Foreign Trade Policy 2015-20 - CBEC Explains
CBEC has issued a Circular explaining the salient features of the changes in the schemes of reward or incentive/advance authorization or DFIA/EPCG or post export EPCG.
Reward/Incentive Schemes: Reward in the form of duty credit shall be issued by the DGFT to service providers of notified services located in India under the Service Exports from India Scheme (SEIS) or to export of notified goods (including from SEZs) to notified markets / countries under the Merchandise Exports from India Scheme (MEIS) of the Policy. The MEIS includes reward on specified items that are transacted using e-commerce platforms when their export is made through foreign post offices/courier terminals at Chennai, Delhi and Mumbai for which procedures to be adopted shall be issued separately by concerned wings of CBEC.
Simplifications from earlier schemes include that both SEIS and MEIS reward duty credits are freely transferable and may be used to debit customs duty on import of any goods (except appendix 3A items), debit service tax on procurement of services or debit central excise duty on domestic procurement of excisable goods (without exception for appendix 3A items); the basic customs duty debited in SEIS/MEIS duty credit may also be allowed as drawback.
Advance Authorization & DFIA schemes: Advance Authorization for Annual Requirement has been restricted to cases of standardised norms (no self-declared norms). Only a post-export transferable DFIA with exemption from basic customs duty is provided for. Fuel cannot be imported under the new DFIA.
Export Promotion Capital Goods (EPCG) Scheme: The Board Circular states, "To further provide impetus to domestic production, the Policy has increased the lowered export obligation (when capital goods are sourced indigenously) from 10% to 25%. (What does this mean? As per para 5.01 of the Policy, the Export Obligation for EPCG is 6 times the duty saved. As per para 5.04, in case of indigenous sourcing of Capital Goods, the Export Obligation shall be 25% less than the EO stipulated in Para 5.01. This was earlier 10%. This means, in case of indigenous sourcing of Capital Goods, the Export Obligation shall be 75% of 6 times the duty saved, which was earlier 90% of this 6 times duty. This is what the Board means by increased the lowered export obligation.)
Facility of exemption from furnishing bank guarantees (BG) or of giving concessional BG under the export promotion schemes: The Board had noticed a practice in one jurisdiction of prescribing BGs of 1% to 5% of the duty saved amount before new authorisations were registered when EODC for an existing authorisation was not produced in the prescribed time. The Board views that such a practice imposes transaction cost on exporters because every case of pending EODC is not a case of default in export obligation determined by the competent authority and even the enforcement of bond executed for such existing authorisation may not be due. Further, choosing varying levels of BGs also creates room for generation of grievances against field officers. The field formations are expected to avoid similar practices.
CBEC Circular No.14/2015-Cus., Dated: April 20, 2015