapter 3Star Export HousePara 3.5.2 of FTP -Note 1

Doubleweightageallowed toMerchant

Exporters

Note 1.a

Note 4.

Exporters in the Small ScaleIndustry/.The Double Weightage shall beadmissible to Merchant as well as

Manufacturer Exporters. However,a shipment can get doubleweightage only once in any one ofthe above categories.

Transfer of export performancefrom one to another is notpermitted. Therefore disclaimersystem shall not be allowed for

counting of export turnover.

Recognition of One Star ExportHouse status shall be consideredonly in case the exporter hasminimum export performance ofRs. 15 Crores or more duringany two years out of the currentand preceding three years.

On ly Manufac turerexporters were alloweddouble weightage.

-

In case the recognitionis claimed based uponthe current yearsexport performance,same shall be

considered only in casethe exporter has exportperformance duringany one of thepreceding three yearsas well.

Privileges to StarExport House

Para 3.5.2.1 of FTP

vi.

viii.Addition

Target plus benefit deleted

Two Star Export Houses andabove shall be permit ted toestablish Export Warehouses, asper the guidelines issued byDepartment of Revenue in thisregard.

E n t i t l e m e n t f o rconsideration under the

Target Plus Scheme;

Services ExportsPara 3.6.1 of FTP

A d d i t i o n o fr e c e i p t o fp a y m e n t i nIndian Rupees

Services include all the 161tradable services covered underthe General Agreement on Tradein Services where payment for

such services is received in free

Services include all the161 tradable servicescovered under theGeneral Agreement on

Trade in Services


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foreign exchange or in IndianRupees, which are otherwiseconsidered as having been paidfor in free foreign exchange byRBI.

where payment forsuch services isr e c e i v e d i n freeforeign exchange.

SERVED FROMINDIA SCHEMEEligibility - Para3.6.4.2 of FTP

Addition ofreceipt ofpayment inIndian Rupees

All Service providers of serviceslisted in Appendix-10 of Handbookof Procedures (Vol. I) who have atotal foreign exchange earningor earning in Indian Rupeeswhich are otherwise consideredas having been paid for in freeforeign exchange by RBI of atleast Rs.10 lakhs in the precedingor current financial year shall beeligible to qualify for a duty creditscrip.

All Service providerswho have a totalfore ign exchange earning of at leastRs.10 lakhs in thepreceding or currentfinancial year shall beeligible to qualify for aduty credit entitlement.

Entitlement -Para3.6.4.3 of FTP

ServiceProviderscategory

All Service providers; includingHealthcare and EducationalService providers as well asEngine e r i n g P r o c e s sOutsourcing (EPO) andK n o w l e d g e P r o c e s sOutsourcing (KPO) serviceproviders; of services listed inAppendix-10 of Handbook ofProcedures (Vol. I) (other thanservice providers covered by Para3.6.4.4) shall be entitled to dutycredit scrip equivalent to 10% ofthe foreign exchange earned bythem in the preceding financialyear.

All Service providers(other than hotels andrestaurants) shall beentitled to duty creditequivalent to 10% ofthe foreign exchangeearned by them in thep r e c e d i n g f i nancialyear.

Remittances Para3.6.4.3.1 of FTP-

Addition The foreign exchange earnedthrough International CreditCards and other instruments aspermitted by RBI for rendering ofservice by the service providersshall also be taken into account forthe purposes of computation ofduty credit entitlement under thescheme.

Imports allowedPara 3.6.4.5 of FTP

Duty creditscrip-Importsliberalized

Duty credit scrip may be used forimport of any capital goodsincluding spares, office equipmentand professional equipment, officefurniture and consumables; thatare otherwise freely importableunder ITC (HS) Classification ofExport and Import items. Theimports shall relate to anyservice sector business of theapplicant.

Duty credit entitlementmay be used for importof any capital goodsincluding spares, officee q u i p m e n t a n dprofessionale q u i p m e n t , o f f i c ef u r n i t u r e a n dconsumables, relatedto the main line ofbusiness of the

applicant.


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Special provisionsPara 3.6.4.8 of FTP

Benefitextended toEOUs, SEZ,STPI & EHTP

Para deleted to extend the benefitof the scheme to EOUs, SEZ,STPI & EHTP

The scheme shall notbe available for 100%EOUs and unitsoperating under SEZ,STPI and EHTPSchemes. The clubbingof turnover of servicesrendered by these unitswith the turn over of theDTA units shall also notbe allowed.

Import underLease Para 3.6.4.9of FTP

Additionalbenefit

Utilization of duty free credit scripearned under the schemefinancingshall be permitted forpayment of duty in case of importof capital goods under leasefinancing in terms of provision inPara 2.25 of this Policy.

-

Target PlusScheme Para 3.7of FTP

Deleted Benefit withdrawn w.e.f31.03.2006

Text not produced

FOCUS MARKETSCHEME

Objective

Eligibility

Para of 3.9 ofFTP - NewIncentive forexport tospecifiedcountries-Appendix 37-C

Para 3.9.1 ofFTP

Para 3.9.2 ofFTP

Para 3.9.2.1 ofFTP

The objective is to offset the highfreight cost and other disabilities toselect international markets with aview to enhance our exportcompetitiveness to thesecountries.

Exports of all products to thenotified countries shall be entitledfor duty credit scrip equivalent to2.5% of the FOB value of exportsfor each licensing yearcommencing from 1st April 2006.

