Remission of Duties or Taxes on Export Products (RoDTEP) was introduced for the Exporters to make Indian products cost-competitive and create a level playing field for them in the Global Market by Refund un-refunded Taxes or Duties / Levies, not Exempted or Rebated at Present by any other Mechanism.
Government Issued an Advisory on 1st Jan’2021, to implement the Scheme effective from 1st Jan’2021, and allowed the exporters to claim in the Shipping Bill, even though Rates were not announced. Subsequently the Rates range from 0.5% to 4.3% for various Sectors at 8 Digit Level as per Appendix – 4R of Hand Book of Procedures were announced by DGFT vide: Notification 19/2015-2020, dated 17th Aug’2021.
Now, CBIC announced the Manner of Issue Duty Credit for Goods Exported under the scheme vide Notification No: 76/2021-Customs (N.T.), 23rd September, 2021.
However, there are some Difficulties and Issues regarding the RoDTEP Scheme.
Issue – 1: Low Rates of RoDTEP
Exporters & Industry Bodies, Export Promotion Councils are expressing displeasure over Low Rates announced under RoTEP. They are feeling that Various Duties, Taxes & other Levies suffered at Different Stages in the Entire Supply Chain are not being adequately covered by the Rates. In almost all the cases the RoDTEP rates are much lower than MEIS Rates previously entitled.
Exporters, Export Promotion Councils and Industry Bodies must come out with proper data in the Form R2 & R3 in case the RoDTEP Rates are found lower. Since the Information to be provided in the Form R2 & R3 which calls for incidences of taxes / duties / levies, at different stages at the central, state and local level, which are incurred in the process of manufacture and distribution of exported products but are not being refunded under any mechanism currently in practice are outside the individual company or industry data base, and are very difficult and may not be available, they can’t compile it, so the Government may come out with simplified Form or adopt some short of formula or industry wise standards for working out incidences of such taxes and levies which are not at present exempted or refunded.
There is provision in the scheme to review the RoDTEP rates on an annual basis if the substantial information and data supporting evidence of higher incidents of embedded taxes are found.
Issue – 2 : Not Eligible for Certain Categories
By putting some built-in checks in the System to disallow RoDTEP benefit for categories like Advance Authorization, EOU, SEZ etc. are illogical as the Objective of the scheme is to refund, all the un-refunded taxes or duties / levies, Embedded in the Entire Value Chain, those are not exempted or rebated at present by any other mechanism currently in practice.
At present under various schemes like Advance Authorization, EOU, Jobbing, SEZ etc. Taxes / Duties on immediate (First Tier) Inputs only are being Exempted and no other incidents of Duties, Taxes & Local Levies Embedded in the Entire Value Chain beyond First Tier are covered. There are certain taxes / duties / levies, at different stages at the central, state and local level, which are incurred in the process of manufacture and distribution of exported products at various stages in the supply chain, but are not being refunded under any mechanism currently in practice. For example, in the Processed Food Industry, at the originating Stage Supplies of Farm Inputs like Seeds, Fertilizers, Pesticides, Diesel etc. are being suffered with Various Taxes or Levies are Not being Rebated / Refunded & Absorbed as Cost and passed on to down in the supply chain. Similarly in the Subsequent Stages of Value chain different taxes are being born as Cost.
So, the Rates proposed under RoDTEP are Mutually Exclusive basis being not exempted by other Schemes, therefore the Benefits of RoDTEP should be allowed to Exporters availing Advance Authorization, EOU, SEZ etc.
Issue – 3 : Three Sectors – Steel, Chemicals and Pharmaceutical are Not Covered under the Scheme.
Three Sectors – Steel, Chemicals and Pharmaceutical are Not Covered under the Scheme, citing the reason that they are “Doing Well without Incentives”. This is very illogical as the RoDTEP Scheme is to Refund Taxes & Levies which are incurred by the Exporters, but not Exempted or Refunded by any Scheme at Present. Such incidence of taxes and Levies are also happening in these three industries and are being taken as Cost and therefore to further encourage exports from these sectors and make them competitive, RoDTEP Scheme must be allowed for Steel, Chemicals and Pharmaceutical Sectors.
Issue – 4 : Deemed Exports are Not Eligible for RoDTEP Scheme Benefits
“Deemed Exports” refers to those transactions in which the goods supplied do not leave the country, but supporting by supplying Inputs or capital goods to the Direct Exporters under Advance Authorisation, EPCG or EOU Schemes. The Deemed Export Scheme was introduced to Encourage Domestic Sourcing.
By Discriminating and not allowing the RoDTEP benefits, Deemed Exports may not become Competitive, as a result, exporters naturally avoid to source from domestic suppliers even though those items with comparable quality are available in the domestic market.
Therefore, it is essential in the true national sprite and in public interest to encourage and promote Indian industry by putting them in the same platform compared to imports under Export Promotion Schemes. It is wrong in the policy provisions to spend (waste) huge amounts from national exchequer for promoting import of foreign products in to the Indian market in the name of Export Promotions.
To make the schemes truly national (SWADESHI) and to Promote “Make in India”, RoDTEP benefit must be extended to Deemed Exports also.
Disclaimer : The views and opinions; thoughts and assumptions; analysis and conclusions expressed in this article are those of the authors and do not necessarily reflect any legal standing.
Author : SN Panigrahi, GST & Foreign Trade & Project Consultant, Practitioner, International Corporate Trainer, Mentor & Author.
Author can be Reached @ [email protected]; Mobile : 9652571117