Skip to main content

Duty Drawback under Deemed Exports

As per point (i) of para 7.01 and para 7.02 of the Foreign Trade Policy (2015-20),

Quote

“7.01 Deemed Exports

(i) “Deemed Exports” for the purpose of this FTP refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as specified in Paragraph 7.02 below shall be regarded as “Deemed Exports” provided goods are manufactured in India.

7.02 Categories of Supply

Supply of goods under following categories (a) to (d) by a manufacturer and under categories (e) to (h) by main / sub-contractors shall be regarded as “Deemed Exports”:

A. Supply by manufacturer:

(a) Supply of goods against Advance Authorisation / Advance Authorisation for annual requirement / DFIA;

(b) Supply of goods to EOU / STP / EHTP / BTP;

(c) Supply of capital goods against EPCG Authorisation;”

Unquote

Further, para 7.03 of the Foreign Trade Policy (2015-20) says,

Quote

“7.03 Benefits for Deemed Exports

Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods, qualifying as deemed exports, subject to terms and conditions as given in HBP and ANF-7A:

(a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA.

(b) Deemed Export Drawback for BCD.

(c) Refund of terminal excise duty for excisable goods mentioned in Schedule 4 of Central Excise Act 1944 provided the supply is eligible under that category of deemed exports and there is no exemption.”

Unquote

Considering the above quoted paras of the FTP 2015-20, your transaction should be qualified as deemed exports as per paras 7.01 & 7.02, and should be subject to terms and conditions as per Handbook of Procedures (2015-20) as well as ANF-7A. For your reference we have reproduced the terms and conditions given as following,

The para 7.06 of the Foreign Trade Policy (2015-20) says,

Quote

“7.06 Conditions for refund of deemed export drawback

Supplies will be eligible for deemed export drawback as per para 7.03 (b) of FTP, as under:

Refund of drawback on the inputs used in manufacture and supply under the said category can be claimed on ‘All Industry Rate’ of Duty Drawback Schedule notified by Department of Revenue from time to time provided no CENVAT credit has been availed by supplier of goods on excisable inputs or on ’Brand Rate Basis’ upon submission of documents evidencing actual payment of basic custom duties.

7.07 Common conditions for deemed export benefits

(i) Supplies shall be made directly to entities listed in the Para 7.02. Third party supply shall not be eligible for benefits/ exemption.

(ii) In all cases, supplies shall be made directly to the designated Projects/ Agencies/ Units/ Advance Authorisation/ EPCG Authorisation holder. Sub-contractors may, however, make supplies to main contractor instead of supplying directly to designated Projects/ Agencies. Payments in such cases shall be made to sub-contractor by main-contractor and not by project Authority.

(iii) Supply of domestically manufactured goods by an Indian Sub-contractor to any Indian or foreign main contractor, directly at the designated project’s/ Agency’s site, shall also be eligible for deemed export benefit provided name of sub-contractor is indicated either originally or subsequently (but before the date of supply of such goods) in the main contract. In such cases payment shall be made directly to sub-contractor by the Project Authority.”

Unquote

Please refer to the following references regarding Deemed Exports:

You can get further information on Deemed Exports.

Also, get the latest updates on Duty Drawback.

Your views are welcomed :)

Thank you!

Labels:

Comments

Post a Comment

Popular posts from this blog

Practical issues in RoDTEP Scheme

I hope, by now, everybody is aware of what is the RoDTEP Scheme. Assuming that let me highlight some practical questions regarding this scheme. On 28th October 2020 under the chair of Mr. G. K. Pillai, the RoDTEP Committee was formed. The main objective of this committee is to determine the ceiling rates of items covered under the scheme. However, the data of chapter 86, 88, and 89 are still pending from the industry's side. It is predicted that the Remission of Duties and Taxes on Exported Products briefly known as the RoDTEP Scheme is likely to be launched under the new Foreign Trade Policy. The scheme seeks to refund currently un-refunded duties/taxes/levies at the local, state, and central level have borne on the exported products. In view of the above, I have jotted down some key questions which need to be answered, 1.  How to segregate the VAT and Excise Duty leviable on petrol & diesel on export and domestic selling products? 2.  How to segregate the electricity dut...
1 comment
Read more

Drafting Transfer Pricing Legislation: Taxes Covered

Depending on the design of a country’s tax system, application of the arm’s-length principle may be relevant in determining the taxable objects for one or more direct taxes (income tax, corporate tax, profits tax, etc.). Generally, most countries’ transfer pricing legislation has broad application across direct taxes. One notable exception being Ireland, where the transfer pricing legislation introduced in 2010 applies only to certain classes of income for direct tax purposes.  Countries with other specific types of direct taxes governing specific sectors or transactions types (such as a mining income tax) may need to consider application of transfer pricing legislation to them. Typically, this would be achieved through separate provisions being inserted in the relevant taxing acts. However, where a consolidated tax code has been adopted, a single set of legislation may be possible. Transfer pricing provisions may also be necessary for other types of taxes such as a resources royal...
Post a Comment
Read more