advance license export incentive divyang gupta [email protected]
TRANSCRIPT
Advance Licence 2
INTRODUCTION• An Advance Licence is an incentive issued to allow duty free import of
inputs, which are physically used in the production of product for export (also making normal allowance for wastage).
• 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.
• Duty free import of mandatory spares upto 10% of the CIF (Cost Insurance Freight) value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under AdvanceLicence.
Advance Licence 3
BASIS OF LICENSE ISSUE/VALUE
• Advance Licences are issued on the basis of the inputs and export items given under SION (Standard Input Output Norms).
• However, they can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of Handbook.
Advance Licence 4
ISSUED FOR THE FOLLOWING
Physical exports Intermediate supplies
Deemed exports
Advance Licence 5
Definitions
Physical exports:-Advance Licence may be issued for physical exports including exports to SEZ to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product.
Intermediate supplies:-Advance Licence can be issued for deemed export to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in the Policy.
Deemed exports:-
Advance Licence benefit for deemed export can also be availed by the sub-contractor of the main contractor to such project provided the name of the sub-contractor(s) appears in the main contract.
Advance Licence 6
Exemptions at Glance
BASIC CUSTOM
DUTY
ADDITIONAL CUSTOM
DUTY
DEEMED EXPORT
EC AND SHEC
Advance Licence 7
Exemptions at Glance
Other than Deemed Export
Basic Customs Duty
EC & SHEC Safeguard Duty
Anti Dumping
Duty
Additional Customs
Duty
Advance Licence 8
Export Obligation
• The period for fulfillment of the export obligation under Advance Licence shall be as prescribed in the Handbook (Vol.1).
• Supplies to SEZ would also be counted for fulfillment of export obligation under the Advance Licence for physical exports
Advance Licence 9
Advance Licence for Annual Requirement
• Advance Licence can also be issued on the basis of annual requirement for physical exports, intermediate supplies or deemed exports.
• One to Five Star Export House shall be entitled for the Advance Licence for annual requirement.
• However, if the status holders are holding the certificate as merchant exporter, they are also entitled to the Advance Licence for Annual Requirement .
Advance Licence 10
Advance Realease Order
• An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC(Duty Free Replenishment Certificate) intending to source the inputs from indigenous sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units in lieu of direct import has the option to source them against Advance Release Orders denominated in foreign exchange/ Indian rupees.
• The transferee of a DFRC shall also be eligible for ARO facility. However, supplies may be obtained against the licence from EOU/ EHTP/ BTP/STP/SEZ units, without conversion into ARO
Advance Licence 11
Back-to-Back Inland Letter of Credit
• An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC may, instead of applying for an ARO, avail of the facility of Back-to-Back Inland Letter of Credit in accordance with the procedure specified in Handbook (Vol.1).
Advance Licence 12
Prohibited Item
• Prohibited items of imports mentioned in ITC(HS) shall not be imported under the licence issued under the scheme.
Advance Licence 13
Surrender of Advance License
• Entity can surrender the license, if it cannot fulfill the obligation as stated in advance license issued or due to any other reason . At the time of surrender, Entity has to pay duty saved(custom duty or any other duty as stated above ) along with Interest at the rate of 15% of the duty saved.
• Period For Which Interest is Required to be Paid:-From date of Bill of Entry to Date of Deposit .
Advance Licence 14
Advantages
• Unlike DEPB it is an Pre-Export benefit availed by exporter .
• The facility of Advance Licence shall also be available where some or all of the inputs are supplied free of cost to the exporter.
• In such cases, for calculation of value addition, the notional value of free of cost inputs along with value of other duty-free inputs shall be taken into consideration. However, if all the inputs are supplied free of cost, it shall be covered under paragraph 4.2.7 of the Policy.
• Benefit is also extended for using indigeneous items subject, to some requirement.
Advance Licence 15
Limitation
• Advance Licence and/or materials imported there under shall not be transferable even after completion of export obligation.
• Time bar for fulfillment of obligation of export
Advance Licence 16
Some Useful Links/Meanings
• Five Star Export House:If current and previous three yrs. Export is more than and equal to 5000crore
• Back to Back Inland Letter of Credit : It is a L/c which is opened by the ultimate buyer in favour of a particular beneficiary, who may not be the actual supplier/ manufacturer offering the main credit with near identical terms in favour as security and will be able to obtain reimbursement by presenting the documents received under back to back credit under the main L/c.It work as a funding to middle man .
• Advance Release Order: These are instruments for sourcing goods from indigenous sources against Advance License and DFRC,issued by DGFT(Directorate general of Foreign Trade )or Back to Back inland letter of credit issued by banks
17
Some Useful Links/MeaningsITC(HS) http://www.dgft.org/ITC_HS_Code.html
Handbook (Vol.1).http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBMQFjAA&url=http%3A%2F%2F164.100.9.245%2Fexim%2F2000%2Fprocedures%2Fhbcontents2006.pdf&rct=j&q=Handbook%20(Vol.1)&ei=nA1tTdTOOIG8ceKgvcEF&usg=AFQjCNH0SuAv-X3dv_dhPwjeuqkBNF3JmQ&sig2=lySddJBXPqncFd6j3tthBA&cad=rja
Anti Dumping Duty http://www.infodriveindia.com/exim/indian-customs/anti-dumping-duty.aspx
SION http://www.eepcindia.org/sion.asp
Safeguard Duty http://www.infodriveindia.com/exim/indian-customs/safeguard-duty/about-safeguard-duty.aspx#what_is_a_safeguard
DFRC http://www.cbec.gov.in/customs/cst-0809/cs-gen31-37.pdf
Inland Letter of Credit http://www.eximkey.com/copycon/disparch.asp?archid=354
For knowing More About This Scheme And if want to Use This Scheme
http://www.impexsolution.com/export_benefits_5.asp
Advance Licence