The scrip and the items importedagainst it would be freelytransferable.

Under the Scheme, export to allcountries as given in Appendix-37-C of Handbook of Procedures(Vol. I) shall qualify for exportbenefits as per Para 3.9.2 above.Items which are restricted orprohibited for export under

Schedule-2 of the Export Policy in


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Imports allowed

Para 3.9.2.2 ofFTP

Para 3.9.2.3 ofFTP

Para 3.9.3 ofFTP

the ITC (HS) Classification ofExport and Import items shall notbe eligible for any benefits underPara 3.9.2.

The following exports shall not betaken into account for calculationof export performance or forcomputation of entitlement underthe scheme:a. Export of importedgoods covered under Para 2.35 ofthe Foreign Trade Policy orexports made throughtransshipment.b. Export turnoverof units operating under SEZ/EOU/EHTP/STPI/ BTP Schemes orsupplies made to such units orproducts manufactured by themand exported through DTA units.c.Deemed Exports.d. ServiceExports.e. Diamonds and otherprecious, semi precious stones.f.Gold, silver, platinum and otherprecious metals in any form,including plain and studdedJewellery.g. Ores andConcentrates, of all types and inall forms.h. Cereals, of all types.i.Sugar, of all types and in allforms.j. Crude / Petroleum Oil &Crude / Petroleum based Products

covered under ITC HS codes 2709to 2715, of all types and in allforms.

Exporters shall have the option toapply for benefit either under theFocus Market Scheme or underthe Focus Product Scheme orunder Vishesh Krishi and GramUdyog Yojana in respect of thesame exported product/s.

The Duty Credit may be used forimport of inputs or goods includingcapital goods, provided the sameis freely importable under ITC(HS). Imports from a port otherthan the port of export shall beallowed under TRA facility as perthe terms and conditions of thenotification issued by Departmentof Revenue.


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Cenvat /Drawback

Special provisions

Para 3.9.4 ofFTP

Para 3.9.5 ofFTP

Additional customs duty/exciseduty paid in cash or through debitunder this scrip shall be adjustedas CENVAT Credit or DutyDrawback as per rules framed bythe Department of Revenue.

Government reserves the right inpublic interest, to specify from timeto time the export products orexports to such countries, whichshall not be eligible for calculationof entitlement.

FOCUS PRODUCTSCHEME

Objective

Eligibility

Para3 . 1 0 o fFTP - N e wIncentive fore x p o r t t ospecifiedproductsAppendix 37-D

Para 3.10.1 ofFTP

Para 3.10.2 ofFTP

Para 3.10.2.1of FTP

The objective is to incentivesexport of such products whichhave high employment intensity inrural and semi urban areas so asto offset the inherent infrastructureinefficiencies and other associatedcosts involved in marketing ofthese products.

Exports of notified products to allcountries shall be entitled for dutycredit scrip equivalent to 2.5% ofthe FOB value of exports for eachlicensing year commencing from1st April, 2006. However only 50%of the export turnover of suchproducts shall be counted forbenefits under the Scheme. Thescrip and the items imported

against it would be freelytransferable.

Under the Scheme, export of suchproducts as given in Appendix-37-D of Handbook of Procedures(Vol. I) shall qualify for exportbenefits as per Para 3.10.2 above.(Provisions of para 3.9 standapplicable)


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Chapter 4

ADVANCEAUTHORISATIONSCHEME(ERSTWHILE

ADVANCELICENCESCHEME)

Nomenclature of the erstwhileAdvance License changed It allowstransferability of scrip once theexport obligation is complete. The

scheme will come into effect from1st May, 2006

AdvanceAuthorization Para4.1.3 of FTP

Addition However, the Director General ofForeign Trade, by means of PublicNotice, may in public interestexclude any product (s) from thepurview of advance Authorization.

Para 4.1.6 of FTP Relaxation forsupplies to SEZunder the

scheme

However, for physical exports forwhich payments are not received infreely convertible currency, the

same shall be subject to valueaddition as specified in Appendix-11 of Handbook of Procedures(Vol.1). In case of supplies toSEZ Units, irrespective of thecurrency of realization, AdvanceAuthorization shall be issuedwith a positive value addition.

However, for physicaexports for whicpayments are no

received in freeconvertible currencythe same shall bsubject to value additioa s s p e c i f i e d iAppendix-1 1 o fHandbook (Vol.1).

Provision for BIFRunits

Para 4.1.9 A ofFTP

Export Obligation Period Extension,as mentioned above, shall bewithout the payment of composition

fee for cases where rehabilitationpackage has been announced/approved.

Not there

Prohibited Items Para 4.1.13 ofFTP

The State Trading Enterprises arealso allowed to sell the goods onHigh Sea Sale basis to the holdersof Advance Authorisation/ DFIA/DFRC

Not there

Duty EntitlementPassbook Scheme(DEPB)

Para 4.3.1 ofFTPRelaxationfor SEZ supply

Under the DEPB scheme, anexporter may apply for credit, as aspecified percentage of FOB value

of exports, made in freelyconver t ib le cur rency o r t h epayment made from the ForeignCurrency Account of the SEZunit in case of supply by DTA toSEZ unit.

Under the DEPscheme, an exportemay apply for credit, a

a specified percentagof F OB value oexports, made in freelconvertible currency.

