Explore the new Amnesty Scheme under the Foreign Trade Policy 2023, allowing a one-time settlement for default in export obligations by Advance and EPCG authorization holders. Learn about the covered schemes, key highlights, eligibility, benefits, and the procedure for availing this significant relief provided by the Ministry of Commerce and Industry. Act now to address defaults and ensure compliance with the latest regulations.
Amnesty Scheme for one-time settlement of default in export obligation by Advance & EPCG authorization holder
New Foreign Trade Policy 2023 made applicable by Ministry of Commerce and Industry unwinds a New Amnesty Scheme for one-time settlement of defaults in exports obligation by Advance and EPCG authorization holder. Directorate General of Foreign Trade (DGFT) vide Public Notice No.2/2023 dated 1st April 2023 has notified this very important Amnesty Scheme.
Schemes Covered under the Amnesty Scheme
1. Advance Authorization Scheme (AA Scheme)
- Under this scheme Inputs are allowed to be imported into India free of duty provided if they are physically incorporated in the goods which are to be exported.
- The scheme is valid for authorization holder up to 12 months from the date of issue of such authorization provided he fulfill its Export Obligation within 18 months from the date of issuance of authorization or within such time as notified by DGFT.
2. Export Promotion Capital Goods (EPCG) Scheme
- Under the above scheme Import of Capital goods required for the manufacturing of export-oriented product specified in Export Promotion Capital Goods authorization are permitted at Concessional rate/Nil rate of duty.
- Import of such goods under EPCG scheme is subject to an Export Obligation which is equal to 6 times of the duty exempted which needs to be satisfied within 6 years from the date of issue of EPCG authorization.
Key Highlights of the Amnesty Scheme
1. Coverage
i. AA and EPCG authorization issued under the FTP policy during the period 2009-14 till 31.03.2015 are covered under the above scheme.
ii. The AA and EPCG authorization issued under the FTP policy on or before 2009 and whose Export Obligation period (Original or Extended) was valid beyond 12.08.2013 are also covered under the above amnesty scheme
iii. Even the cases which are already been adjudicated (or pending adjudication) either original or in appeal can also avail benefit of this amnesty scheme.
2. Procedure and Time Limit for the Amnesty Scheme
a. Authorization holder who wishes to avail the benefits of above scheme shall register themselves on the website of DGFT by way of separate application.
b. Authorization holder shall apply for amnesty scheme on or before 30.06.2023.
c. Payment of Customs duty and the applicable Interest with the Jurisdictional Customs Authorities needs to be completed before 30.09.2023 and shall send the proof to the Regional Authority of the DGFT concerned.
d. The Authorization holder applying for the amnesty scheme shall provide an Undertaking stating that no application for availing CENVAT credit or refund for the duty paid under the said scheme shall be made before any authority and/or before any court of law.
e. After examining the request and verifying all the supporting documents, Regional Authority shall issue a letter granting Export Obligation Discharge Certificate.
3. Authorization holder who are ineligible for the Amnesty Scheme
a. Authorization holder whose cases are under investigation or cases adjudicated for involving fraud, misdeclaration or unauthorized diversion of material and/or capital goods.
b. Authorization holder who has already deposited duty alongwith applicable interest.
4. Benefits under the scheme
If the license holder fails to fulfil the prescribed export obligation then the licensee is liable to pay the customs dues along with 15% interest per annum to the customs authority.
Under this Amnesty Scheme license the defaulting license holder will be required to pay back an amount equivalent to the customs duty saved plus interest (calculated from the date of import till the date of payment) whereby the maximum Interest Payable is capped at 100% of the Duty exempted excluding Additional Custom Duty and Special Additional Customs Duty.
A. When the Entire Export Obligation is not fulfilled
- Illustration:
For example, Total CIF value of import material is Rs.1,00,000/- and at the time of import on 1.05.2011, due to AA or EPCG license he saved following amounts of duty:
| Basic Customs Duty | : Rs. 6,000 |
| Additional Customs Duty | : Rs. 3,000 |
| Special Additional Customs Duty | : Rs. 1,000 |
| Total Duty | : Rs. 10,000 |
If the licence holder has not fulfilled his entire export obligation, then under normal circumstances he would have been required to pay interest @ 15% on the entire exempted duty component which in the given example is 10,000. Interest amount would come to Rs. 18,060 @ 15% from 1.05.2011 to 13.05.2023 (upto date of payment), accordingly he would be required to pay 28,060 (10000 + 18060) for getting Export Obligation discharge certificate.
However, under the amnesty scheme, maximum Interest shall be limited to 100% of basic customs duty amount which in the above example is Rs.6,000/- (100% of 6,000/-). Therefore, the total amount payable by the authorization holder would be Rs. 16,000/- (10,000+6,000), saving Rs. 12,060 for him.
B. When the Export Obligation is not fulfilled Partially
- For example, Total CIF value of import material is Rs.1,00,000/- and at the time of import on 1.05.2011, due to AA or EPCG license he saved following amounts of duty:
| Basic Customs Duty | : Rs. 6,000 |
| Additional Customs Duty | : Rs. 3,000 |
| Special Additional Customs Duty | : Rs. 1,000 |
| Total Duty | : Rs. 10,000 |
- If the licence holder has not fulfilled 40% of his export obligation, then under normal circumstances he would have been required to pay interest @ 15% on the proportionate exempted duty component which in the given example would come to Rs. 4,000. Interest amount would come to Rs. 7,225 @ 15% from 1.05.2011 to 13.05.2023 (upto date of payment), accordingly he would be required to pay 11,225 (4,000 + 7,225) for getting Export Obligation discharge certificate.
- However, under the amnesty scheme, maximum Interest shall be limited to 100% of proportionate basic customs duty amount which in the above example is Rs. 2,400/- (40% of 6,000/-). Therefore, the total amount payable by the authorization holder would be Rs. 6,400/- (4,000+2,400), saving Rs. 4,825 for him.
Conclusion
This is a major relief provided under the Foreign Trade Policy (FTP) 2023 to Exporters who were unable to fulfill their Export Obligation under Advance Authorization or EPCG Scheme. The authorization holder should avail this benefit as the maximum interest is capped at 100% of the Duty exempted excluding Additional Custom Duty and Special Additional Duty irrespective of whether Export Obligation is fulfilled partially or not fulfilled completely.
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| Chartered Accountant | Article Assistant |
Author Bio
require guidance in submission of the application under Amnesty scheme of DGFT