PRESENTATION ON EXIM POLICY

BACKGROUND EXIM Policy (2002 – 07) Export – Import Policy Announced on Focuses on 220 identified commodities 25 potential markets for exports. Enables duty free imports with a committed exports obligation. Norms fixed by the Central Government  SION ( Standard Input – Output Norms.  Adhoc basis ( where SION is not published)

EXIM Policy covers - Duty Exemption Scheme ( DES )  Duty Exemption Pass Book ( DEPB)  Duty Free Replenishment Certificate (DFRC ) Export Promotion Capital Goods (EPCG) Deemed Exports Export Oriented Units (EOUs) / Special Economic Zone (SEZ)

AMENDMENTS IN EXIM POLICY ( FEB. 2004) Duty Exemption Scheme Duty free Fuel can be imported with actual user condition under DFRC Advance License for intermediate supplies under DFRC scheme. Advance license for annual requirements extended for Deemed Exports. Deemed Exports Deemed export facility extended to Fertilizers and Refinery projects. Fixation of drawback rate decentralized & delegated to DGFT Regional Offices.

Duty Exemption / Remission Scheme Enables duty free import of inputs required for export production. Advance Licence is issued under Duty Exemption Scheme. Enables Post-Export Replenishment / Remission of duty on inputs used in the export product. Duty Remission Scheme - DFRC DEPB DFRC : Permits free imports – Transferable in Nature. DEPB : allows drawback of import charges on inputs used in the export product

Advance Licence Issued for:-  Physical exports  Intermediate supplies  Deemed exports Advance Licence & Materials imported thereunder – Not Transferable. Advance Licence issued : annual requirements of exports. Advance Licence for annual requirement : EH/TH, STH, SSTH Entitlement upto 200% of the FOB value of export in the preceding license years.  Allows duty free imports of inputs (fuel oil)  For the EOUs / EUs.  Requirements can be procured Indigenously under Deemed Export Scheme

Advance Intermediate Licence Documents required from customer. Copy of PO/ LOI, or offer letter duly accepted by the customer. One copy of each invoice - stamped & signed by customer with remark ‘ received material’ All invoices - counter signed by the Jurisdictional Excise Authorities Consent letter from the customer Bill no., Date, Cheque no., amount, name of bank Payment certificate as per appendix 22A

Advance Intermediate Licence Procedure for supply of materials Supplier executes a contract to supply to the AL holder – Raw material, Quantity, Value as given in the Advance Licence. Will apply for IALs Gives the name of J-DGFT with whom he is registering. Buyer forwards his AL with suppliers contract to his J- DGFT For invalidate the item for import in the Licence J- DGFT to issue a letter confirming the invalidation letter to buyer, cc to supplier, cc to J-DGFT, supplier.

PROCEDURE FOR SUPPLIES UNDER ADVANCE LICENCE Supplier Customer Foreign Customer place an order ( 1 ) DGFT issue File No.(3) Supplier JDGFT Supplier can import duty free Raw Materials (5) Supplier applies for AL (2) Licence issued subsequently (4) On completion of EO, submit appln. for redemption (6) JDGFT issues RC (7)

PROCEDURE FOR SUPPLIES UNDER DEEMED EXPORTS Supplier AL Holder AL Holder JDGFT Offer of Product to the Customer ( 1 ) Along with offer & AL submit for invalidation (2) Issue IL to AL holder, CC to Supplier and CC to Supplier JDGFT ( 3) Supplier JDGFT copy of IL & AL(4) Apply for AIL to obtain File No. (5) Commence supplies (6)

Advance Intermediate Licence Procedure for supply of materials Supplier to apply with it’s J –DGFT for IAL, after receipt of invalidation letter along with copy of AL of the supplier Supplier upon receipt of File No. by J-DGFT intimate to Refinery for supplying the material to the customer File No. issued by J-DGFT to be mentioned on all invoices before issue.

