Issuance of Pre- Shipment Inspection Certificate (PSIC)

• Pre-shipment Inspection Agencies (PSIA) shall issue Pre-Shipment Inspection Certificate (PSIC) as per format defined in Appendix 2H of Foreign Trade Policy. PSIC would also carry uniquely numbered hologram of the PSIA.
• A PSIA can also carry out inspections in countries, where it does not have a full time equipped branch office but which falls within its area of operation, by deputing its Inspectors. However, for such inspections in other countries, the PSIA will be required to give prior intimation to DGFT by sending an email (at psia-travel-dgft@gov.in) and furnishing details of visit / inspection done by the Inspector in PSIC.
• The applicants may submit their applications initially without bank guarantee, as required under S.No.9 of ANF-2L. Their applications would not be rejected only on the ground of non-submission of bank guarantee. Applicants would, however, be required to submit bank guarantee or an equivalent financial instrument, before they are notified as PSIA, by the competent authority, as per FTP/HBP 2015-20.

(Amended vide Public Notice No 12/2015-20 dated 18.05.2015)

Check list of Documents for cancellation of Bond (LUT) / Bank Guarantee

Para 5.13 of HBP (Vol 1) deals with redemption and issue of Export Obligation Discharge Certificate (EODC) by DGFT on production of relevant documents for proof of export done by the licencee. After receipt of EODC from the licensing authorities, the licencee has to request for cancellation of Bond (LUT) / Bank Guarantee executed with custom authorities. The request for cancellation of Bond / BG should be accompanied by the following documents for cancellation / closure of Bond (LUT) / BG :-

1.     Request letter

2.     Original EPCG Licence

3.     Duty debit sheets in original

4.     Original EODC (Redemption Certificate) from DGFT

5.     Installation Certificate from Central Excise

6.     Self attested copies of Bills of Entry

7.     Self attested copies of Shipping Bills

8.     Invoice copies / Bills of Lading copies etc.(Import)

9.     Invoice copies / Bills of Lading copies etc.(Export)

10. Import statement (Bills of Entry-wise details, specially duty saved amounts)

11. Export statement (Shipping Bills details, specially FOB amounts)

12. Bank Realization Certificates

13. Authorisation letter to CHA / Representative to receive the BG/Bond

14. Any other documents required by Group AC.

Duty remission schemes under Export Promotion Schemes

EPCG Scheme under FTP 2015-20,

• A Zero duty EPCG scheme applicable to all sectors is available with optional exemption from the additional duty of customs. The EO is equivalent to 6 times of the duty saved amount on the capital goods imported with EO period 6 years (extendable by 2 years) from the date of issue of Authorization. A more favorable dispensation for EO is provided for export of specified green technology products as well as units located in North Eastern States, Sikkim and Jammu and Kashmir. The EO for spares for imported/domestically sourced capital goods is same as that for capital goods.
• The import of Capital goods has to be made within 18 months, with the Regional Authority of DGFT having certain powers to revalidate the validity of import.
• EO of 50% is to be fulfilled in two blocks of 4 years and then 2 years. The RA can grant extension of block-wise period or overall period of fulfillment subject to specified conditions. In the case of manufacturer/merchant/service exporters, the EO is required to be fulfilled by exporting goods manufactured or capable of being manufactured or services rendered by the use of capital goods imported under the scheme. The EO is to be over and above the average level of exports achieved in the preceding three licensing years for the same and similar products. Certain sectors are not required to maintain average level of exports.
• The Authorizations are issued to manufacturer exporters and merchant exporters with or without supporting manufacturer, and service providers and also available to Common Service Provider (CSP). The authorizations specify the value/quantity of the export product to be exported against it.
• The Authorization holder is required to file bond with 100% Bank Guarantee with the Customs prior to commencement of import of capital goods. Certain categories of exporters get benefit of exemptions from Bank Guarantee in terms of the Circular No. 58/2004-Cus dated 21-10-2004 as amended last by 15/2014-Customs dated 18.12.2014. Normally, the CG imported are subject to actual user condition and the goods imported cannot be transferred or sold, etc till the fulfillment of EO.
• Third party exports are permitted with respect to exported goods manufactured by the authorisation holder. 
• Installation Certificates (ICs) for capital goods are permitted to be obtained from jurisdictional Central Excise or independent Chartered Engineer. In the latter case, a registered unit would send copy of IC to the jurisdictional Central Excise office. Capital goods may be installed at supporting manufacturer's premises if prior to such installation the latter's details are endorsed on the authorization by Regional Authority, who would intimate the change to jurisdictional Central Excise offices and the Customs where authorisation is registered in terms of FTP 2015-20.
• The EPCG Authorization holder is required to indicate the EPCG Authorization No./date on the shipping bill/invoice (in case of deemed exports). After fulfillment of specified EO, relevant documents are to be submitted to Regional Authority for obtaining EODC. This is taken into account by Customs authority at port of registration for purposes of redemption of bond/Bank Guarantee, subject to prescribed checks including intelligence based checks.
• The export obligation is lower by 25% when capital goods are sourced indigenously. This is implemented by Regional Authorities.
• The zero duty EPCG scheme under FTP 2015-20 is not available to exporters, who avail in that year, the benefit of SHIS; the provision is not available that up to 50% of the EO may be fulfilled by export of other goods manufactured or service(s) provided by the importer or his group company or managed hotel; the import of cars, etc. as commercially registered tourist vehicles is not permitted under Zero duty EPCG scheme. 
• The EPCG authorisation for annual requirement, the provisions for technological up- gradation and for transfer of EPCG capital goods to group companies in certain cases/sectors are discontinued in FTP 2015-20.

