Top Leading Advance Authorization In Hyderabad

Indian entrepreneur(s) who desires to manufacture quality end / export product(s) of international standards need quality raw material which is permissible for import without paying duties under Duty Exemption Scheme. Quality export product(s) of global standards are manufactured from the imported raw material and to facilitate import of Raw material government allows the same without paying any duty under Duty Exemption scheme.

Advance Authorization under Duty Exemption scheme introduced by the Govt. of India under which exemption from payment of import duties is allowed against raw materials / inputs required for the manufacture of export product(s).  The purpose of this scheme is to make India’s products competitive in the Global market as duties paid on raw material are saved, it automatically brings down the cost of the export product.

Under this scheme, the exporter can import inputs / raw materials duty free which may be in raw / natural / unrefined / unmanufactured of manufactured state. Hence, Advance Authorization is issued to allow duty free import of inputs / raw material which are physically incorporated in the export product.  In addition to this fuel, oil, catalysts which is consumed / utilized in the process of production of export product may also be allowed. All types of duties are exempted against the inputs / raw material under this scheme. The Raw material / inputs are allowed for import with Actual User (AU) condition.

Manufacturer Exporter, Merchant Exporter tied up with a supporting manufacturer can avail this scheme with Actual User condition. Inputs / Raw material may also be procured indigenously from a domestic manufacturer who in turn can avail benefits under Deemed Exports scheme.

Advance Authorization is issued for:

• Physical exports (including export to SEZ)
• Intermediate supply, and / or
• Supply of goods to the categories mentioned under Deemed Exports
• Supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.

Methods of issuing Advance Authorization:

1. Standard Input Output Norms (SION): The DGFT has already fixed Standard I-O Norms for several export products, which shows the quantity of input(s) required for manufacturing of a unit of the export / end product. Standard Input Output Norms are available in Hand Book (Vol.II).

• Self-Declaration: Where Standard Input-Output Norms are not available for the export product or the requirement of inputs / raw material is different from SION – Advance Authorization is issued under this category.  Norms Committee (NC) corresponding to the export product group ratifies the I-O norms subsequently.

      Applicant specific prior fixation: Advance Authorization issued subsequent to fixation of norms by Norms Committee. 

• Self-Ratification: When there is no SION for the export product or though SION notified, but the exporter wants additional raw material / inputs for manufacturing the resultant product apply for Advance Authorization under self-ratification basis. But this is only available to an Authorized Economic Operator (AEO) Certificate holder. Ratification by the norms committee is not required for this scheme and the DGFT-RA may issue the authorization upon fulfilment of the conditions.

Benefits of the Advance Authorization ?

Exempted from payment of all duties against the raw materials / inputs such as –

• Education Cess

• Basic Customs Duty

• Additional Custom Duty

• Duty Drawback (in certain cases where input is not mentioned in norms)

• Anti-Dumping Duty

• Countervailing Duty

• Safeguard Duty

• Integrated Tax and Compensation Cess

Advance Authorization is valid for import for 1 year from the date of its issuance. 1st Revalidation for a period of 6 Months granted from the date of expiry. 2nd Revalidation granted for a period of 6 months from the expiry date of 1st revalidation for making imports proportionate to export obligation already fulfilled. A maximum period of 24 Months Import Validity is available.

Export obligation need to be fulfilled within 18 months from the date of issue of Authorization. 1st EOP extension up to 6 Months is allowed from the date of expiry of initial EO period subject to payment of composition fee of (i) Rs.5,000/- where CIF value of Authorization up to Rs.2 Crores, (ii) Rs.10,000/- where CIF value of Authorization is more than Rs.2 Crores to Rs.10 crore & (iii) Rs.15,000/- where CIF value of Authorization is above Rs.10 crore. Request for further extension of 6 months (2nd EOP extension) after expiry of 1st extension can be considered subject to payment of composition fee (i) Rs.10,000/- where CIF value of Authorization up to Rs.2 Crores, (ii) Rs.20,000/- where CIF value of Authorization is more than Rs.2 Crores to Rs.10 crore & (iii) Rs.30,000/- where CIF value of Authorization is above Rs.10 crore.  A self-declaration stating that unutilized imported / domestically procured inputs are available with them. So generally maximum period of 30 Months export validity is available under this scheme and no further extension is allowed by the RA concerned.

Export Obligation:

Needs to fulfil “Export Obligation” by exporting “Resultant / End / Export product” manufactured from “Imported / Indigenously procured Raw Material” / “Material in Stock”  on Replenishment basis. Pre-Import condition, if any is applicable as decided by DGFT from time to time. The Export Obligation (EO) is calculated on the basis of Value Addition achieved by the exported product.

Value Addition (VA) calculation is mentioned below:

           VA= ((A-B)/B)*100

Where,

A = FOB value of exports realized or FOR value of supply received.

B = CIF value of inputs covered by Authorization, plus value of any other input used on which benefit of DBK is claimed or intended to be claimed.

Minimum Value Addition:

• Minimum value addition required to be achieved under Advance Authorization is 15%.

• Export Products where value addition could be less than 15% are given in Appendix4D.

• Minimum value addition for Gems & Jewellery Sector is given in paragraph 4.60 of HBP v1

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

• In case of Spices, min. value addition shall be 25%.

Actual User condition under Advance Authorization:

The material imported under Advance Authorization shall be subject to “Actual User” condition.  It means the material can not be transferred and it has to be used in the premises of license holder. The material is not transferable even after the completion of export obligation. However, they have the option to dispose of / sell products manufactured out of duty free inputs once the export obligation is completed.

Invalidation letter:

In case exporter wants to procure raw material indigenously from a domestic supplier, then they need to get the authorization invalidated for direct import and obtain Invalidation letter from the respective RLA. The validity of Invalidation letter co-terminus with the validity of Advance Authorization.