The Director General, DGFT has issued a statement on 17Th May 2021 that the rates of Remission of Duties and Taxes on Exported Products (‘RoDTEP’) scheme shall be announced in about 15 days. In such a scenario, there is a need to recollect an understanding of RoDTEP scheme summarized in the article below:
1) Why was the RoDTEP scheme introduced?
- In the lights of complaints made by USA against India to discontinue export incentive schemes (like MEIS) citing that these export incentive schemes tantamount to subsidy and subsequent rulings of the Dispute Resolution Panel (DRP) of the World Trade Organization (‘WTO’) that MEIS violate the norms of the WTO, India has been asked to withdraw the MEIS policy.
- As a compliance to the above, the MEIS policy has been discontinued w.e.f. 31.12.2020.
- In such a scenario, the Government after much deliberations has formulated an exports benefits WTO compliant scheme as a substitute to the MEIS policy known as Remission of Duties and Taxes on Exported Products (‘RoDTEP’); to be made applicable from 1 January 2021.
Objective of RoDTEP
- The objective of the RoDTEP is to refund embedded duties and taxes that were not being refunded so far under any law. For example- VAT on fuel, Mandi Tax, Duty on electricity charges, stamp duty on export documents, embedded GST paid on pesticides, fertilizers, etc used in production of agriculture goods, etc.
Salient Features about the RoDTEP scheme
- Both merchant exporters (traders) and manufacture exporters are eligible to claim benefits under the scheme, irrespective of their turnover.
- Under the RoDTEP scheme, a digital refund (as a percentage of FOB value of exports) shall be granted to the exporter in the form of an Electronic Credit ledger.
- The rates of RoDTEP are yet to be notified.
- The scrip i.e. amount in the Electronic Credit Ledger can be used to pay Basic Customs Duty on imported goods or can even be transferred to other parties like just MEIS / SEIS scrips. The party to which the scrip is transferred also needs to have a valid credit ledger account.
- The procedure for availing the benefit of RoDTEP scheme is as follows:
> To avail the scheme exporter shall make a claim for RoDTEP in the shipping bill by making a declaration. The declaration should be mentioned in INFO CODE in Table SW_INFO_TYPE of the shipping bill as follows:
a) RODTEPY- IF RoDTEP is availed;
b) RoDTEPN- If RoDTEP is not availed.
It is pertinent to note here that if declaration RoDTEPY is not filed at the time of shipping bill, benefits under RoDTEP shall not be granted. Further, no changes shall be allowed in the shipping bill post filing of EGM
- Once export general manifest (EGM) is filed, claim will be processed by Customs.
- Once processed a scroll with all individual Shipping Bills for admissible amount would be generated and made available in the users account at ICEGATE,
- User can create RoDTEP credit ledger account under Credit Ledger tab. This can be done by IECs who have registered on ICEGATE with a DSC.
- Exporter can log in into his account and generate scrip after selecting the relevant shipping bills.
Ineligible Categories
- The RoDTEP scheme is not available to service exporters (even though SEIS has been discontinued);
- The country of origin of the exported products must be India i.e. re-exported products are not eligible;
- Exports by EOUs, Advance Authorization, Jobbing, EPCG license holder shall not be eligible for benefits under this scheme;
- It is unclear whether exports by SEZs shall be allowed to take benefit under this scheme. SEZs have been advised to mention the following on the shipping bill if they intend to avail the benefits of RoDTEP
“Shipping Bill filed under RoDTEP scheme if applicable to SEZ unit & subject to such conditions as prescribed including the product coverage”
Issues
- While, exports through e-commerce platforms are eligible to claim benefits under RoDTEP. However, CSB-V and PBE-2 have not been modified to include RoDTEP declarations;
- While, RoDTEP intends to replace MEIS as an export benefits policy, the same has been announced without specifying the products and the rates at which RoDTEP benefits shall be given. Further, it is still not clear whether exports by SEZs shall be allowed to claim benefits under this scheme. Thus, there is complete lack of planning while implementing the policy.
- RoDTEP aims to grant refunds in respect of taxes that were not so far being refunded under any law. Hence, there is no rationale of disallowing benefits under RoDTEP for exports where benefits of schemes like Advance Authorization, EPCG, EOU, Jobbing etc are being claimed. Under these schemes, refunds are grated in respect of only the immediate First Tier input. However, RoDTEP aims to grant refunds of those taxes that are not being refunded in the entire value clain. Thus, these schemes are mutually exclusive and an exporter should be eligible to claim benefits these schemes as well as RoDTEP.
- There must be an interim mechanism to grant benefits under RoDTEP even if RoDTEPY declaration has not been filed as many exporters missed to file such declaration during the initial months due to lack of awareness. This becomes even more relevant in a scenario where a scheme has been announced without specifying the rates and there is a lack of planning on the Government’s side as well.
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(The author is a practicing Chartered Accountant based in Delhi and can be reached at nitingoel6231@gmail.com or 9811933762)
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.
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