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Circular No. 45/99-Cus
dated 19/7/99

Government of India

Ministry of Finance

Department of Revenue, New Delhi

Subject :  Annual Advance Licensing Scheme for manufacturer exporters – regarding.

    Attention is invited to para 7.4A of the Exim Policy and Public Notice No. 10 (RE-99)/1997-2002 dated 7.6.99 issued by the DGFT announcing annual advance licensing scheme to promote exports.  The Department of Revenue has issued Notification No. 48/99-Customs dated 29th April, 1999 and amendment notification No. 90/99-Customs dated 6.7.1999 in order to operationalise the Scheme.  Annual Advance Licences shall be issued to eligible exporters under the scheme which would come into operation with effect from 1.7.1999.

2.  (i)  Manufacturer exporters with export performance of Rs. 1 crore in the preceding year and registered with Central Excise authorities except for products which are not exciseable and for which no registration is required, and

(ii)  Merchant Exporters holding Export House, Trading House, Star Trading House or Super Star Trading House status and having the name & address of the supporting manufacturer declared on the Licence, shall be eligible to avail this scheme 3.  The salient features of the scheme are as follows:


    (i)  Eligibility : Annual Advance Licences shall be issued with positive value addition for an export product group & the entitlement under the scheme shall be upto 125% o the average FOB value of exports in the preceding licensing year.     (ii)  Scheme available to export products having I/O norms: The scheme shall be applicable to only those export products of the said export product group for which the standard input output norms (SIO norms) are specified in Volume 2 of the Hand Book of Procedure of Exim Policy 1997-2002.     (iii)  Details of inputs imported against Annual Advance Licence to be entered by Customs in DEEC Book: Annual Advance Licences shall be issued indicating the export product group by the DGFT authorities.  The full details of inputs imported against the Licence shall be entered in part “C” of the DEEC Book by the Customs at the time of import.     (iv)  Utilisation of Inputs : Inputs imported duty free under the scheme shall only be utilised in the manufacture of export product.     (v)  Transferability / Sale not allowed of imported inputs or Annual Advance Licences : (a)  The imported inputs shall not be disposed off or utilised in any manner except for discharge of export obligation.  The Annual Advance Licences shall be subject to actual user condition & its transfer shall not be allowed.

(b)  Waste / scrap arising in the course of processing or manufacture of resultant product as prescribed in the standard input / output norms shall be allowed without payment of customs duty.     (vi)  Exports : (a) Discharge of Export obligation :

The export obligation shall be discharged by exporting the resultant products within the period specified in the Annual Advance Licence.  The licence holder shall account for the utilisation of the imported inputs in the export product in terms of the S.I.O. norms.  Export obligation shall be treated as discharged when the imported inputs are utilised in the export product which is exported, and the export obligation specified in the Annual Advance Licence is discharged in full by exporting resultant product and the export proceeds are realised in full. 4.  Following procedure may be adopted for implementation of the Annual Advance Licensing Scheme.


4.1  Filing of Shipping Bill for Export :

    Exporters working under Annual Advance Licensing Scheme shall file a shipping bill for export of dutiable goods (where export duties are leviable) o shipping bill for export of duty free goods (where no export duties are leviable).  Each endorsement of the shipping bill shall contain the following endorsement by the Exporter –

“Shipping Bill for export under Annual Advance Licensing Scheme”

“Exported under DEEC No. _______________ dt. ________________”

4.2  Declaration on Shipping Bill :

    Exports under the scheme shall be accompanied by the following declaration to be pasted on the reverse of the Shipping Bill.

    “I/We……………. (name of the exporter) to hereby declare as follows

    (a)  That this shipment is in discharge of export obligation under Annual Advance Licence No. ……………….. dated …………… DEEC No. ………………… dt ………………….. issued by …………… (name of licensing authority).

4.3  At the time of export, a copy of the DEEC (Part 2) shall be obtained from the exporter and kept on records of the Customs House.

4.4  Examination of Export Goods :

    The export goods shall be examined with reference to the description & technical specifications of the export product given in the shipping bill and also the description & technical specification of imported & other inputs declared to have been used in the export product.  Samples for testing need not be dawn where goods are exported under Central Excise Seal or accompanied by test reports of statutory authorities.  Samples for testing should be drawn only when necessary.

