BACKGROUND
The RoDTEP scheme, was announced and implemented from January 1st, 2021, and required the exporters opting for the Scheme, to mention so in their shipping bills. The rates applicable and the guidelines for RoDTEP were notified on 17th August 2021 vide Notification No. 19/2015-2020 dated 17.08.2021. The Ministry of Finance has notified the manner of to issue duty credit for goods exported under the Scheme for RoDTEP vide Notification No. 76/2021-Customs (N.T.) dated 23.09.2021.
PROVISIONS OF THE NOTIFICATION
The notification sets out the conditions to be fulfilled for duty credit to be issued. The conditions can be summarised as follows.
Mandatory conditions against which the duty credit shall be issued-
- In lieu of Duties specified under the RoDTEP scheme. It cannot be issued in lieu of Duties that are exempted, or which are credited under other schemes.
- Against the Export of Goods, at the respective rate and cap notified in Appendix 4R of the FTP. The value of such goods to be considered for calculation of Duty Credit shall be the lower of Declared FOB value or 1.5 times the market price.
- Against a declaration made at an item level in the bill of export or shipping bill in the customs automated system.
- Against a shipping bill or bill of export presented on or after 01.01.2021 and that has been cleared.
- After the claim has been allowed by Customs and Export manifest/report has been filed.
- In accordance with any rules or regulations issued in relation to duty credit, e-scrip, or electronic duty credit ledger. (Covered in the later part of this note.)
Usage of Duty Credit or E-Scrips
The duty credit can only be used to pay the Import Duty, when goods are imported into India, as specified in the Import Tariff i.e., the First Schedule to the Customs Tariff Act, 1975.
Restriction on class of Exported goods
The following export categories shall not be eligible for duty credit under the RoDTEP scheme:
- Goods which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC-HS
- Export of imported goods (2.46 of FTP)
- Exports through trans-shipment i.e., exports that are originating in third country but trans-shipped through India
- Goods subject to minimum export price or export duty as specified in the export tariff i.e., the second schedule of the Customs Tariff Act, 1975
- Deemed exports under Foreign Trade Policy
- Goods manufactured or exported by any of the units situated in SEZ/FTWZ/EHTP/BTP/EPZ
- Goods manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit.
- Goods exported under Advance Authorisation or Duty Free Import Authorisation issued under the relevant Foreign Trade Policy
- Goods manufactured and supplied by units in DTA to units in SEZ/FTWZ
- Goods manufactured in SEZ/SEZ/FTWZ/EOU/EHTP/BTP and exported through DTA unit.
- Goods manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962
- Goods availing the benefit of the notification No. 32/1997-Customs, dated the 1st of April,1997 i.e., goods imported for execution of an export order placed on the importer by the supplier of goods for jobbing.
- Goods that have been taken into use after manufacture.
Conditions on Realisation of Sale Proceeds of Exported Goods
The duty credit will be deemed to be ineligible on failure of realization of sale proceeds, in respect of Exported Goods under RoDTEP, in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999) i.e., 9 months from date of Export or 15 months from date of shipment as applicable.
The Duty Credit shall subject to a reduction to the extent of unrealised the sale proceeds against export of goods made earlier by the said exporter where the period allowed for realization, including any extension of the said period by the Reserve Bank of India, has expired. In case where, The Principal Commissioner of Customs or Commissioner of Customs has reason to believe that the claim of duty credit may not be bona fide, he may direct, for reasons to be recorded in writing, to allow duty credit after realisation of sale proceeds of such exports
Other Conditions to be satisfied
The port of imports and exports must be through an EDI port which accepts and processes bill of entry, shipping bill or bill of export electronically through Customs automated system.
The duty credit under RoDTEP for exports made to Nepal, Bhutan and Myanmar shall be allowed only upon realization of sale proceeds against irrevocable letters of credit in freely convertible currency established by importers in Nepal, Bhutan, and Myanmar in favour of Indian exporters for the value of such goods.
The notification also sets out the provisions for Cancellation and recovery of duty credit. –
Cancellation of Duty Credit
The Principal Commissioner of Customs or Commissioner of Customs may conduct an enquiry and suspend the operation of an E-Scrip, or the electronic duty credit ledger or duty credit transferred from such e-scrip during the pendency of the enquiry; and pass an order for cancellation of duty credit when the exporter has contravened any of the legislative provisions governing the exports and Duty Credit under the RoDTEP scheme. On cancellation, the duty credit would be deemed as never been allowed and the duty credit amount used in such e-scrip or transferred from such e-scrip may be recovered.
