Exim Matters
The commerce minister, in the revised Exim Policy, granted the long standing prayer of the exporters by introducing the `Duty Free Replenishment Certificate' (DFRC) Scheme. Under the Scheme the exporters can replenish through duty free imports, the inputs used in the manufacture of exportt product. So, the DFRC will have a specific list of items that can be imported duty free. In case an exporter does not want the replenishment, he can very well sell the DFRC or the inputs imported under DFRC.
Customs have now notified the procedure for filing DFRC shipping bills. An exporter may file a Free shipping bill or a Drawback Shipping bill depending on whether he wants to claim drawback alongwith DFRC benefit. The export ittem must figure in the Standard Inputt Output Norms (SION). The shipping bill must show the serial number of the export product in the SION schedule and list all the inputs, as per SION. He must also declare the quality, grade and technical specifications of the inputs, which must have a direct relationship or `nexus' with the quality, grade or technical specification of the product actually exported.
For example, an exporter of ready made garments must declare the composition of fabric, he must state whether fabric is made out of spun yarn or filament and whether made of textured filament or not.
He must declare the GSM of the fabric used and state whether the fabric is dyed, printed or yarn dyed with multi coloured yarns. He must also declare whether the input is woven fabrics or Knitted fabrics; in case of knitted fabrics, he must state whether the same is pile fabrics or looped pile fabrics and mention the composition of fabrics.
Similarly, an exporter of plastic items should declared the type of plastics and grade of polymer used in the export products. An exporter of engineering goods must declare the type of steel used and composition of goods exported. The Customs will, at random, examine and if need be draw samples and test the export goods to verify the `nexus'.
The licensing authorities who issue the DFRC will incorporate the detailed quality, grade and specification of the inputs in the DFRC. Customs will allow duty free imports of only those items whose specifications exactly match the specificattions mentioned in the DFRC. Goods imported under DFRC will suffer Additional Duties of Customs (CVD), which can be taken as Cenvat Credit. The exemption will be limitted to Basic Customs Duties, Surcharge and 4% Special Additional Duties.
The Anti-dumping or Safegurad duties will not be exempted. TThese are logical restictions. DFRC is distinct improvement over the erstwhile "Transferrable Advance Lincense'. The exporter need not file an application for license before effecting exports. He can edport and then ask for DFRC.
The `nexus' will be verified at the stage of releasing thte shipping bill itself. The process of logging the export entires in the Duty Exemption Entitlement Certificate (DEEC) is completely eliminated. Indeed, there will be no DEEC.
Although problems of proving the `nexus' may arise at the stage of releasing the shipping bill, no difficulties should arise thereafter. It is much easier ot sort out the diffuculties while releasing shipping bill i.e. before issue of the DFRC license.