4.5  Endorsement of part E & F of DEEC Book :

    Customs Officer at the port of export, shall enter the full details of the export goods in pat E & F of the DEEC Book at the time of permitting export.  He shall also endorse the exports in part F of the DEEC.  Simultaneously, the fact of endorsement of export on the DEEC shall be recorded on the shipping bills as follows

    “Entered at Sl. No. …………………………………… of part F of DEEC No. …………………………. dt …………………………. “

5.  Imports

5.1  Registration of Annual Advance Licence & Issue of TRA :

    Prior to first imports against Annual Advance Licence, the Licence and DEEC (Imports) shall be registered at the port of registration mentioned on the licence and the DEEC.  A copy of the licence and import part of the DEEC book shall also be kept on records of the Customs House of registration.  Where imports are intended from another port, licence holder shall give intimation to port of registration Port of registration shall give intimation to port of registration.  Port of registration shall than issue a Telegraphic Release Advice (T.R.A.) to the port of import and shall also keep a copy of TRA in the relevant file.  The details of actual imports shall be sent by port of import to port of registration.

5.2  Maintainance of separate register for Annual Advance Licence :

    Every Custom House registering DEEC cases shall maintain a separate register for Annual Advance Licence.  Each Licence shall be serially numbered at the time of registration and the serial no. allotted shall be entered on the licence and the DEEC.  Against each registered licence, following minimum information shall be kept in the register –

    –    Name of the Licencee
    –    DEEC No. & Date
    –    Licensing Authority
    –    Date of first import
    –    Date of expiry of export obligation
    –    Details of TRA issued
    –    Custom House File No.

5.3  The Licence holder shall have the flexibility to import any input upto the quantity limit specified in the input-output norms vide Volume 2 of the Handbook of Procedure of Exim Policy 1997-2002 under the export product group specified in the Annual Advance Licence.  However, the licence holder shall have to maintain the nexus between the imported input & the resultant product & account for the inputs as per the said input output norms.

5.4  In case there is a change in SIO norms during the validity period of the licence, the licence holder shall account for raw material in respect of the exports made prior to the date of amendment, as per the revised norms and for exports made on or after the date of amendment, as per the revised norms.

5.5  Full details of imports in part C of DEEC to be given with B/E & import documents.

    At the time of clearance of goods from customs, the Licence holder shall furnish the full details of the inputs under import alongwith the B/E & import documents which shall be entered in part “C” of the DEEC book by the Customs.

5.6  Imports subject to normal checks/examination :

    Imports effected under the scheme shall not be cleared under fast track / green channel scheme & would be subjected to normal checks / examination procedure.

5.7  Sourcing of inputs from private bonded warehouses :

    The facility of sourcing inputs from private bonded warehouses under Para 5.15 of the Exim Policy shall be available & for this purpose the provisions of Section 68 of the Customs Act, 1962 shall be applicable except that the clearance of inputs from bond shall be allowed free of duty as well as interest chargeable on duty against annual advance licence subject to fulfilment of the terms & conditions mentioned in this Circular, Notification No. 48/99-Cus. dated 29.4.1999 and amendment Notification No. 90/99-Cus. dated 6.7.99.

5.8  Debiting of Annual Advance Licence & DEEC Book :

    No clearance shall be allowed under customs Notification No. 48/99-Cus. dated 29.4.99 unless a debit entry has been made in the Licence and Part D of the DEEC (Imports).

6  Restriction on Ports :

6.1  Imports and Exports, under the scheme shall be permissible only from ports, airports and inland container depots specified in the condition (iv) of the Customs Notification no. 48/99-Cus. dated 29.4.99.  Commissioners of Customs have been empowered to permit imports and exports from any port, airport, land customs station or inland container depot, subject to such conditions as may be specified by the Commissioner.

7.  Monitoring of export obligation :

7.1  Customs House at the port of registration shall call from the exporter the details of export alongwith Par 2 of the DEEC (copies to be kept on record), within 30 days of expiry of export obligation.  if the export obligation is not discharged in full in the manner as specified in para 3 (vi) above, the Customs shall proceed to recover the customs duties with 24% interest.  The intimation of recovery proceedings shall also be endorsed to concerned DGFT authority to enable it to take action for recovery of duty in terms of para 7.29 of the Hand Book of Procedure Volume I, 1997-2002.

7.2  Endorsement on the DEEC shall be countersigned by the Assistant Commissioner of Customs.

8.  Part H of DEEC to be filled :

  DEEC holder seeking discharge of bond / bank guarantee shall fill the information in part h of consolidated imports and exports made under the scheme.

9.  Copies of the relevant portion of the DGFT public notice No. 10 (RE-99)/1997-2002 dated 7.6.1999 and amendment Notification No. 90/99-Customs dated 6.7.1999 are enclosed.

10.  Standing Orders / Departmental Orders for the information and guidance of the field staff and trade / public notices for the trade may be issued and copies of the same may be forwarded to the Joint Secretary (Drawback).

(Sandeep Ahuja)
Under Secretary to the Govt. of Indi

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