In a major move aimed at boosting exports and offering relief to exporters, the government on 17th August 2021 notified Remission of Duties and Taxes on Exported Products (RoDTEP) (guidelines) as part of the Chapter 4 provisions of the Foreign Trade Policy 2015-20– Notification No. 19/ 2015-20 dated 17 August 2021 to replace the Merchandise Exports from India Scheme and operationalized it from 1 January 2021 Press Release dated 31 December 2020 after the US had challenged India’s export subsidy programmes in the WTO, claiming them to be violative of the trade body’s norms.
Pending issuance of guidelines and notification of rates, the Central Board of Indirect Taxes and Customs (CBIC) has mandated that exporters need to indicate their intent to claim benefit of RoDTEP in the shipping bill in form of a suitable declaration with effect from 1 January 2021. Furthermore, an online RoDTEP ledger was created on the ICEGATE system for the conversion of scrolls into scrips and its usage, including for transfer.
The objective of the scheme is to refund the following duties or taxes which are currently not being refunded:
> 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
> Such indirect duties/ taxes/ levies in respect of distribution of exported product.
Rebate shall not be available in respect of duties and taxes already exempted or remitted or credited.
Under the scheme, a rebate would be granted to eligible exporters at the notified rate as a percentage of FOB value with a value cap per unit of the exported product, wherever required.
However, for certain export items, a fixed quantum of rebate amount per unit may also be notified. The rates and value cap have been notified in Appendix 4R.
Necessary calibrations and revisions shall be made to the scheme benefits, as and when required.
The rebate allowed will be subject to the receipt of sale proceeds within time allowed under the FEMA Act, failing which, such rebate shall be deemed never to have been allowed.
Issuance and nature of Rebate
> The rebate amount will be granted in the form of a transferable duty credit/ electronic scrip (e-scrip), which will be maintained in an electronic ledger by the CBIC.
> The scrips would be used only for payment of duty of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 i.e. Basic Customs Duty.
>Necessary rules and procedure regarding grant of RoDTEP claim and implementation issues (including manner of application, time period for application and other matters) would be notified by the CBIC on an IT enabled platform.
> Provisions for recovery of rebate amount where foreign exchange is not realized, suspension/ withholding of RoDTEP in case of frauds and misuse, as well as imposition of penalty will also be built suitably by CBIC.
Ineligible supplies under the scheme
The following categories of exports/ exporters shall not be eligible for rebate under the scheme:
> Export of imported goods covered under paragraph 2.46 of FTP (import for export)
> Exports through trans-shipment
> Export products which are subject to minimum export price or export duty
> Products which are restricted/ prohibited for export
> Deemed Exports
> Supplies of products manufactured by units in Domestic Tariff Area to Special Economic Zone (SEZ)/ Free Trade Warehousing Zone (FTWZ) units
> Products manufactured in Electronic Hardware Technology Park (EHTP) and Bio-Technology Park (BTP)
> Products manufactured partly or wholly in a customs warehouse
> Products manufactured or exported availing the benefit of the Notification no. 32/1997-Customs dated 1 April 1997 (imports for job work)
> Exports for which electronic documentation in ICEGATE electronic data interchange (EDI) has not been generated / Exports from non-EDI ports
> Goods which have been taken into use after manufacture
> Products manufactured or exported in discharge of export obligation against an Advance Authorization (AA) or Duty Free Import Authorization (DFIA)
> Products manufactured or exported by 100% Export Oriented Unit
> Products manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or SEZ
Inclusion of exports made by EOU, SEZ and AA/ DFIA holder and RoDTEP rates for such categories would be decided based on the recommendations of the RoDTEP Committee.
Monitoring, Audit and Risk Management System
The exporter will be required to maintain records, substantiating claims made under the RoDTEP. A monitoring and audit mechanism with an IT-based Risk Management System will be operationalised by the CBIC to physically verify the records on a sample basis
Issues related to the scheme that arise subsequently are to be considered by an inter-ministerial committee, called the ‘RODTEP Policy Committee’, chaired by the DGFT and comprising members of the DoC and the DoR, whose decisions would be binding
The new RoDTEP is expected to give relief to trade that was awaited since January 2021 onwards. It is likely to help in easing the liquidity of the exporters, ensuring predictability and stability. Prescription of rates may also help them in determining the competitive export prices.
The budgeted allocation under RoDTEP is much lower as compared to the government’s annual outlay under MEIS that has been replaced. Further, It is relevant to note that export of certain products including steel, chemicals and pharmaceuticals are not covered under the scheme.
Although it has been clarified that future inclusion of exports made against Advance Authorisation, DutyFree Import Authorisation, Special Advance Authorisation or by units in an EOU, SEZ or FTWZ, including rates, will be decided based on the recommendations of the RoDTEP Committee.