Exporters can now benefit from duty free import authorisation

EXIM MATTERS

The Director General of Foreign Trade (DGFT) has issued very useful public notices and policy circulars making life easier for exporters. In particular, the holders of Duty Free Import Authorisation (DFIA) and proprietorship and partnership firms will be happy at the changes in procedures made by the DGFT.

The DFIA scheme was introduced on May 1, 2006, in place of the Duty Free Replenishment (DFRC) scheme but exporters were unable to file DFIA shipping bills because the Customs had not amended the software. So, the shipments were allowed under the DFRC scheme even after April 30, 2006. Subsequently, the Customs converted these DFRC shipping bills into DFIA shipping bills. The licensing authorities, however, were not accepting such shipping bills. The DGFT has now allowed DFIA benefits against such shipping bills. (Policy Circular no. 27/2007 dated July 23, 2007). The DGFT has also asked the licensing authorities to endorse the file number while granting the export obligation discharge certificate or transferability letter to facilitate verification by the Customs before allowing imports under DFIA.

The Foreign Trade Policy allows transferability of the DFIA scrip and the duty free materials imported under the DFIA scrip after fulfilment of export obligation subject to the condition of payment of additional duty of Customs (CVD). The procedures prescribed endorsement of the CVD payment condition at the time of grant of transferability endorsement but the procedures for CVD payment on goods already imported duty free were not prescribed. Now, the DGFT has prescribed the procedures to cover such situations. (Public Notice no. 26/2007 dated July 23, 2007).

Para 4.68 of the Foreign Trade Procedures prescribing submission of Annexure 23 statement of consumption under the DFIA scheme has been replaced with the words "Provisions of Para 4.25 will apply". The said 4.25 mandates submission of documents prescribed in the Form ANF-4F to show fulfilment of export obligation. The said Form ANF-4F makes no mention about the submission of Annexure-23. However, the requirement of submission of Annexure-23 has been retained in Form II of Form ANF-4H that deals with redemption and transferability endorsement of DFIA. This is a bit confusing. The DGFT should clarify as to whether Annexure-23 has to be submitted by DFIA holders while seeking the redemption and transferability endorsement.

The holders of licenses/authorisations under the duty exemption scheme and the Export Promotion Capital Goods (EPCG) scheme are required to execute a bond with the Customs at the time of import of goods. The bonds are required to be backed by bank guarantees by certain categories of exporters, according to the circular no.58/2004-Cus. dated October 21, 2004. The DGFT has now amended Para 2.20 of the Foreign Trade Procedures to prescribe the same dispensations for such license/authorisation holders who want to source the goods from indigenous suppliers under the relevant schemes.

The earlier dispensations under the said Para 2.20 were somewhat messy and discriminated against proprietorship and partnership firms. The discrimination has now been removed.

The recent reviews of procedures and consequent amendments give an impression that the new DGFT, RS Gujral, is more energetic and dynamic. He should try to direct his energies to reduce corruption at the licensing offices and restore the DFRC scheme that the DFIA scheme replaced for the simple reason that DFRC holders could source excise duty free raw materials under excise notification no. 43/2001-CE(NT), whereas DFIA holders can not.

tncr@sify.com