FTP 2004-09 – Board explains
- 09 05 2006 had explained the customs notifications to bring into effect the new Foreign Trade policy. The Board has explained the new features in a circular.
Duty Free Import Authorisation (DFIA) Scheme:- Under the scheme, the inputs required for export production are exempt from basic customs duty, additional customs duty, education cess, anti-dumping duty and safeguard duty. The scheme is similar to Advance Licence Scheme with certain differences. One significant difference is that unlike the Advance Licence Scheme where the value addition requirement is only positive value addition, under the new scheme minimum value addition requirement is 20% (except for items in gem & jewellery sector). Another vital difference is that under the new scheme once the export obligation is fulfilled, the licence or the inputs imported (other than fuel) against it can be transferred / sold. As in the case of erstwhile DFRC Scheme, under the new scheme, in respect of sensitive items mentioned in para 4.55.3 of the Handbook, the exporter shall be required to give declaration with regard to technical characteristics, quality and specifications in the shipping bill. Notification No. 40/2006-Customs dt. 1.5.2006 has been issued to operationalise the DFIA scheme.
Vishesh Krishi & Gram Udyog Yojana:- The Vishesh Krishi Upaj Yojana has been expanded to include village industry products and is now called Vishesh Krishi & Gram Udyog Yojana. The list of products will be notified by DGFT in due course. Some other changes have also been made in this scheme. One important change is that the entitlement has been reduced to 3.5% (from 5%) for all products in cases where the exporter has availed the benefits of duty exemption / duty remission schemes under Chapter 4 of the Policy and Duty Drawback. The EOUs and SEZ units have been excluded from the purview of Vishesh Krishi Upaj & Gram Udyog Yojana, meaning thereby that these units will not be eligible for the benefits of the scheme. Notification No. 41/2005-Customs dt. 9.5.2005 has been amended by notification No. 43/2006-Customs dt. 5.5.2006.
EPCG Scheme :- Paragraph 5.11 of Handbook has been amended to provide that extension of export obligation period beyond 8+2 years can be considered for a further extension upto 2 years with a condition that 50% of duty payable in proportion to the unfulfilled export obligation is paid by the licence holder to the Customs authorities. Notification No. 97/2004-Customs dt. 17.9.2004 has been amended by notification No. 43/2006-Customs dt. 5.5.2006. Further, paragraph 5.18 of the Handbook dealing with clubbing of EPCG licences has been amended to restore the provisions of licences having been issued during the same licensing year and for export of the same product(s) or same services, as obtaining prior to 8.4.2005.
Advance Licence Scheme:- A number of changes have been made in the Policy and Handbook in the chapter dealing with Advance Licence Scheme. Advance Licence can now be issued for supply of stores on board of the foreign going vessel / aircraft subject to the condition that there is specific SION in respect of the item(s) supplied. The provision providing for extension in export obligation period beyond 36 months in respect of advance licence (para 4.22.1 of Handbook) has been deleted restricting the export obligation period to 36 months even after 12 month extension. Likewise, the provision providing for extension in export obligation period in respect of advance licence for annual requirement has been deleted from the Handbook. [Para 4.24 A(e)]
It was brought to the notice of the Board that although the requirement of logged DEEC book has been withdrawn from the FTP in consultation with DOR w.e.f. 1.4.2002 in the case of Advance License for Annual Requirement Scheme, the Customs field formations are insisting the same for want of deletion of the clause from the corresponding Customs notification. Notification No.94 / 2004-Cus dated 10.9.2004 has since been amended vide notification No. 43/2006-Customs dt. 5.5.2006 so as to delete the requirement of DEEC book.