The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, issues Policy Circular No. 02/2024 concerning the applicability of certain provisions regarding payment requirements for Advance Authorizations. This article delves into the intricacies of the circular, aiming to provide clarity on its implications for exporters and trade members.
1. Background Context: The circular addresses concerns raised regarding the payment obligations outlined in Para 4.49 of the Handbook of Procedure 2023 (HBP 2023). Specifically, it focuses on the applicability of the 3% amount due to non-achievement of minimum Value Addition and the 10% CIF value requirement.
2. Transitional Arrangement: The circular refers to Para 4.48(a) of HBP 2023, which outlines transitional arrangements for authorizations issued before 01.04.2023. It emphasizes that such authorizations are subject to the provisions of the respective HBPs under which they were issued, excluding clubbing and extension provisions for Export Obligation period.
3. Clarification on Applicability: It clarifies that the provisions regarding payment obligations mentioned in Para 4.49(a)(ii) and 4.49(b) of HBP 2023 apply only to authorizations issued on or after 01.04.2023. Authorizations issued prior to this date are governed by the relevant provisions of HBP for the regularization of genuine Export Obligation defaults.
4. Exclusion from Fee Refund: Importantly, the circular highlights that the clarification provided does not warrant a refund of fees already paid by exporters.
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Government of India
Ministry of Commerce and Industry
Department of Commerce
Directorate General of Foreign Trade
Vanijya Bhawan, New Delhi
Policy – 4 Division
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Policy Circular No. 02/2024-DGFT| Dated: 03rd May, 2024
To
All Regional Authorities of DGFT
All Exporters/Members of Trade
All Custom Authorities
Subject: Clarification on the applicability of 3% amount on account of non-achievement of minimum Value Addition as mentioned in para 4.49 (b) and amount equivalent to 10% of the CIF value in Para 4.49 (a)(ii) of HBP 2023 -reg.
This Directorate is in receipt of some cases seeking relaxation in payment of 3% amount under Para 4.49 (b) and similar provisions of HBP 2023 against Advance Authorisation issued prior to 01.04.2023.
2. In this regard, attention is drawn towards Para 4.48 (a) of Handbook of Procedure 2023 (Transitional Arrangement for Authorisations issued up to 31.03.2023), which provides that, Advance Authorizations (AA) including Advance Authorizations for Annual Requirement issued up to 31.03.2023 shall be governed by the respective provisions contained in the relevant HBPs, under which the subject AA was issued, excepting provisions relating to clubbing and extension in Export Obligation period.
3. Accordingly, it is clarified that provisions relating to the payment of 10% of CIF value and 3% of shortfall in FOB value amounts specified in Para 4.49(a) (ii) and 4.49(b) respectively of Handbook of Procedures, 2023 are applicable only in cases where Advance Authorization is issued on or after 01.04.2023.
4. AAs issued prior to 01.04.2023, will be governed by the relevant provisions of HBP (for the purpose of regularisation of bonafide EO default) under which such AAs were issued.
5. However, this clarification will not constitute a ground for refund of fees already paid.
6.This Policy Circular is issued with the approval of the Competent Authority.
(K.M. Harilal)
Jt. Director General of Foreign Trade
(Issued from file no. 01/94/180/128/AM24/PC-4)
