Reward /Incentive Schemes under Export Promotion Schemes

Under the Foreign Trade Policy 2015-20, the -

• Merchandise Exports from India Scheme (MEIS) rewards export of notified goods to specified markets listed in Appendix 3B of Appendices & ANF-3D @ 2% or 3% or 5% of certain FOB value of exports. It covers reward on export via post or courier of specified items that are transacted using e-commerce platforms, subject to certain conditions. In order to claim reward under MEIS it is mandatory that exporter declare intent to claim reward at time of export on shipping bills / bills of export that are filed on or after 1.6.2015.
• Service Exports from India Scheme (SEIS) incentivizes export of notified services listed in Appendix 3D of Appendices & ANF-3B by service provider located in India who have a specified minimum net free foreign exchange earnings. Only services rendered in the manner as supply of a 'service' from India to service consumer of any other country through cross border trade. The entitlement is either 3% or 5% of net foreign exchange earned
• Both, MEIS and SEIS scrips are freely transferable and can be used for import of any items except those listed in appendix 3A of Appendices and ANF, or for domestic procurement (without exception for appendix 3A items) or for payment of service tax on procurement of services. The additional customs duty/GST paid in cash or through debit in these scrips may be adjusted as ITC or Duty Drawback. Moreover, the basic custom duty paid in cash or through debit in these two scrips may be adjusted as duty drawback.

Certain aspects related to usage of reward duty credit scrips:

• Board's Circular No. 8/2009-Customs and Instruction No. 603/13/2013-DBK dated 27.05.2014 highlighted the difference between freely transferable scrips meant for all types of goods with certain exceptions and scrips with limited transferability/actual user condition and meant for specified goods. These differences in the nature of scrips issued under the various FTPs and the type of duties or tax that may be debited in a particular scrip are aspects to be kept in view by field formations.
• The scrips being usable only with respect to those goods that are permitted to be imported under the relevant reward scheme pertaining to that scrip, it implies that debit of duty in a scrip, even in the case of discharging duty on already imported goods in cases of export obligation (EO) default, is to be only in respect of goods that are importable under that scrip. Accordingly, scrips like SHIS, AIIS or SFIS which, for example, cannot be used for debiting duty on raw materials, cannot also be used for debiting of duty on raw material in cases of EO default. This was brought to notice of field formations vide Board's letter F.No. 605/32/2013-DBK dated 19.12.2013 in connection with use of duty credit scrip for debiting towards customs duties in case of EO defaults under chapter 4 and 5 of the FTP. Similarly, if a scrip can be used in relation to a capital goods 'CG1' but not 'CG2', then it cannot be used to debit duty related to import of 'CG2' in relation to which there is an EO default.
• Scrips issued under FTP 2015-20 can be utilized / debited for payment of customs duties in case of EO defaults for authorizations issued under Chapter 4 and 5 of FTP 2015-20 only. Similar position holds for scrips issued in terms of FTP, 2009-14.
• Scrips cannot be used to discharge penalty or interest which is required to be deposited in cash.

Verification related to reward duty credit scrips:

• Verification of genuineness of reward scrips is provided for before allowing registration. Further, random verification of the shipping bills or bills of export of goods based on which the reward scrip was issued is prescribed to ascertain the genuineness of the supporting shipping bills. However, the genuineness of shipping bills or bills of export of goods not on Customs EDI (i.e. Manual shipping bills) should invariably be verified while registering the scrip. While Customs can carry out complete verification of scrip where specific intelligence suggests misuse, Also, instructs that scrips issued by the DGFT should normally be accepted unless there is a reason for detailed verification for which the AC / DC is to record the reasons, in writing in file.