Introduction

In order to boost country’s export, The Government of India has introduced various duty exemption and remission scheme to support exporters and enhance the competitiveness of Indian Product in the Global Market.

Advance authorization is duty exemption schemes which allow duty free import of input which is physically incorporated in the export product (making normal allowance of wastage). However this exemption is not limited to only inputs material but in case of fuel, oil, catalyst which is consumed /utilized in the process of production of export of product may also we allowed.

1. What types of entities are eligible for Advance Authorisation?

a. Advance Authorisation can be issued either to a Manufacturer Exporter or to a Merchant Exporter tied to a Supporting Manufacturer.

b. For pharmaceutical products manufactured through the Non-Infringing (NI) process, as specified in Para 4.18 of the Handbook of Procedures, Advance Authorisation shall be issued only to a Manufacturer Exporter.

2. On what basis is an Advance Authorisation issued?

Advance Authorisation is issued for inputs in relation to the resultant product on the following basis:

a. As per Standard Input Output Norms (SION) as notified.

b. On the basis of Self Declaration, as per Paragraph 4.07.

c. Applicant-specific prior fixation of norms by the Norms Committee.

d. On the basis of Self-Ratification Scheme in terms of Para 4.06.

3. Under what circumstances can an Advance Authorisation be issued?

An Advance Authorisation shall be issued in the following cases:

i. Physical Export (including Export to SEZ)

ii. Intermediate supply

iii. Supply of goods on board of foreign going vessel/aircraft, subject to the condition that there is specific Standard Input Output Norms in respect of the item supplied.

iv. Supply of goods to the categories mentioned in Paragraph 7.02 of the FTP.

4. What is the minimum value addition requirement for Advance Authorisation?

The value addition requirement under the Advance Authorisation Scheme varies depending on the product category and the nature of the product.

a. Minimum value addition required to be achieved under Advance Authorisation is 15%.

b. Export products where value addition could be less than 15% are given in Appendix 4D.

c. Minimum value addition for the Gems & Jewellery sector is given in Paragraph 4.60 of the Handbook.

d. In case of Tea, minimum value addition shall be 50%.

e. In case of Spices, minimum value addition shall be 25%.

5. Which duties and taxes are exempt from payment under the Advance Authorisation Scheme?

The following duties have been exempted under the Advance Authorisation Scheme:

a. Basic Customs Duty

b. Additional Customs Duty

c. Education Cess

d. Anti-Dumping Duty

e. Countervailing Duty

f. Safeguard Duty etc.