Agenda

AGENDA

Types of Industries in India

DTA Unit Schemes

DTA Unit – Pre Export Benefit

Advance Authorization

Export Promotion Capital Goods

Duty Free Import Authorization

DTA Unit – Post Export Benefits

Focus Market Scheme

Focus Product Scheme

Status Holder Incentive Scheme

Export Oriented Unit

B-17 Bond

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DTA Unit SchemesDTA Unit Schemes

Pre Export Benefit Schemes

➢ AA➢ EPCG➢ DFIA

Post Export Benefit Schemes

➢ FMS➢ FPS➢ VKGUY➢ SHIS

DTA Unit - Pre Export Benefit SchemesDTA Unit - Pre Export Benefit Schemes

• AA - Advance Authorization

• EPCG - Export Promotion Capital Goods

• DFIA - Duty Free Import Authorization

Pre Export Benefit SchemePre Export Benefit Scheme

If the material is an Import material, company is exempted from payment of all duties (Present Import duties are)

➢ Basic Custom Duty BCD,➢ Countervailing Duty CVD,➢ Educ CESS,➢ Sec Educational CESS,➢ Additional duty.

Advance Authorization - AAAdvance Authorization - AA

An Advance Authorization is issued to allow duty free import of raw materials.

The Government of India will have a Bill Of Material BOM or Standard Input Output Norm SION for all the materials getting manufactured in India.

This license is valid for importing raw materials for 2 years and the export of the Finished Goods (FG materials) in 3 years. Failing to complete the target after availing the License will lead to penalty.

Value addition should be in positive. (ie., import value should be lesser then export value)

Export Promotion Capital Goods EPCGExport Promotion Capital Goods EPCG

An EPCG is issued to allow duty free import of capital materials, which are incorporated in the production of the export product.

Export Condition: Duty Saved * 8Times * 8YearsIf a company is importing a machine worth 1CR and

duty saved say 24.5Lacs under the EPCG License, then that company has to export 1.96 Crore (24.5Lacs * 8Times = 1.96 Crore) of FG material in 8Years.

Failing to do so, will lead to penalties

Government of India has given 2 options for the companies who prefer EPCG Scheme.

A) 3% Advance Payment of Duty:Import Capital Material Value: 1CrDuty: 24.5%Advance duty paid: 3%Condition for Export: 21.5% * 8Times * 8Years

B) 100% * 8Times * 8Years

Single Export Document can be offered for both Advance Authorization as well as EPCG Scheme and Chapter III Benefits.

Export Promotion Capital Goods EPCGExport Promotion Capital Goods EPCG

Duty Free Import Authorization DFIADuty Free Import Authorization DFIA

DFIA is similar to Advance Authorization Scheme

Advance Authorization doesn't have any minimum value addition, where value addition should be minimum 20% for DFIA.

DEPB - Duty Entitle Pass BookDEPB - Duty Entitle Pass BookCurrently Not available -abolished from 01.11.2011Currently Not available -abolished from 01.11.2011

DTA Unit - Post Export Benefit SchemesDTA Unit - Post Export Benefit Schemes

• FMS – Focus Market Scheme• FPS – Focus Product Scheme• DBKC – Duty Draw Back with CENVAT• SHIS – Status Holder Incentive Scheme• DFRC – Duty Free Import Authorization• VKGUY - Vishesh Krishi Gram Udyog Yojana

Post Export Benefit SchemePost Export Benefit Scheme

➢ Export has been done first and based on that, applicable Post export benefit can be claimed.

➢ Duty draw back either as a cash benefit or as a Scrip benefit.

➢ Scrip Benefit: Get a license for the benefit value, against which you can import materials for free of duty.

➢ Applications for obtaining Duty Credit Scrip has to be filed in DGFT Server (online).

Focus Market Scheme FMSFocus Market Scheme FMS

Objective of FMS is to offset high freight cost and other externalities to select international markets with a view to encourage our export competitiveness

Exporters of all products to notified countries shall be entitled for Duty Credit scrip equivalent to 2.5% of FOB value of exports

Totally 57 Countries has been listed under FMS, 8 in American blocks (eg; Venezuela, Argentina) & 49 in African Blocks (eg; Ethiopia, Libya, Namibia).

Focus Product Scheme FPSFocus Product Scheme FPS

Objective FPS is to incentivise export of products, which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products.

Exports of notified products to all countries shall be entitled for Duty Credit scrip equivalent to 1.25% of FOB value

Status Holder Incentive Scheme SHISStatus Holder Incentive Scheme SHIS

Status Holder Incentive Scrip (SHIC) which entitles the status holders for additional duty scrip at 1% of the FOB value of exports.

Its a Star rating starting from * - *****

This measure is to incentivise the exporting community to upgrade their technology and enhance exports.

Scrip benefit of 1% by SHIC can be used for procurement of capital goods subject to the actual user condition

Export Oriented Unit EOUExport Oriented Unit EOU

The main objectives of the EOU scheme is to increase exports, earn foreign exchange to the country, transfer of latest technologies stimulate direct foreign investment and to generate additional employment.

The EOUs are licensed to manufacture goods within the bonded time period for the purpose of export. As per the EXIM Policy, the period of bonding is initially for five years, which is extendable to another five years

EOU'sEOU's

EOU's:

➢ CT3: For Local Purchases

➢ Procurement Certificate PC: For Import

➢ Bond Entry:

➢ For Capital Goods – 25% of Duty

➢ For Raw material – 100% of Duty

B-17 Bond B-17 Bond Requirement for EOU ApprovalRequirement for EOU Approval

All the Export Oriented Units in India need to conduct its operations under the supervision of the Customs and Central Excise Department. For this purpose, EOU has to sign a multipurpose bond with the jurisdictional Deputy Commissioner of Customs and Central Excise at the time of commencement of the unit.

The bond is submitted in a prescribe format along with the copy of EOU project report and Letter Of Proposal (LOP) to the Deputy Commissioner’s Office in the zone.

5% of Bond value should be given as a Bank Guarantee towards the President of India

EOU & B-17 Bond

➢ When I buy raw material towards EOU, I save 100% duties. Which will get reduced in the Bond value

➢ When I purchase capital goods, I save 25% duties. Which will get reduced in the bond value.

➢ I will get this bond value re credited either when I export the FG material produced using the raw material or capital material purchased using EOU or the time when I inward the material purchased under the EOU scheme.

SAP – Add-on Vs EXIM

SL NO Functionality Spectra Exim

1 Advance License YES

2 EPCG License YES

3 DBK YES

4 Focus Market Scheme YES

5 Focus Product Scheme YES

6 VKGUY YES

7 Accounting Entries NO

8 LC Tracking NO

9 Reports YES

10 UOM and Batch pricing YES

FOR EOU UNITS

11 CT3 TRACKING YES

12 PC TRACKING YES

13 B17BOND MAINTANCE YES

14 Re-ware housing process YES

15 Reports YES