What is Duty Exemption Remission Schemes and different Methods To Gain Duty Free Benefits
Duty Exemption and Remission Scheme
Duty Exemption and Remission Schemes rely on the principle and commitment of the government that exporters should focus on goods and services rather than taxes and levies. Its purpose is to allow duty-free import/procurement of inputs or replenishment, either for the inputs used or the duty component on inputs used.
Brief out these schemes are as follows-
1. ADVANCE AUTHORISATION SCHEME (AA)-
The Advance Authorisation Scheme (AA) will allow all manufacturers to export duty-free inputs, such as oil, catalysts, etc. The government allows these inputs in accordance with Standard Input Output Norms (SION) or based on ad hoc conditions under actual user circumstances. Additionally, the applicant must apply for the Advance Authorisation Scheme using IEC.
Furthermore, a minimum value addition of 15 percent is required, except for particular items. In addition, exporters must fulfil export obligations over a specific period of time, both in terms of quantity and value.
As for eligibility conditions, entitlement for Advance Authorisation shall be provided to exporters with at least two years of performance. Moreover, a claim will be based on CIF import value, which must be 300 percent of the FOB export value and/or for deemed exports from the previous year, or Rs 1,00,00,000, whichever is higher.
2. DUTY FREE IMPORT AUTHORISATION SCHEME (DFIA)-
The Duty Free Authorization Scheme (DFIA) began in 2006, and authorities will issue it after exporters export the goods for products under Standard Input Output Norms (SION). In fact, the provisions of the DFIA scheme are more or less similar to the Advance Authorisation Scheme. Specifically, DFIA will allow all manufacturers to export duty-free inputs, such as oil, catalysts, etc., with inputs allowed in accordance with Standard Input Output Norms (SION).
Minimum Value Addition
minimum value addition required to fall under the DFIA scheme should be 20 percent.
value addition (except for the Gems and Jewellery sector) shall be:
Where,
A = FOB value of export realized or the FOR value of supply received.
B = CIF value of inputs covered by the authorization, plus the value of any other input used on which the benefit of DBK is claimed or intended to be claimed.
DFIA Validity and Transferability under EXIM Policy 2015-20 (FTP 2015-20)
- Applicants must file an application with the concerned Regional Authority before the commencement of export, as prescribed under the DFIA scheme. Afterwards, exporters must undertake exports within 12 months of the date they apply and generate a file number. In addition, they must ensure all requirements are met before proceeding.
- Moreover, a file number shall be indicated by the applicant on the documents required for export, including the Shipping Bill, Airway Bill, Bill of Export, ARE-1, ARE-3, or the Central Excise certified Invoice.
- After completing exports and realizing proceeds, the Regional Authority in a state may request the issuance of transferable duty-free import authorization within twelve months from the date of export, or within six months (or additional time allowed by RBI for realization) from the date of export proceeds.
- Additionally, each SION and each port must receive a separate DFIA. It is important to note that exporters must make the exports under the Duty-Free Import Authorisation Scheme (DFIA) from a single port.
- Furthermore, the SION does not issue a Duty-Free Import Authorisation for an export product in which the input requires ‘Actual User’ status. In addition, a transferable DFIA must be issued by the regional authority and shall be valid for 12 months. However, Regional Authorities may not grant further revalidations.
Guiding You for DFIA Scheme
We analyse the feasibility of the DFIA scheme for all the exporters. We have a team of DGFT experts who have adequate knowledge and experience in providing such service.
- We make sure that there are no delays in the process by checking the documentation work.
- Afterwards, in the Application process we make the online application and submit the required hardcopy in DGFT.