DUTY FREEIMPORTAUTHORISATIONSCHEME

Para 4.4.1 ofFTP N e w l yInserted

A Duty Free Import Authorisation isissued to allow duty free import ofinputs, which are used in themanufacture of the export product(making normal allowance for

wastage), and fuel, energy, catalyst


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etc. which are consumed or utilisedin the course of their use to obtainthe export product. However, theDirector General of Foreign Trade,by means of Public Notice, may inpublic interest, exclude anyproduct(s) from the purview of thisscheme. This scheme will comeinto force from 1st May, 2006.

Entitlement Para 4.4.2 ofFTP - addition

The Authorisation shall be issuedon the basis of inputs and exportitems given under Standard Inputand Output Norms (SION). Theimport entitlement shall be limitedto the quantity mentioned in SION.

Duty Free import of mandatoryspares upto 10% of the CIF valueof Authorisation which are requiredto be exported/ supplied with theresultant product may also beallowed under the scheme.

Such Authorisation can be issuedeither to a manufacturer exporter ormerchant exporter tied tosupporting manufacturer(s):i) for Physical exports (includingexports to SEZ); and/ orii) for Intermediate supplies; and /oriii) to the main contractor for supply

of goods to the categoriesmentioned in paragraph 8.2 (b), (c),(d), (e), (f), (g), (i) and (j) of thePolicy; for import of inputs requiredin the manufacture of goods. Inaddition, in respect of supply ofgoods to specified projectsmentioned in paragraph 8.2 (d), (e),(f), (g) and (j) of the Policy, a DFIAcan also be availed by the sub-contractor of the main contractor to

such project provided the name ofthe sub contractor(s) appears in themain contract.

Such Authorisation can also beissued for supplies made to UnitedNations Organisations or under theAid Programme of the UnitedNations or other multilateralagencies and paid for in freeforeign exchange.


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A manufacturer exporter or amerchant exporter tied up with thesupporting manufacturer can applyfor the Authorisation under theScheme. Before affecting exportsunder scheme, an applicant isrequired to file an application to theRegional Authority.

Such Authorisation shall be initiallyissued with actual user conditionand shall be exempted frompayment of basic custom duty,additional customs duty, educationcess, ant i -dumping duty andsafeguard duty, if any.

Import items Para 4.4.3 ofFTP- Addition

Prohibited items of importsmentioned in ITC(HS) shall not beimported under the Authorisationissued under the Scheme.Duty Free procurement fromdomestic market will be availableas in case of advance Authorisationscheme against ARO/ invalidationletter/back to back inland letter ofcredit etc.

Provisions of paragraph 4.1.13 ofFTP shall be applicable for theDFIA holder.

Value Addition Para 4.4.4 ofFTP - Addition

A minimum 20% value additionshall be required for issuance ofsuch Authorisation except for itemsin gems and jewellery sector forwhich value addition as given inparagraph 4A.2.1 of the Handbookof Procedures (Vol.1) and items forwhich higher value addit ion isprescribed under AdvanceAuthorisation Scheme shall beapplicable.


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Export Obligation Para 4.4.5 ofFTP- Addition

Procedure related to fulfilment ofExport Obligation under thescheme and the time periodallowed to fulfil it has been laiddown in chapter 4 of Handbook ofProcedure, Vol. I

Transferability Para 4.4.6 ofFTP - Addition

Once export obligation has beenfulfilled, request for transferability ofthe Authorisation or the inputsimported against it may be madebefore the Regional Authority.Once, transferability is endorsed,the Authorisation holder will be atliberty to transfer the duty freeinputs, other than fuel and anyother item(s) notified by DGFT forthis purpose.

However, in respect of Standard

Input Output Norms, which aresubject to actual user condition orfor import of fuel under the generalnorms or where Standard InputOutput Norms allow import ofAcetic Anhydride, Ephedrine andPseudo Ephedrine, DFIA shall beissued with actual user condition forthese inputs and no transferabilityshall be allowed for these inputseven after fulfilment of the export

obligation. Transfer of items thatare restricted for imports or theDFIA for such items shall beallowed under the DFIA schemeonly against a specific importlicence for that item.

However, for fuel, the importentitlement may be transferred onlyto the companies, which have beengranted Authorization to market fuelby the Ministry of Petroleum &

Natural Gas.

CENVAT Facility Para 4.4.7 ofFTP Addition

No CENVAT credit facility shall beavailable for inputs either importedor procured indigenously againstthe Authorization.

Drawback Facility Para 4.4.8 ofFTP Addition

The drawback shall be available inrespect of any of the duty paidmaterial, whether imported or

indigenous, used in the goods


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exported, as per the drawback ratefixed by Ministry of Finance. Thedrawback shall, however, berestricted to the duty paid materialsmentioned in the application.

Facility ofClubbing

Para 4.20.5 ofFTP Addition

However clubbing of erstwhileValue based Advance licencesshall not be allowed.

