The DGFT (Director General of Foreign Trade) has issued Notification No: 19/2015-20 dated: 17.08.2021 and thus detailed the scheme guidelines for RoDTEP (Remission of Duties and Taxes on Exported Products)
As expected the RoDTEP benefits are lesser than the erstwhile MEIS (Merchandised Export Incentive Scheme) benefits which came to its end in 31.12.2020
Though the RoDTEP scheme was came into effective from 1st January 2021, the rates were notified only on 17th August 2021 as Appendix 4R to the Notification No: 19/2015-20 dated: 17.08.2021
The RoDTEP scheme is drawback in nature instead of incentive. It enables refund of taxes paid on goods and services which were not refunded by any other means. For example GST paid on Purchase of Goods and / or Services are availed as ITC (Input Tax Credit) and hence it is not covered under RoDTEP scheme.
The Duties and Taxes which are not availed as ITC or Refunded alone covered under RoDTEP scheme
As per the Notification:
i. The Scheme‘ s objective is to refund, currently un-refunded:
a. Duties/ taxes / levies , at the Central, State and local level, borne on the exported product , including prior stage cumulative indirect taxes on goods and services used in the production of the exported product and
b. Such indirect Duties/ taxes / levies in respect of distribution of exported
ii. The rebate under the Scheme shall not be available in respect of duties and taxes already exempted or remitted or credited.
The important features of this schemes includes:
> The rebate would be granted to eligible exporters at a notified rate as a percentage of FOB value with a value cap per unit of the exported product, wherever required, on export of items which are categorized under the notified 8 digit HS Code
> For certain export items, a fixed quantum of rebate amount per unit may also be Rates of rebate / value cap per unit under RoDTEP will be notified in Appendix 4 (download link given below)
> The RoDTEP rebate allowed is subject to the receipt of sale proceeds within time allowed under the Foreign Exchange Management Act, 1999 failing which such rebate shall be deemed never to have been allowed (At the time of issuance of Rebate – Sales Proceedings are not required mandatory. Hence we can apply RoDTEP without sale proceeds however if the same was not received within time, we may need to reverse / reimburse the same)
> Scheme would be implemented through end to end digitization of issuance of rebate amount in the form of a transferable duty credit/electronic scrip (e-scrip), which will be maintained in an electronic ledger by the Central Board of Indirect Taxes & Customs (CBIC)
> Rules and Procedure regarding grant of RoDTEP claim under the Scheme and implementation issues including manner of application, time period for application and other matters including export realization, export documentation, sampling procedures, record keeping etc. are yet to be notified by the
> The Credited RoDTEP benefit can be converted as transferrable e-Scrips. e-Scrips can be used for payment of Import Duty (Only for Basic Customs Duty)
> e-Scrips can also be transferred to another IEC holder electronically from the Common Credit Ledger.
Ineligible Supplies / Items / Categories under the RoDTEP Scheme:
There are some transactions declared as ineligible for RoDTEP Scheme by the DGFT Notification as under:
The following categories of exports / exporters shall not be eligible for rebate under RoDTEP Scheme:
i. Export of imported goods covered under paragraph 2.46 of FTP
ii. Exports through trans-shipment, meaning thereby exports that are originating in third country but trans-shipped through India
iii. Export products which are subject to Minimum export price or export duty
iv. Products which are restricted for export under Schedule-2 of Export Policy in ITC (HS)
v. Products which are prohibited for export under Schedule-2 of Export Policy in ITC (HS).
vi. Deemed Exports
vii. Supplies of products manufactured by DTA units to SEZ/FTWZ units
viii. Products manufactured in EHTP and BTP
ix. Products manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962)
x. Products manufactured or exported in discharge of export obligation against an Advance Authorization or Duty Free Import Authorization or Special Advance Authorization issued under a duty exemption scheme of relevant Foreign Trade Policy
xi. Products manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit (EOU) in terms of the provisions of the Foreign Trade Policy
xii. Products manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones
xiii. Products manufactured or exported availing the benefit of the Notification No. 32/1997- Customs dated 1st April, 1997.
xiv. Exports for which electronic documentation in ICEGATE EDI has not been generated/ Exports from non-EDI ports
xv. Goods which have been taken into use after manufacture
(On the above, points x, xi & xii not notified yet. All other points are notified as effective from 1st January 2021)
From the above the conditions for ineligibility is more or less similar as MEIS Scheme.
For Supplies to SEZ & Supplies from SEZ / EOU Units, MEIS is eligible earlier but in RoDTEP that also made as ineligible, which will be a bigger impact for businesses.
The Newly introduced MOOWR Scheme (Manufacturing and Other Operations in Warehouse Regulation) also brought under Ineligible category for RoDTEP Scheme.
The RoDTEP benefits for Sub-Contracting / Job Work exports (Principal sending materials to Sub-Contractor / Job Worker and exporting directly from the premises of Sub-Contractor / Job Worker). These type of Exports are eligible under the erstwhile MEIS Scheme, but RoDTEP scheme is silent on this transaction.
The RoDTEP scheme is not an Incentive scheme like MEIS and hence the benefit of this scheme is lesser than MEIS Scheme. It is just refunding the unclaimed duties and taxes paid on goods and services, which includes Local Taxes, Electricity Duty, Taxes on Fuel consumed in Transportation of Goods etc.,
As the MEIS incentive is already stopped and the RoDTEP benefit is very less, the Exporters will have to review their pricing strategy now to accommodate this minimal benefits. Obviously the prices for Export Items may go up a little, and the competitiveness in the global market will become an issue.
There is no other compensation mechanism announced by DGFT for the losses happened to the Exporters due to the RoDTEP scheme compared to the erstwhile MEIS Scheme.
There are still some areas not yet clarified by the DGFT and hope the same will be clarified later for the benefit of the Exporters
We can hope for the same at the earliest.