Overview
The Advance Authorisation Scheme allows exporters to import inputs without paying duties if these inputs are used in products meant for export. This guide explains the scheme's details, eligibility, application process, duty exemptions, value addition requirements, and record-keeping practices.
Key Points
Purpose
- Duty-Free Imports: Import inputs duty-free for products intended for export.
Issuance Basis
- Standard Input Output Norms (SION): Defined in the Handbook of Procedures.
- Self-Declaration: As per paragraph 4.07 of the Handbook of Procedures.
- Norms Committee: Applicant-specific norms fixed by the Norms Committee.
- Self-Ratification Scheme: According to Para 4.06 of the Foreign Trade Policy.
Eligibility
- Who Can Apply: Manufacturer exporters or merchant exporters with supporting manufacturers.
- Eligible Exports:
- Physical exports (including SEZ)
- Intermediate supply
- Supply to specific categories in paragraph 7.02 of FTP
- Supply of ‘stores’ on foreign-going vessels/aircraft with specific SION.
Duty Exemptions
- Duties Exempted: Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty.
- Additional Exemptions: Integrated Tax and Compensation Cess under section 3 of the Customs Tariff Act, 1975.
Minimum Value Addition
- Requirement: At least 15%.
- Calculation:
Application Procedure
- Online Application: Submit digitally signed applications to the jurisdictional Regional Authority.
- Documents: Upload prescribed documents; no physical copies needed.
Norm Fixation
- Procedure: Apply online with ANF 4B form if norms are not predefined.
- Norms Committee: Fixes SION/ad hoc norms and updates status online.
Entitlement
- CIF Value Limits:
- Status Holders: Up to 300% of FOB/FOR value of the previous year's exports/supplies.
- Others: Up to 300% of FOB or Rs. 10 crore, whichever is higher.
Record-Keeping
- Account Maintenance: Keep records of input consumption and utilization as per Appendix 4-I.
- Verification: Records must be verified by Customs or a Chartered Engineer and cross-verified by a Chartered Accountant.
- Retention: Preserve records for at least three years after the Export Obligation Discharge Certificate (EODC).
Validity and Revalidation
- Import Validity: 12 months from the issue date.
- Revalidation: One-time revalidation for 12 months allowed; no further extensions.
Export Obligation (EO)
- EO Period: 18 months from the issue date.
- Extensions:
- Initial six-month extension possible with composition fee.
- Further six-month extension also possible, but no more than two extensions allowed.
- Total extension not exceeding 12 months.
Monitoring EO
- Records: Regional Authority maintains records to monitor EO.
- Compliance: Submit proof of export within six months after EO period ends.
Redemption
- Application: Submit ANF-4F form online after completing exports and imports.
- EODC/Redemption Certificate: Issued upon fulfilling EO.
Conclusion
Understanding and following the Advance Authorisation Scheme helps exporters import inputs duty-free for their export products, optimizing operations and ensuring regulatory compliance.
Checkpoints to Avoid Delays
| Checkpoint | Key Actions | Caution Points |
|---|---|---|
| Eligibility | Ensure you're a manufacturer or merchant exporter | Verify eligibility before applying |
| Application | Submit digital applications and upload required documents | No physical copies needed |
| Value Addition | Calculate and ensure 15% value addition | Accurate calculation is crucial |
| Norm Fixation | Apply online if norms are not predefined | Update status online regularly |
| Records | Maintain proper records in Appendix 4-I format | Retain records for three years |
| Validity & EO | Adhere to import validity and EO periods | Extensions have limits |
| Monitoring | Submit EO proof within six months after EO period | Timely submission avoids penalties |
Key Terms
- Duty-Free Imports: Importing inputs without paying duties.
- Eligibility: Criteria to determine who can apply.
- Application Process: Steps to submit the application.
- Duty Exemptions: Types of duties you don’t have to pay.
- Value Addition: Increase in value required after import.
- Record-Keeping: Maintaining proper documentation.
- Validity: Period for which authorization is valid.
- Export Obligation: Requirement to export within a specific period.
- Monitoring: Keeping track of obligations and compliance.
- Redemption: Final step to confirm compliance and obtain clearance.
By following these guidelines, exporters can efficiently use the Advance Authorisation Scheme to boost their export operations while staying compliant with regulations.