Post Export EPCG Duty Credit Scrip Scheme:

• Under the FTP 2015-20, there is one Post Export EPCG Duty Credit Scrip Scheme. The duty credit in these scrips is a duty remission computed based on the basic customs duty paid on capital goods which had been imported on payment in cash of all applicable duties of customs in cash. Subject to installation and use of the imported capital goods, and other conditions including non-disposal of the capital goods till the date of last export, the duty remission may be granted by the Regional Authority in proportion to export obligation fulfilled within a fixed export obligation period. For this purpose, the export obligation is fixed (over and above average export obligation) at 85% of applicable specific export obligation, computed as if the duty paid imports had taken benefit of duty exemption (i.e. like the EPCG duty exemption scheme). As in the EPCG duty exemption scheme, if it is opted to not take the CENVAT credit of additional duty of customs paid, a lower export obligation would be fixed. There is no provision for extension of export obligation period in this scheme.
• The duty remission is envisaged in proportion to export obligation fulfilled within a fixed export obligation period. Unlike the EPCG duty exemption scheme, the block obligation periods or their related proportions of export obligation fulfilment are not pre-defined. More than one duty credit scrip may issue (against the duty paid import of capital goods) based on the progressive fulfilment, during the specified export obligation period, of larger extents of the total export obligation. The meaning of 'export obligation' would apply individually to each duty credit scrip. Further, scrip issuance is akin to a discharge (or partial discharge) of the export obligation and is a remission by the DGFT of duty collected by the CBEC. Therefore, it is necessary that the Deputy/Assistant Commissioner of Customs satisfies himself of the compliance of the conditions of the notification (including fulfilment of export obligation, the quantum of duty remission in the duty credit scrip, the cumulative duty credits issued against imported duty paid capital goods) before allowing a duty credit scrip, issued under the Scheme, to be registered.
• A sequential monitoring is required to be followed. This begins from registration of authorization (for importing capital goods) at the port of registration and is followed by import on payment of full applicable duties of customs in cash, endorsement of import particulars on authorization at time of clearance, making specified endorsements on bill(s) of entry at time of import, ensuring registration or installation/use of all imports under authorization before any scrip issues, registration of scrip at the same port, keeping cumulative record of duty credit scrips issued against an authorization, and making the indicated endorsements on documents at the time of registration. Moreover, the assessment Group which handles the authorization to import capital goods on payment of duty under this variant of the EPCG scheme would need to allow the registration of this duty credit scrip. The genuineness of the post export EPCG duty credit scrip should be verified.
• Safeguards are provided in the Revenue notification relating to making endorsements on the documents. The option for not availing CENVAT Credit on capital goods imported under authorization and thereby enjoying a lower export obligation is to be backed by a certification. Jurisdictional Central Excise authority should ensure that certificate on non-availment of CENVAT Credit is issued expeditiously and normally within two weeks but not later than four weeks under all circumstances. Where the goods imported against an authorization are found defective or unfit for use and are re-exported back to the foreign supplier, if claim of duty drawback is made, no duty remission for the duty paid at the time of import on the re-exported goods is to be allowed. Further, after any duty remission in the form of duty credit scrip has been claimed in respect of the duty paid on the goods imported against an authorization, no duty drawback shall be allowed when the goods are re-exported and the export obligation is also not to be re-fixed. Indigenous sourcing of capital goods (referred to as invalidation procedure of import authorization) on payment of duty is not permitted in this scheme.
• The post export EPCG duty credit scrip cannot be issued as a refund on the premise that duty was paid but a situation arose where there was no export obligation to be fulfilled. The Commissioners of Customs are also to exercise special checks so as to ensure that there is no misuse of the scheme and a proper record of all such checks is maintained. These shall include random verifications of the address shown on the authorizations (for import of capital goods) during their validity period in at least 10% of authorizations, random verifications of the certificates produced (not issued by central excise authorities) and of the declarations submitted with respect to Condition No. 14(e)(i) of the notification No.17/2015-Customs in at least 10% cases. These verifications should be made through the Commissioners of Central Excise. The central excise authorities should include, in their verification, a check of the periodical utility bills (containing the address) as one of the means enabling verification of installation/ operation/ authorization holder premises. The Commissioners are expected to exercise due diligence to prevent misuse.

