Date:08/05/2006 URL: http://www.thehindubusinessline.com/2006/05/08/stories/2006050801780300.htm

Back Duty exemption allowed under new import authorisation scheme

K.R. Srivats

Exporter has to give technical characteristics, specifications of materials in shipping bill

New Delhi , May 7

The Finance Ministry has operationalised the Duty Free Import Authorisation Scheme (DFIAS) announced in the recent Annual Supplement to the Foreign Trade Policy.

Imports made under this authorisation scheme are now exempt from basic customs duty, additional customs duty, anti-dumping duty and safeguard duty as long as certain conditions are met. One of the objectives of the DFIAS is to enable exporters to import the required inputs before exports and also allow them to transfer the scrip once the export obligation is completed.

The DFIAS scheme has clubbed the existing advance licence scheme (ALS) and the Duty Free Replenishment Certificate (DFRC) scheme.

DFRC has been phased out from April 30.

While the advance licence scheme serves about 19-20 per cent of the country's merchandise exports in value terms, the DFRC scheme accounted for about 3 per cent.

The country's merchandise exports during 2005-06 stood at Rs 4,45,657 crore.

Informed sources said that the Finance Ministry has, while implementing the DFIAS scheme, tightened the norms and stipulated that the exporter would have to in the shipping bill give a declaration of the technical characteristics and specifications of materials used.

No flexibilities

For those who undertake exports first and then go in for import of inputs, sources said that this stipulation would imply that the flexibility that was available under the DFRC scheme for importing the required inputs would not be available under the DFIAS.

For example, if an exporter has used alloy sheets in his export product, he could generally import alloy sheets of any grade under the DFRC scheme.

But now under DFIAS, this may not be allowed and the specifications mentioned in the shipping bill would have to be adhered and no flexibilities would be allowed.