Export of Cut &PolishedDiamonds forCertification/Grading

Para 4A.2 of FTP- Addition

Gem and Jewellery exporters maybe permitted to send cut &polished diamonds each weighing0.25 of a carat and above forcertification/grading to IndianDiamond Institute, Surat, Gujarat.In addition, Gem and Jewelleryexporters with a track record of atleast three years and having anannual average turnover of Rs.5crores and above during thepreceding three licensing years orthe authorized offices /agencies inIndia of Gemological Institute ofAmerica (GIA), The RobertMouawad Campus, InternationalGemological Institute (IGI) andEuropean Gemological Laboratory(EGL) in USA, Hoge Road VoorDiamond, Antwerp, (HRD), WorldDiamond Centre of Diamonds HighCouncil, Antwerp, Belgium, CentralGem Laboratory, Miyagi Building,5-15-14 Ueno Taito-Ku, Tokyo,Japan, American Gem SocietyLaboratories (AGS Laboratories),8917 West Sahara Avenue, LasVegas, Nevada 89117 andDiamond Trading Company,Maidenhead, U.K.may also be permitted to export cut& polished diamonds eachweighing 0.25 of a carat and aboveto the said

laboratories/agencies for thepurpose of certification/gradingreports by them with a conditionthat the same should be reimported with the ertificate/gradingreports issued by them without anyimport duty at the time of re-import.

GEMS & JEWELLERY Insertion of following paras: -Export of cut &Polished precious

and semi-precious

Para 4A.20.1 ofFTP

Gems & Jewellery exporters shallbe allowed to export cut and

polished precious and semi-


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stones fortreatment and re-import

precious stones for the treatmentand re-import as per customs rulesand regulations.

Import of preciousmetal scrap/usedjewellery formelting and re-export of jewellery

Para 4A.21 ofFTP

Import of precious metalscrap/used jewellery shall beallowed for melting, refining and re-export of jewellery as per theprocedure laid down in theHandbook of Procedures, Vol. I..However, such import shall not beallowed through hand baggage.

Re-import ofrejected jewellery

Para 4A.22 ofFTP

Gems & Jewellery exporters shallbe allowed to re-import the rejectedprecious metal jewellery as per theprocedure laid down in Para 4A.32and 4A.32.1 of Handbook ofProcedure, Vol. I.

Export ofJewellery onconsignment basis

Para 4A.23 ofFTP

Gems & Jewellery exporters shallbe allowed to export jewellery onconsignment basis as per theprocedure given in chapter 4 of theHandbook of Procedures, Vol. Iand as per the Customs rules andregulations in this behalf.

Chapter 4, Para4.7.1 of HBoP

Entitlement The CIF value of one or more suchauthorisations shall be 500% of theFOB and/or FOR value ofpreceding year exports and/orsupplies in case of status holdersand Rs. 5 crore or 500% of theFOB and/or FOR value ofpreceding year exports and/orsupply, whichever is more, forothers. However, in cases whereNC has already ratified the normsfor the same export and importproducts in respect o f a nauthorisation obtained underparagraph 4.7, such norms shall bevalid for a period of six monthsreckoned from the date ofratification. The authorisationholder in such cases shall beentitled for further authorisation(s)as per the norms ratified by NCwithout the need for subsequentratification by NC. In such casesthe applicant would file theapplication under Adhoc NormsFixed category. However, NCshould ensure that such adhocnorm(s), if not notified already, arenotified within a period of one

month after six months of

The CIF value of one om o r e s u c hauthorisations shall b200% of the FOB and/oFOR value of precedinyear exports and/osupplies in case ostatus holders and Rs. crore or 100% of thFOB and/or FOR valueof preceding yeaexports and/or supplywhichever is more, foothers. However, icases where ALC haalready ratified thnorms for the samexport and impoproducts in respect of licence obtained undeparagraph 4.7, sucnorms shall be valid foa period of six monthreckoned from the datof ratification. Thlicence holder in succases shall be entitlefor further licence(s) aper the norms ratified b

ALC without the nee


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ratification of such adhoc norm(s). f o r s u b s e q u e n tratification by ALC. Is u c h c a s e s thapplicant would file thapplication under AdhoNorms Fixed category.

Entitlement Para 4.7.2 0fHBoP - Addition

Once the norms are fixed by NC,the value limits mentioned in subparagraph 4.7.1 above would notbe applicable to AdvanceAuthorizations issued under thisparagraph. Such authorizations,subsequent to fixation of norms byNC, may be enhanced.

It is mandatory for the industryto provide production data etc.as may be required byDGFT/EPC for fixation of SION.Otherwise, the applicant shallnot be allowed to take the benefitof Advance Authorizationscheme for taking repeatadvance authorization on self-declared basis.

Once the norms arfixed by ALC, the valulimits mentioned in suparagraph 4.7.1 abovwould not be applicablto Advance licenceissued under thip a r a g r a p h . S u c hlicences subsequent tfixation of norms byALC, may be enhanced

Licence in Excessof Entitlement

Para 4.7.5 ofHBoP - Addition

The applicant shall give anundertaking that he shall abide bythe norms fixed by NC a n daccordingly pay duty, together with15% interest, on the unutilisedinputs as per norms fixed by NC.However the holder of theauthorisation has the option toundertake additional exportobligation in proportion to theexcess unutilized inputs. In casethe application is rejected by theNC, then the authorization holdershall pay the customs dutysaved along with 15% interest onthe imported inputs.In addition, an amount

equivalent to 3% of the CIF valueof unutilised imported materialshall be required to be depositedthrough a TR in the authorisedbranch of Central Bank of Indiaindicating the Head Account:1453, Foreign Trade and ExportPromotion and Minor Head 102.The Authorisation holder shallalso be required to obtain aseparate import licence f o r

regularisation of the excess

The applicant shall givan undertaking that hshall abide by the normfixed by NC anaccordingly pay dutytogether with 15%interest, on thunutilised inputs as penorms fixed by NCHowever the holder othe licence has thoption to undertaka d d i t i o n a l e x p o r tobligation in proportioto the excess unutilizeinputs


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imported input(s). However, theprovisions of this sub-paragraphshall not be applicable if theunutilised imported material wasfreely importable on the dateof import.

