GOVERNMENT
OF
DEPARTMENT OF COMMERCE
DIRECTORATE GENERAL OF
FOREIGN TRADE
UDYOG BHAWAN,
Policy Circular No.
9/2009-2014 Dated:
1st October, ’09.
To
All
Regional Authorities;
All Commissioners of Customs;
Exporting Community
Subject: Clarification
with regard to:
A. Deemed Export Benefits on supplies against
Invalidation Letter / ARO.
B. Value Addition requirement on clubbing -
regarding.
Attention
is invited to paragraph 4.1.11 of FTP wherein the reference has been made to
the facility of Invalidation Letter and Advance Release Order (ARO) for
domestic procurement of the inputs for export production. Trade and Industry have represented that for
want of specific provision stating the FTP benefits to the domestic supplier
against Invalidation Letter / ARO, field formations at times raise objections.
In
this regard, it is informed that the purpose of Invalidation letter / ARO is to
facilitate duty neutralisation or inputs procured
from the domestic market, in lieu of duty free imports allowed under the authorisation.
Accordingly, it is clarified that against invalidation letter, the
supplier can avail Advance Authorisation for
Intermediate supplies and TED refund (wherever Excise exemption is not
available against such supplies), whereas against ARO, the supplier is entitled
for deemed export duty drawback, as applicable.
Provision of Paragraph 4.1.11 of FTP has to be read with Paragraphs 8.3
and 8.4.1 of FTP.
2. Value
addition requirement on clubbing of Advance Authorisations
of Paragraph 4.20 of HBP v1:-
Trade
and Industry have represented that since the minimum prescribed value addition
under Advance Authorisation Scheme has been enhanced
to 15% in the FTP 2009-14, the required minimum value addition for the purpose
of clubbing of advance authorisations issued during
the pre-2009-14 policy and that of 2009-14 policy, needs to be clarified for a
uniform application by the Regional Authorities.
In
this regard, it is clarified that the value addition on clubbing should be the
prescribed minimum value addition stated in the FTP and not the declared value
addition given in the application. In case of clubbing of authorisations
with different minimum prescribed value addition, the aggregate value addition
should be the weighted average based on CIF value utilized in the respective authorisations.
For
clarity, an illustration is given below with reference to two Authorisations issued with different V.A Norms:
(i)
CIF Value utilized
under Authorisation A (issued under positive V.A
provision): say, Rs.
1000/-.
(ii)
CIF value utilized
under Authorisation B (issued under 15% V.A
provision): say Rs.
2000/-.
(iii)
Minimum FOB Value
required under Authorisation A shall be: Rs. 1000/-.
(iv)
Minimum FOB value
required under Authorisation B shall be: Rs. 2300/-.
(v)
Upon Clubbing, CIF
value of the clubbed authorisation would be Rs. 3000/- and the minimum FOB value of the clubbed authorisation would be Rs.
3300/-.
This
will ensure that the prescribed minimum value addition on the respective authorisations is achieved indicating that the weighted
average value addition for the clubbed authorisation
is maintained.
This issues with the approval of Competent Authority.
(Tapan Mazumder)
Joint Director General of
Foreign Trade
Tel: 011-23061050
E-mail: tmazumder@nic.in
(Issued from F.No.
01/94/180/ Open House Meet -