Advance Intermediate License Closure of the file Procedures at Supplier end - Supplier to submit various documents viz. Invoice, BRC,etc. to J -DGFT for closure of file. J-DGFT will issue Discharge Certificate of having fulfilled the export obligation Discharge Certificate to be produced to Customs with copies of documents, for cancellation of legal undertaking

Deemed Exports EXIM POLICY – under Chapter 8 Definition Goods supplied do not leave the country payment for such supplies is received in Indian rupees. Categories ( Provided goods mgfd. in India):  Supply of goods Against Licence / AL for annual requirement / DFRC.  Supply to 100% EOU / SEZ/ STPs / EHTPs & EPCG holders Includes Advance Release Order (ARO) Back to Back LC

ARO & B2B LC Advance Release Order (ARO) Sourcing of inputs from indigenous source, procure thru ARO ARO against DFRC is transferable. Back to Back LC ( B2B LC) This is an alternative to ARO. Admissibility Duty drawback is allowed at 8 % of FOB. Either imported of indigenously procured. Benefits to HPCL  Entitled to IAL.  Refund of Terminal Excise Duty / Duty Drawback, as applicable.

DEPB Duty Entitlement Pass Book Background To neutralize the incidence of custom duty on the import content of the export products. Validity of DEPB is 12 months. No revalidation possible. Holder of DEPB shall have the option to pay additional custom duty if any, in cash as well.

EXPORT PROMOTION CAPITAL GOODS SCHEME ( EPCG) Scheme Allows import of capital goods for pre – production / post production. 5 % custom duty on capital goods Conditions Export obligation equivalent to 8 times of duty saved. Time period - 8 years from the date of issue of licence. CIF value of Rs. 100 crores or more - 12 yrs instead of 8 yrs. Import of 2 nd hand capital goods upto 10 years old allowed. EPCG licence holder may source the capital goods from a domestic manufacturer. Export obligation short fall upto 5% /10% excess is allowed.

THE STANDARD INPUT/OUTPUT NORMS UPTO Sr. No.Oty A- 2687Hydrocarbons viz. Propane, Propylene,I MT1) Crude Oil MT C3/C4Butane, Byeylene, (various grades),2) Relevant catalysts limited to Liquefied Petroleum Gas (LPG- various 1% of FOB value. grades) and Mixtures thereof. A- 2688Light Ends (LE) viz. Naphtha Motor Spirit1MT1) Crude Oil MT (Gasoline), Solvents, Retomate, Hexane, TAME excluding C3/C4 Hydrocarbons and mixture thereof A-2689Middle Distillates (MD) viz. ATF, SKO, HSD1 MT1) Crude Oil MT (3-4 grades), MTO, LABFS, AROMEX, JBO LDO, Gas Oils Solvents (2-3 grades) A-2690Heavy Ends (HE), viz. FO (2-3 grades),1 MT1) Crude Oil MT LSHS (2-3 grades), HPL Pitch Asphalt (3-4 grades), Petroleum Bitumen (3-4 grades), RAW Petroleum Coke and Calcined Petroleum Coke. Resultant ProductsInputs

VALIDITY OF AL/ IAL  SION is fixed (for Petroleum Products SION is fixed) : An application as per Appendix 10- b along with prescribed documents to J-DGFT. Normally the validity period of the licence is 18 months from the date of issue Regional Licensing Authority may consider one revalidation for a period of 6 months & further revalidation of 6 months possible.

REGULARISATION OF BONAFIDE DEFAULT Export Obligation (EO) fulfilled in value, shortfall in terms of quantity Licence holder pay to the custom authority 1. For custom duty on the unutilized value of the imports & Int. 2. 3% of CIF value of unutilized imported material thereon. EO fulfilled in Qty., shortfall in value. 1. No penalty, if the licence holder achieves the positive VA. EO not fulfilled in Qty. and Value. 1. Both penalty will apply

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