AdvanceAuthorization orDFRC or DFIA forIntermediateSupplies

Para 4.13 ofHBoP - Addition

The application for grant ofAdvance Authorisation or DFRC orDFIA for Intermediate supply maybe made on the basis of a tie-upagreement with the exporter(physical / deemed) holding anAdvance authorization or DFRC orDFIA. The Regional Authorityconcerned shall consider suchrequests. The AdvanceAuthorization or DFRC or DFIA forIntermediate supply shall be issuedafter making the Authorisation/Certificate invalid for direct importof items to be supplied by theintermediate manufacturer. In suchcases, a copy of the invalidationletter will be given to theAuthorization/Certificate holder andcopy thereof will be sent to theintermediate suppliers well as theRegional Authority of theintermediate supplier. TheAuthorization / Certificate holderin such case has an option either

to supply the intermediateproduct to holder of Advanceauthorization / DFRC / DFIA or toexpor t (phys ica l / deemed)directly. However, once theElectronic message transferfacility among the RegionalAuthorities becomes fullyoperational, the requirement ofsending a copy of theinvalidation letter/ARO to the

jurisdictional Regional Authorityshall not be required.

The application for granof Advance licence oDFRC for Intermediatsupply may be made othe basis of a tie-uagreement with thexporter(physical/deemed)holding an Advanclicence or DFRC. Thl i c e n s i n g a u th o r i t yc o n c e r n e d s h a l lconsider such requestsT h e A d v a n c eAuthorization or DFRCfor Intermediate supplshall be issued aftemaking the invalid fodirect import of items tbe supplied by thintermediatemanufacturer. In succases, a copy of thinvalidation letter will bgiven to the licens

holder and copy thereowill be sent to thintermediate supplier awell as the licensinauthority of thintermediate supplier.The licence holder isuch case has an optioeither to supply thintermediate product tholder of Advanc

licence or to expor(physical/deemed)directly.


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Redemption Para 4.26 ofHBoP - Addition

After redemption, the RegionalAuthority shall forward a copy ofthe redemption letter indicating theshipping bill number(s), date(s),FOB value in Indian rupees as pershipping bill(s) and description ofexport product to the CustomsAuthority at the port of registration.Such details shall also be placedby the zonal offices in theirwebsite immediately afterissuance of the export obligationdischarge/ redemption letter/NoBond Certificate and by DGFTHq. in DGFT website on monthlybasis for the Customs Authorityto access it from the website.

Before discharging BG/LUT againstPhysical Exports, the Customsshall verify that the details of theexports as given in theRedemption Certificate, are asper their records. However beforedischarging BG/LUT againstIntermediate Supplies and DeemedExports, the Customs shall verifythe details of the supplies from theCentral Excise Authorities/BondOfficer.

Ordinarily, redemption of BG/LUTshall not preclude the customsauthority from taking action againstthe Authorization holder for anymisrepresentation, mis-declarationand default detected subsequently.

Further the Regional Authorityshall also take action against theAuthorization holder in case ofnon-submission of Appendix 23,

duly filled in, as stipulated inParagraph 4.30 of this Handbookor for any misrepresentation,mis-declaration And defaultdetected subsequently in thedetails declared and furnished inAppendix 23. An endorsement tothis effect shall be made by theRegional Authority in theredemption certificate.

After redemption, thRegional Authority shaforward a copy of thr e d e m p t i o n l e t t e rindicating the shippinbill number(s), date(sFOB value in Indiarupees as per shippinbill(s) and description oexport product to thCustoms Authority athe port of registration.

Before d ischarg i ngB G / L U T a g a i n s tPhysical Exports, thCustoms shall verify thathe details of the exportas given in thRedemptionCertificate, are as petheir records. Howevebefore discharging BGL U T a g a i n s tIntermediate Supplieand Deemed Exportsthe Customs shall verifthe details of thsupplies from thC e n t r a l E x c i s eAuthorities/Bond Officer

Ordinarily, redemptioo f BG /LUT shall nopreclude the customauthority from takinaction against thAuthorisation holder foany misrepresentationmis-dec la ra t i on andd e f a u l t d e t e c t e dsubsequently


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Regularization ofBonafide Default

Para 4.28 (v) ofHBoP Addition

The Regional Authority shallcompare the relevantportion of Appendix-23 dul yverified and certified byChartered Accountant with thatof norms allowed in theAuthorisation(s) and the actualquantity imported against theAuthorisation(s) in the beginningof the financial year for all suchAuthorisations redeemed in thepreceeding licensing year. In thisverification process, in case if itis found that the Authorisationholder has consumed lesserquantity of inputs than imported,the authorisation holder shall beliable to pay customs duty onthe unutilized value of importedmaterial alongwith interest @15% per annum thereon or effectadditional export within theexport obligation period.

