RoDTEP ( Remission of Duties and Taxes on Exported Products )
The Indian ministry of Commerce & Industry under the Department of Commerce has introduced the RoDTEP Scheme Guidelines by issuing the Notification No. 19/2015-2020 on 17th August 2021, providing the parameters of the Scheme. It has also provided for the percentage of benefit applicable on various products presently 8555 tariff lines being exported from India.
Moreover, as a part of the RoDTEP scheme, duties, taxes and other levies are remitted to exporters of goods manufactured in India at the national, state, and local levels. Additionally, it includes the incidence of taxes incurred after manufacturing, i.e. in relation to the distribution of exported goods. The benefits provided by RoDTEP are not available in respect of those duties or taxes which are otherwise exempted or remitted or credited. The benefit is given as a percentage of FOB or fixed amount per unit of measurement as prescribed in the Appendix 4R to the Notification.
MEIS OR RoDTEP
The MEIS was offered under chapter 3 of the FTP, namely, the Exports from India Scheme, and the RoDTEP, which is in accordance with global trade norms under the WTO, was offered under chapter 4. Similarly, the MEIS aimed to stimulate export of products from India whereas the RoDTEP is aimed at neutralizing the taxes and duties paid on exported goods which are otherwise not credited, refunded, or remitted in any way.
How RoDTEP is different from MEIS
MEIS (Merchandise Export From India Scheme) was designed to provide rewards to exporters to offset infrastructural inefficient and associated costs.
1. MEIS offered between 2% and 7% of benefits, while RoDTEP offered between 0.01% and 4.3% at FOB.
2. Most of the products were covered under MEIS. Whereas, in RoDTEP industries like, chemical, steel, pharmaceuticals are not covered.
3. While MEIS was in the usage, there were few countries which were not entitled for benefits. But in RoDTEP there are no country specific restrictions.
Taxes which are intended to be compensated to the exporters in RoDTEP Scheme
As part of the scheme, the Central, State, and Local governments will compensate exporters for the import duties, taxes, and levies applicable to the imported goods and services used to produce and distribute the export products. Those taxes would look like this
i. VAT and Excise duty on the fuel (5 goods) used in self-incurred transportation costs;
ii.VAT and Excise duty on the fuel used in generation of electricity via power plants or DG Sets;
iii.VAT and Excise duty on the fuel used in running of machineries/plant;
iv.Electricity duty on purchase of electricity;
v.Mandi Tax/ Municipal Taxes/ Property Taxes;
vi.Stamp duty on export documents;
vii.Un-creditable CGST/ SGST/ IGST/ Compensation Cess on items falling under Section 17 (5) [passenger transportation vehicles, food and beverages, rent-a-cab, works contract services, etc.]
viii.Un-creditable CGST/ SGST/ IGST/ Compensation Cess which normally gets lost due to defaults by suppliers, e.g. GSTR 2A default, Section 16 (2) default, Section 16 (4) default.
Applicability of RoDTEP
Accordingly, all exporters can benefit from the Scheme regardless of their status in relation to goods manufactured in India. In addition, there is no turnover limit for claiming the benefit.
Ineligible categories under the Scheme for claiming benefit
The scheme has been very restrictive because many supplies or products or categories have been disqualified from eligibility for the Scheme, as stated in para 4.55. There are the following categories that are ineligible:
(1) Exports of imported goods based on section 2.46 of the FTP
(2) Transshipment exports – those that originate in a third country but are transshipped through India
(3) Export products subject to export duties or minimum export prices
(4) Products restricted for exports under Schedule 2 of Export Policy in ITC (HS)
(5) Products prohibited for exports under Schedule 2 of Export Policy in ITC (HS)
(6) Deemed Exports
(7) Supplies of products manufactured by DTA units to SEZ/FTWZ units
(8) Products manufactured in EHTP and BTP
(9) Products manufactured at a warehouse in accordance with section 65 of the Customs Act, 1962 (i.e.. MOOWR etc.)
(10)Exports of goods produced under a duty exemption scheme of the relevant FTP pursuant to an advance authorization of the DFIA or special advance authorization
(11)Products manufactured or exported by 100% EOU
(12)Products manufactured or exported by any of the units situated in FTZ, EPZ or SEZ
(13)Exports or manufactures under the Notification No 32/1997-Customs
(14)Exports for which electronic documentation in ICEGATE EDI has not been generated or exports from Non EDI port
(15)Goods which have been taken into use after manufacture (i.e. second hand goods)
The rationale for covering SEZ, EOU, FTWZ, MOOWR etc under the ineligible categories
Through the RoDTEP, all taxes not capable of being credited, remitted, or refundable are neutralized. RoDTEP has not been extended to these units as policy makers have shifted their focus to the customs duty exemptions enjoyed by these units.
By taking this approach, the entire objective of the Scheme is lost, as RoDTEP intends to refund duties, taxes, and levies, not just customs duties, that have been remitted or credited. In failing to provide RoDTEP benefits to these units, they have been placed at a disadvantage by not remitting the other taxes borne by these units viz. DTA manufacturing and thereby affecting their overall relevance to remain as SEZ, EOU, etc.
Although the Scheme provides for the inclusion of exporters in the categories of SEZs, EOUs, Advance Authorisations, etc, with retrospective effect later in the scheme, it is preferable that these units also receive the benefit with retrospective effect immediately.
Effective date of claiming the RoDTEP
In regard to exports that have been identified on the shipping bill as being eligible for the benefit, RoDTEP becomes effective on 1st January 2020. Depending on the date that is determined by the appropriate authority, RoDTEP benefits will be offered to EOUs, SEZs, and AAs in the future.
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