DGFT surprises exporters with annual returns under the Rodtep scheme

The Director General of Foreign Trade (DGFT) has prescribed an annual return to be furnished by exporters who have claimed duty credits of more than Rs 1 crore in a financial year under the remission of duties and taxes on export products (Rodtep) scheme. The exporters are surprised by the kind of details and declaration called for in the annual Rodtep return (ARR) required to be furnished before the March 31 of the next year.

 

The Rodtep scheme, introduced in 2021, intends to rebate duties/taxes/levies, at the Central, State and local level, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in the production of the exported product and in respect of distribution of exported product, that are not refunded through any other scheme. Under the scheme, exporters get duty credits at a notified percentage rate of FOB value of exports that can be utilised for payment of basic customs duties on imported goods. The rates are based on the recommendations of the Rodtep committee that examined extensive data from various exporters on transportation and other costs that included un-rebated taxes/duties/levies.  

 

The exporters are puzzled because the ARR calls for export product-wise data regarding the value added tax (VAT) and excise duty (ED) paid on inbound transportation by rail/road of raw materials, components etc. for manufacture of export product and outbound transportation by road/rail of export product  from factory to the gateway port. This kind of information is impossible to get because the transporter gives an invoice only for the freight amount for carrying cargo from one place to the other.  The buyer of the transportation service has no access to the data on how much fuel was consumed or how much VAT or ED was paid on it. In any case, no exporter maintains such data export product wise. Even the transporter will not be able to give data on how much VAT or ED was paid on carrying the cargo of a particular party from one place to another. Similarly, the estimate of embedded Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) can only be a matter of conjecture and not hard data based on any documentation.

 

The DGFT wants the exporters to submit the data for the year 2023-24 by the March 31, 2025. Not furnishing the ARR will lead to denial of Rodtep benefits. Delay of three months in furnishing the ARR can be condoned upon payment of composition fee of Rs 10,000. Any further delay will entail a composition fee of Rs 20,000. The exporters are peeved that the ARR calls for a declaration that the amount of remission availed under the Rodtep scheme is not more than the duties/taxes/levies actually incurred during the same period.  The ARR filings will be shared with the Rodtepcommittee for revision of Rodtep rates and based on its assessment, the exporter may be asked to surrender any excess claims.

 

Apparently, our government has failed to convince some of our trading partners at the World Trade Organisation on the basis of available data that the Rodtep scheme is not a prohibited export subsidy and so has called for more data. It may not get the desired data because most exporters may not have collected such figures for the last year. 

 

Email : tncrajagopalan@gmail.com