Duty exemption schemes under Export Promotion Schemes

Advance Authorization Scheme:

• Advance Authorisations (AA) are issued to allow duty free import of inputs that are physically incorporated in the export product (after making normal allowance for wastage) as well as certain items like fuel, oil, catalysts which are consumed in the course of their use to obtain the export product. The raw materials/inputs are allowed in terms of Standard Input-Output Norms (SION) or self-declared norms of exporter. The AA are issued on pre-export or post export basis in accordance with the FTP and procedures in force on the date of issue.
• The holder is required to fulfil export obligation (EO) by exporting specified quantity/value of resultant product. The AA and the materials imported are not transferable even after completion of EO.
• AA usually has a minimum of 15% value addition.
• All Industry Rate (AIR) of Duty Drawback is not admissible with AA. However, Brand Rate of Duty Drawback may be claimed in respect of duty-paid inputs (not specified in the norms) which are used in the export product provided such duty paid inputs have been endorsed by Regional Authority for drawback payment on the AA. This specification ensures value addition norms.
• AA are issued for physical exports as well as deemed exports. These are also issued on the basis of annual requirements of exporter, which enables planning manufacturing / exports on a longer term basis. However, self declared norms are not permitted under annual requirement under FTP 2015-20. Advance Authorisation for Annual Requirement is also not available in respect of SION where any item of input appears in Appendix 4-J of FTP 2015-20.
• AA are issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) or to sub-contractors in respect of supplies of goods to specified projects provided the name of such sub-contractor appears in the main contract.
• AA holders are to file a bond with 100% Bank Guarantee for the duty difference at the time of importing duty free inputs. Certain categories of exporters are conditionally exempt from filing Bank Guarantee in terms of Circular No. 58/2004-Cus. dated 21-10-2004 as amended last by 15/2014- Customs dated 18.12.2014.
• Normal validity of an AA is 12 months for making imports but there is provision for RA to consider request of original authorization holder and grant one revalidation for six months from expiry date. For fulfillment of EO, normally a period of 18 months from the date of issue is specified, with certain exceptions of shorter or longer periods.
• There are provisions relating to accounting of inputs in the AA schemes. The AA holder is also required to maintain a true and proper account of consumption and utilization of duty free imported/domestically procured goods for a specified minimum period. The AA No./date is to be indicated on the shipping bill/ bill of export or invoice (in case of deemed exports). The imports/exports under AA and their utilization require monitoring. The AA holder is to submit relevant export documents to Regional Authority/DGFT to obtain an Export Obligation Discharge Certificate (EODC). An AA holder is required to deposit Customs duties with interest in case EO is not fulfilled. The Regional Authority informs details of payments to Customs at the port of registration or Commissioner of Central Excise having jurisdiction over the factory of AA holder, as the case may be. The EODC or redemption letter is taken into account by Customs authority at port of registration for purposes of redemption of bond/Bank Guarantee, subject to prescribed checks including intelligence based checks.

AA for export of certain items that are otherwise prohibited for export:

• Certain items that are otherwise prohibited for export may be exported under AA scheme, with conditions stricter than otherwise imposed including the export being allowed only from specified EDI enabled ports subject to pre-import condition under notified SION/prior fixation of norms by Norms Committee, export obligation period being 90 days from import clearance without extensions and import being subject to non-transfer, including for job work, and actual user condition, and the inapplicability of provisions for regularisation of default, etc.

Duty Free Import Authorisation (DFIA):

• DFIA issued under the FTP 2009-14 are similar to AA in many aspects including requirement of monitoring. However, DFIA has a minimum value addition requirement of 20% and once export obligation is completed, transferability of the authorization and / or material imported against it is permitted. Once the transferability is endorsed, the inputs can be imported/domestically sourced only on payment of additional duty of customs/ central excise duty. The DFIA is issued only where SION are notified. After the annual supplement 2013 to the FTP 2009-14, the exemption from anti-dumping duty and safeguard duty is not available when materials are imported against a DFIA made transferable. In case imported materials are transferred the importer is to pay an amount equal to the anti-dumping and safeguard duty leviable on the material, with interest. These aspects apply subject to specified conditions.
• Under the FTP 2015-20, only post-export transferable DFIA with exemption from only the basic customs duty is issued by Regional Authority. Such DFIA is not available for Gems and Jewellery sector or where SION prescribes actual user condition (for example, fuel). The admissibility of brand rate of duty drawback is as per para 4.26 of the FTP.

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.

Export Promotion Schemes

The Export Promotion Schemes implemented by CBIC relate to respective Foreign Trade Policies. However, presently the predominant ones are the following broad categories pertaining to FTP 2015-20.

1. Incentive or Reward schemes under which exporters are granted duty credit in a scrip which is permitted to be utilized in an exemption framework, for debiting certain duties/tax, subject to conditions.
2. Duty exemption schemes like Advance Authorisation (AA) and Duty Free Import Authorization (DFIA) which permit duty free import of inputs related to export production.
3. Duty remission schemes like the Post export EPCG duty credit scheme. Export Promotion Capital Goods (EPCG) Scheme which permits duty free import of capital goods against an obligation to export goods in a specific time frame.