Maintenance ofProper Accounts

Para 4.30 ofHBoP - Addition

E v e r y A d v a n c e Authorisationholder shall maintain a true andproper account of consumption andutilisation of duty free imported /domestically procured goodsagainst each authorisation asprescribed in Appendix-23. Theserecords are required to be sentto the concerned Reg iona lAuthority(ies) at the beginningof each licensing year for allthose authorisations, which havebeen redeemed in the previouslicencing year. However, theserecords in the said format arerequired to be submitted forauthorisations issued on or after13-05-2005. Such records should

be preserved for a period of at leastthree years from the date ofredemption.

E v e r y A d v a n c eAuthorisation holdeshall maintain a true anproper account oc o n s u m p t i o n a n dutilisation ofdomestically procuredgoods against eaca u t h o r i s a t i o n a sprescribed in Appendix23.

Such records should bpreserved for a period oat least three yearsfrom the date oredemption.

Application forDEPB

Para 4.43 ofHBoP

An application for grant of creditunder DEPB may be made to theRegional Authority concerned inthe form given in Aayaat NiryaatForm alongwith the documentsprescribed therein. The agencycommission shall be allowed forthe DEPB entitlement upto the

limit of 12.5% of FOB value onl .

An application for granof credit under DEPmay be made to thReg iona l Au tho r i t yconcerned in the formgiven in Aayaat NiryaaForm alongwith thdocuments prescribed

therein. The FOB value


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The FOB value in free foreignexchange shall be converted intoIndian rupees as per the exchangerate for exports, notified by Ministryof Finance, as applicable on thedate of order of Let Export by theCustoms.

in free foreign exchangshall be converted intIndian rupees as per thexchange rate foexports, notified bMinistry of Finance, aapplicable on the date oorder of Let Export bthe Customs.

Application forDEPB

Para 4.43B ofHBoP

An application for grant of credit forsupplies from DTA to SEZ can bemade by the DTA unit or the SEZunit. The DTA unit may claim thebenefits either from the RegionalAuthority or the DevelopmentCommissioner concerned.

An application for granof credit for suppliefrom DTA to SEZ can bmade by the DTA unit othe SEZ unit. or thDevelopmentCommissionerconcerned.

Frequency ofApplication

Para 4.48 ofHBoP

All the shipping bills in any oneapplication must relate to exportsmade from one Custom Houseonly. There is no limit on thenumber of shipping bills which canbe filed through EDI mode in asingle application.

The applicant may filone or more applicatiosubject to the conditiothat each applicatioshall contain not morthan 25 shipping billsAll the shipping bills iany one applicatiomust relate to exportmade from one CustomHouse only. This limshall not apply to thea p p l i c a t i o n s f i l e dthrough EDI mode.

Duty Free ImportAuthorization(DFIA) Scheme

Para 4.54 toPara 4.72 ofHBoP Newlyinserted in HBoP

Para 4.55 ofHBoP

The Policy relating to the Duty FreeImport Authorisation Scheme isprescribed in Chapter 4 of thePolicy.

In case of export of gold /silver /platinum jewellery and articlesthereof, the quantity, wastage andthe value addition norms shall beas prescribed in paragraph 4A of

the Policy and Handbook ofProcedure(vol.1).

Value Addition Para 4A.2.1 ofHBoP

The minimum value addition shallbe as mentioned below

S.No. Item of Export MinimumValue Addition

a) Plain gold/platinum /silver jewellery/ Articles 4.5% andornaments like Mangalsutra

Containing gold and black beads/

The minimum valuaddition shall be amentioned below:S.No. Item of ExpoMinimum Value Addition

a)Plain gold/ platinum silver jewellery/Articles7% and ornaments lik

Mangalsutra Containin


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Imitation stones, precious stonesand semi precious stones, cubiczirconia , diamonds, precious &semi-precious stones.

gold and black beadsI m i t a t i o n s t o n e sprecious stones ansemi precious stonesc u b i c z i r c o n i a ,diamonds, precious &semi-precious stones.

Value Addition-Sector SpecificRequirements forEOU Units

Appendix 14-I-CSr. No.11 -

Gem andJewelleryProducts -Addition

The minimum value addition oneach consignment shall be in termsof para 4.A.2.1 of the Hand Book ofProcedures.

Export AgainstSupply by ForeignBuyer

Para 4A.15 ofHBoP

In case of direct supply ofgold/silver/platinum, alloys, findingsand mountings ofgold/silver/platinum and plain semi-f in ished gold/s i lver /p la t inumjewellery to status holder/ exporter,the Status Holder/exporter shallfurnish a Bank Guarantee/LUT, asper Customs Rules andregulations to the Customsequivalent to the Customs Dutyleviable on imported gold/ silver/platinum, alloys, findings andmountings of gold/ silver/ platinumand plain semi-finished gold/ silver/platinum jewellery etc.

In case of direct supplof gold/silver/platinumalloys, findingsand mountings ofgold/silver/ platinum anplain semi-finishedgold/silver/platinum jewellery to stholder/ exporter, thStatus Holder/ exporteshall furnish a BanGuarantee as peCustoms Rules a n dregulations to thCustoms equivalentto the Customs Dutleviable on importegold/ silver/ platinum,alloys, findings anmountings of goldsilver/ platinum andp l a i n s e m i -finishego ld /s i lver / la t inum

jewellery etc.