Recovery of amount of Duty Credit.
The exporter shall repay the amount of duty credit allowed in excess of what he was entitled to either voluntarily or against a demand raised by the proper office, within a period of 15 days along with interest on the amount of excess duty credit which has been used or transferred, at the rate specified under section 28AA, which sets out the provisions for interest on delayed payments. In case the exporter fails to repay the said amount the proper officer may recover the amount from the transferee.
The recovery of amount of Duty Credit along with interest, when the exporter fails to repay the amount within the 15 day period, is done in the manner provided in section 142 which sets out provisions for Recovery of sums due to Government.
Recovery of amount of duty credit where export proceeds are not realised
The exporter shall repay the amount of duty credit allowed when the export proceeds have not been realised within the time specified, under the FEMA 1999 or on submission of evidence of extension of such period by the RBI, either voluntarily or against a demand raised by the proper office, within a period of 15 days of expiry of said period, along with interest at the rate specified under section 28AA.
In case part of the sale proceeds have been realised, the amount of duty scrip to be recovered shall be in proportion to the amount of sale proceeds that has not been realised against the total sale proceeds.
In case the exporter fails to repay the said amount the proper officer may recover the amount from the transferee.
The recovery of amount of Duty Credit along with interest, when the exporter fails to repay the amount within the 15 day period, is done in the manner provided in section 142.
When the Exporter fails to repay the amount within 15 days, till the completion of recovery, no duty credits shall be allowed and the unutilised duty credit with the exporter or transferee shall be suspended.
In relation to the Duty Credit scrips the Ministry of Finance has issued the Electronic Duty Credit Ledger Regulations, 2021 vide Notification No. 75/2021-Customs (N.T.) dated 23.09.2021.
The provisions of the Electronic Duty Credit Ledger Regulations can be summarised as follows:
- The claim of duty credit under the RoDTEP scheme presented in the Bill of export or Shipping bill on or after 01.01.2021 shall be processed in the customs automated system, including on the basis of risk evaluation through appropriate selection criteria. On satisfying all the conditions laid down Supra a scroll for duty credit will be generated by the proper officer in the customs automated system.
- The exporter may create an e-scrip in the ledger by combining the duty credits according to the customs station of export, within a period of one year from the date of generation of the scroll. If the exporter doesn’t create an e-scrip within a year the system will automatically combine the duty credit in each scroll into E-scrips for each customs station in the ledger.
- Each e-scrip shall have a unique identification number and date of its creation and all transactions in the ledger shall be carried out using the said number and date.
- The said e-scrips will automatically be registered at the customs station of export which in turn would be the customs station of registration.
- The e-scrips shall be used to pay off the customs duty as specified in first schedule to the Customs Tariff Act, 1975 The e-scrip shall be valid for a period of one year from the date of its creation in the ledger after which it will lapse which cannot be re-generated.
- The e-scrip in the ledger of the exporter can be transferred to the ledger of another person holding an IEC Number. Transfer of e-scrips has to be made in whole and cannot be split in parts. The validity of e-scrips do not change on transfer.
- The exporter shall be able to view all the transactions and details of the ledger in the customs automated system.
- When duty credit is suspended or cancelled the same is reflected in the ledger.
NOVELLO COMMENTS
The notification now provides more clarity on the RoDTEP scheme from a procedural perspective. The scheme was announced and implemented from 01.01.2021 after which the guidance note, and the duty credit rates were announced on 17.08.2021.
The exporters wanting to avail the benefits shall make a declaration at an item level in the bill of export or shipping bill in the customs automated system. They also have to ensure that all the conditions specified in the provisions of the RoDTEP scheme read with the notifications and the Electronic Duty Credit Ledger regulations are complied with to be eligible for the benefits under the scheme.
In terms of the conditions set out it is pertinent to note that realisation of Export Proceeds within the specified timelines has been emphasised, therefore the exporters should ensure that the exports proceeds are realised well within the time period to avoid any cancellation of duty scrips.
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