The Directorate General of Foreign Trade (DGFT) has introduced a significant update through Notification No. 69/2023, amending the Foreign Trade Policy (FTP) 2023. This amendment facilitates the import of inputs under Advance Authorisation without the mandatory compliance to Quality Control Orders (QCOs), streamlining processes for exporters and Export Oriented Units (EOUs).
What Is Advance Authorisation?
Advance Authorisation is a scheme that allows exporters to import inputs required for the manufacture of export products without paying customs duties. The condition is that the finished goods must be exported within a specified period.
Key Highlights of Notification No. 69/2023
Pre-Import Condition
- Imports under Advance Authorisation without compliance to mandatory QCOs are allowed only with a pre-import condition. These inputs must be used in the manufacture of the export product and exported under the same authorisation, accounting for normal wastage.
Specific Endorsement Required
- Exemption from mandatory QCOs must be explicitly endorsed in the Advance Authorisation upon the request of the holder. Without this endorsement, imports must comply with QCOs.
Restrictions on Domestic Transfers
- Unutilised inputs or products manufactured from such inputs cannot be transferred to the Domestic Tariff Area (DTA), even after export obligation regularisation. They must either be destroyed in the presence of GST/Customs officials or re-exported.
Duty Payment on Unutilised Imports
- If unutilised, the required procedure of destruction and duty payment with interest needs to be followed.
Applicability to Physical Exports Only
- The exemption from QCOs applies only to physical exports and not to deemed exports.
No Clubbing Facility
- The facility of clubbing under para 4.36 of the Handbook of Procedures (HBP) 2023 is not available for these authorisations.
Export Obligation Period
- The Export Obligation (EO) period for such authorisations will align with para 4.40 of the HBP, providing a clear timeframe for fulfilling export commitments.
Compliance with FTP Provisions
- The exemption is subject to specific conditions outlined in para 2.03 (c) of FTP, ensuring a comprehensive regulatory framework.
Additional Clarifications
- DFIA Scheme Exclusion: The notification amends para 4.24 of FTP, not allowing the import of inputs without mandatory QCOs under the Duty-Free Import Authorisation (DFIA) scheme.
- EOU Import Exemption: EOUs are granted exemption from mandatory QCOs on imports required for export production, contingent on an undertaking submitted to Customs authorities.
- List of Exempted Ministries/Departments: Appendix 2Y of FTP 2023 specifies the Ministry of Steel and the Department for Promotion of Industry and Internal Trade (DPIIT) as entities exempted from mandatory QCOs.
Conclusion
DGFT’s Notification No. 69/2023 marks a significant step in facilitating smoother import procedures for exporters. By exempting certain imports from mandatory QCOs, the government aims to streamline processes, reduce compliance burdens, and enhance the competitiveness of Indian exports. Exporters and EOUs should familiarize themselves with the provisions outlined in this notification to leverage its benefits effectively.