Export ThroughExhibitions/ExportPromotion

Tours/Export ofBranded Jewellery

Para 4A.17 ofHBoP Para4A.18(a) (ii)

Personal Carriage of gems &jewellery or export throughairfreight/post parcel route for

Export Promotion Tours/ photoshoots/fashion shows overseas:

Personal carriage/export throughairfreight/post parcel route ofgold/silver/ platinum jewellery,cutand polished diamonds, precious,semi-precious stones, beads andarticles as samples upto US$100,000 for export promotion

tours/photo shoots/

Personal Carriage ogems & jewellery- -

P e r s o n a l c a r r i a gego ld /s i lver / la t inum jewellery, cut po l ished d iamondsprecious, semi-precioustones, beads anarticles as samples uptUS$ 100,000 for expopromotion tours antemporary display/ salabroad is also permitte

with the approval o


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fashion shows and temporarydisplay/ sale abroad is alsopermitted with the approval of Gem& Jewellery & Jewellery ExportPromotion Councilsubject to the condition that thepromoter would bring back the

jewellery / goods or repatriate thesale proceeds within 45 days fromthe date of departure throughnormal banking channel. In caseof personal carriage for exportpromotion tours, the exporter shalldeclare personal carriage of suchsamples to the Customs whileleaving the country and obtainnecessary endorsement on theExpor t Ce r tificate issued byJewellery Appraiser of theCustoms. In such cases theexporter shall book with thenominated agency, within 120 daysafter the export promotion tour orthe expiry of the stipulated periodof 45 days, whichever is earlier,go ld /si lver/ platinum for thepurpose of replenishment contentagainst the items sold abroad.

Gem & Jewellery &J e w e l l e r y E x p o r tPromotion Councilsubject to the conditiothat the promoter woulbring back the jeweller/goods or repatriate thesale proceeds within 4days from the date od e p a r t u r e t h r o u g hnormal banking channeIn caseof personal carriage foexport promotion toursthe exporter shad e c l a r e p e r s o n acarriage of suchsamples to the Customw hi l e l ea vi n g t h ecountry and obtainecessary endorsemenon the ExportCertificate issued bJewellery Appraiser othe Customs. In succases the exporter shabook withthe nominated agencywithin 120 days after thexport promotion tour othe expiry of th

stipulated period of 45days, whichever iearlier, gold/silver/platinum for the purposof replenishmencontent against thitems sold abroad.


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Loan Basis Para 4A.23 The exporter may obtain therequired quantity of precious metalon loan basis subject to furnishingof Bank Guarantee for theprecious metal and BankGuarantee/LUT, as the case maybe, for the customs duty to theNominated Agencies for an amountas may be prescribed by theNominated Agencies. On failure toeffect exports within the periodprescribed, the NominatedAgencies shall enforce the BankGuarantee and /or LUT.

The exporter may obtaithe required quantity oprecious metal on loabasis subject tfurnishing of BanGuarantee to thNominated Agencies foan amount as may bprescribed by thNominated AgenciesOn failure to effecexports within the periop r e s c r i b e d , t h eNominatedAgencies shall enforcthe Bank Guarantee an

/or LUT.ReplenishmentAuthorisation forImport ofConsumables

Para 4A.28 ofHBoP Change

A Replenishment Authorisation forduty free import of consumables,equal to 2 % of FOB value ofexports of the preceding year maybe issued on production ofChartered Accountants Certificateindicating the export performance.This Authorisation shall be non-transferable and subject to actualuser condition. This ReplenishmentAuthorisation shall be valid for dutyfree import of consumables asnotified by theCustoms.

Application for import ofconsumables as given abovemay be made to the concernedRegional Authority in the formgiven in Aayaat Niryaat Form.

A R e p l e n i s h m e n tAuthorisation for dutfree import oconsumables, equal to % of FOB value oexports of the precedinyear may be issued oproduction of ChartereAccountants Certificatindicating the expoper f o r m a n c e . T h i sAuthorisation shall bnon-transferable a ndsubject to actual use

c o n d i t i o n . T h i sReplenishmentAuthorisation shall bvalid for duty free imporof consumables anotified by theCustoms.

Application for import oconsumables or impoof plain/ studded

jewellery as given abovmay be made to thconcerned RegionaLicensing Authority itheform given in AayaaNiryaat Form.

Personal Carriageof Gems andJewellery ExportParcels

Para 4A.29 Personal Carriage of gems &jewellery parcels by Foreign BoundPassengers from all EOU/SEZunits and all firms in DTA throughthe Airports in Delhi, Mumbai,

K o l k a t a , C h e n n a i , Cochin,

Personal Carriage ogems & jewellerparcels by ForeigBound Passengers fromall EOU/SEZ units an

all firms in DTA throug


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Coimbatore, B a n g a l o r e ,Hyderabad, Jaipur is permitted.The procedure for PersonalCarriage of exports shall be asprescribed by Customs. The exportproceeds shall, however, berealised through normal bankingchannel. For claiming theReplenishment in case of PersonalCarriage of Exports by ForeignBound passenger, documents shallbe the same as mentioned underpa ra gr aph 4A.21.2 of thisHandbook. Authorised CourierCompanies are also permitted tooperate on the above lines

the Airports in DelhMumbai, Kolkata,C h e n n a i , C o c h i nCoimbatore, BangaloreHyderabad, Jaipuris permitted. Thprocedure for PersonaCarriage of exports shabe as prescribed bCustoms. The expop r o c e e d s s h a l l ,however, be realisethrough normal bankinchannel. Forclaiming t h eReplenishment in casof Personal Carriage ofExports by ForeigB o u n d p a s s e n g e rdocuments shall be thsame as mentioneu n d e r p a r a g r a p h4A.21.2 of thiHandbook.Au thor ised Cour ieCompanies are alspermitted to operateon the above lines.

