Latest Query & Reply

We need a Clarification on Advance License For Import Of Goods Without payment of IGST.

One of Our clients is in business of Import and Export Of Goods. Our Query is That we are in process of taking Advance License to get exemption from payment of IGST on Import of Goods, So we want to know the impact whether we can import goods on nonpayment of IGST and Want to export with payment of IGST and Claim Refund. Also we want to know what things we have to keep in mind for the advance license.

Reply

Following is the extract of notification no. 33/2015-2020 dated 13.10.2018.

Details of duties exempted—Imports under Advance Authorization are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, wherever applicable. Import against supplies covered under paragraph 7.02(c), (d), and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, countervailing duty, safeguard duty and transition Product Specific Safeguard Duty, if any. However , imports under Advance Authorization for physical exports are also exempt from whole of the integrated tax and Compensation cess leviable under sub section (7) and sub section (9) respectively of section 3 of the Custom tariff Act, 1975, as may be provided in the notification issued by Department of revenue, and such imports shall be subject to pre-import condition."

Thus, exemption from payment of IGST is available for physical exports.

The features of Advance authorization scheme are as under— 

Advance Authorization scheme— Under advance authorization scheme, INPUTS which are in the export product can be imported without payment of customs duty.

Validity period of advance authorization:—

Advance Authorization—Validity period for import of Advance Authorization shall be 12 month from the date of issue of Authorization.

Advance Authorization for deemed export: Advance authorization for deemed export shall be co-terminus with contracted duration of project execution or 12 month from the date of issue of Authorization, whichever is more.

Export Obligation:

(i) Period for fulfillment of export obligation – 18 months: Period for fulfillment of export obligation under Advance Authorization shall be 18 month from the date of issue of Authorization or as notified by DGFT.

(ii) Period in case of deemed exports or turnkey projects : In cases of supplies to projects in India under deemed export category or projects abroad, the Export Obligation period shall be co-terminus with contracted duration of the project execution or 18 months whichever is more.

(iii) Period for fulfillment of export obligation for defence items -24 months: Export Obligation for items falling in categories of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co-terminus with contracted duration of the export order whichever is more.

(iv) Export Obligation period for inputs, as specified in appendix 4-j, shall be as mentioned in the relevant column of the said Appendix.

Currency for realization of Export Proceeds—Exports proceeds shall be realized in freely convertible currency except otherwise specified.

Items which can be imported duty free against advance authorization:

(a) Inputs, which are physically incorporated in export product (making normal allowance for wastage).
(b) Fuel, oil, catalysts which are consumed/ utilised to obtain export product.
(c) Mandatory spares which are required to be exported/ supplied with resultant product permitted upto 10% of CIF value of Authorization.
(d) Specified spices only when used for activities like crushing/ grinding/ sterilization/ manufacture of oils or oleoresins and not for simply cleaning, grading, re-packing etc.

However, items reserved for imports by STEs cannot be imported against advance authorization.