Diamond &Jewellery DollarAccounts

Para 4A.33 ofHBoP

The policy for Diamond andJewellery Dollar Accounts is givenin pa ragraph 4A.19 of FTP.Detailed procedure for its operationwill be notified separately.

The policy for Diamonand Jewellery DollaAccounts is given i

paragraph 4A.20 oFTP. Detailed procedurfor its operation will bnotified separately.

Import of Preciousmetal scrap/usedjewellery formelting and re-export of jewelleryNew Parainserted

Para 4A.34 ofHBoP

The policy for Import of preciousmetal scrap/used jewellery formelting and re-export of jewellery isgiven in paragraph 4A.21 of FTP.The procedure is laid as under:

Imported precious metal

scrap/used jewellery shall beallowed to be cleared by theCustoms subject to the condition:a) that the importer files a bondalong with Bank Guarantee for asum equivalent to one and halftimes the customs duty leviable onthe said used jewellery/preciousmetal scrap;

b) the importer fulfils the export

obligation and value addition as

Not there


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notified by Central Government;

c) such import will not be allowedthrough Hand Baggage.

The detailed procedure includingvalue addition requirementand export obligation period etc. foroperationalisation of theFacility under this paragraph shallbe notified separately by DGFT.

Export ObligationunderEPCG Scheme

5.4 Deletion ofpara 4 of 5.4.i

Deleted The import of capitagoods for creatinstorage and distributiofacilities for productm a n u f a c t u r e d o rservices rendered foexport by the EPCGlicence holder would bpermitted under thEPCG Scheme.

CHAPTER 6Export and Importof Goods

6.2 (a) of FTPInsertion ofadditional parafor promotionalactivities ofbusiness

Addition of actualuser condition atthe end of para

Substitution ofpara providingexport duringwarranty periodand inclusion inNFE calculation

a. An EOU/EHTP/STP/BTP unitmay ------Procurement and supply of exportpromotion material like brochure /literature, pamphlets, hoardings,catalogues, posters etc. upto amaximum value limit of 1.5% ofFOB value of previous yearsexports shall also be allowed.

b. An EOU/EHTP/STP/BTP unitmay -----Goods imported by a unit shall bewith actual user condition and shallbe utilized for export production.

h. Procurement and expor t o fspares/components upto 1.5% ofthe FOB value of exports may be

allowed to the sameconsignee/buyer of the exportarticle within the warranty period.

Investment Criteria Para 6.6(d) ofFTP - Addition

The Board of Approval (BOA) mayalso allow establishment of EOUswith a lower Investment criteria.

DTA Sale ofFinished Products/Rejects/ Waste/Scrap/ Remnants

and By-products

6.8 of FTPWithdrawn ofpermission tocertain activities

a.) Such DTA sale shall also not bepermissible to units engaged in theactivities of packaging / labelling /segregation / refrigeration

/compacting/micronisation/


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pulverization/granulation/conversion of monohydrate form ofchemical to anhydrous form or vice-versa.

Other Supplies inDTA

6.9. of FTP b.Relaxationremoved forpayment throughEEFC Account

Deleted Supplies affected inDTA against paymentfrom the ExchangeEarners ForeignCurrency (EEFC)Account of the buyer inthe DTA or againstforeign Exchangeremittance receivedfrom overseas.

Inter Unit Transfer 6.13 of FTPPermission isrequired fortransfer ofmanufacturedgoods

Transfer of manufactured goodsfrom one EOU/ EHTP/STP/BTPunit to another EOU/EHTP/STP/BTP unit is allowed with priorintimation to the concernedDevelopment Commissioner andCustoms authorities following theprocedure of inbound movement ofgoods.

CHAPTER 7

SPECIALECONOMICZONES

CHAPTER-7 The policy relating to Special EconomicZones is governed by SEZ Act 2005, andthe Rules framed there under

FREE TRADE &WARE - HOUSING

ZONES

CHAPTER7A

The policy relating to Free Trade andWarehousing Zones is governed by SEZ

Act 2005, and the Rules framed thereunder.CHAPTE R 8

Deemed ExportsCategories ofSupply

Para 8.2 ofFTP -Addition

Supply and installation of goods andequipment (single responsibility of turnkeycontracts) to projects financed bymultilateral or bilateral agencies/finds asnotified by Department of Economic Affairs,Ministry of Finance under International

Competitive Bidding in accordance with theprocedures of those agencies/finds, whichthe bids may have been invited andevaluated on the basis of Delivered DutyPaid (DDP) prices for the goodsmanufactured abroad.


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CHAPTER 9

Definitions Para 9.8Deleted

Definition of Advance LicenceCommittee

"ALC" means theAdvance LicensingCommittee in theDirectorate Generalof Foreign Tradefor recommendinggrant of licencesu n d e r D u t yExemption Schemea n d f o rrecommendingInput Output normsand value additionnorms to benotified by DirectorGeneral of ForeignTrade

StandingGrievanceCommittee

Para 9.9.1 Authorisation means a permission asincluded in Section 2 (g) of The ForeignTrade (Development and Regulation)Act, 1992 (No.22 of 1992) to import orexport as per provisions of this policy.

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