| Deemed Exports |
8.1 |
“Deemed Exports” 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. |
| Categories of Supply |
8.2 |
Following categories of supply of goods by main / subcontractors
shall be regarded as “Deemed Exports” under
FTP, provided goods are manufactured in India:
- Supply of goods against Advance Authorisation /Advance
Authorisation for annual requirement /DFIA;
- Supply of goods to EOU / STP / EHTP / BTP;
- Supply of capital goods to EPCG Authorisation holders;
- Supply of goods to projects financed by multilateral or
bilateral Agencies / Funds as notified by Department of Economic
Affairs (DEA), MoF under International Competitive Bidding (ICB) in
accordance with procedures of those Agencies / Funds, where legal
agreements provide for tender evaluation without including customs
duty; Supply and installation of goods and equipment
(single responsibility of turnkey contracts) to projects financed by
multilateral or bilateral Agencies / Funds as notified by DEA, MoF
under ICB, in accordance with procedures of those Agencies / Funds,
which bids may have been invited and evaluated on the basis of
Delivered Duty Paid (DDP) prices for goods manufactured abroad;
- Supply of capital goods, including in unassembled / disassembled
condition as well as plants, machinery, accessories, tools, dies and
such goods which are used for installation purposes till stage of
commercial production, and spares to extent of 1 0% of FOR value to
fertilizer plants;
- Supply of goods to any project or purpose in respect of
which the MoF, by a notification, permits import of such goods at
zero customs duty;
- Supply of goods to power projects and refineries not
covered in (f) above;
- Supply of marine freight containers by 1 00% EOU (Domestic
freight containers-manufacturers) provided said containers are
exported out of India within 6 months or such further period as
permitted by customs;
- Supply to projects funded by UN Agencies; and
- Supply of goods to nuclear power projects through
competitive bidding as opposed to ICB.
Benefits of deemed exports shall be available under paragraphs (d),
(e), (f) and (g) only if the supply is made under procedure of ICB.
However, in regard to mega power projects, the requirement of ICB
would not be mandatory, if the requisite quantum of power has been tied
up through tariff based competitive bidding or if the project has been
awarded through tariff based competitive bidding. (This para is added by
NOTIFICATION NO 24 (RE 2010/2009—2014), Dated : 14.1.2010
)
|
Benefits for Deemed
Exports
|
8.3 |
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 in HBP v1:-
- Advance Authorisation / Advance Authorisation for annual
requirement / DFIA.
- Deemed Export Drawback.
- Exemption from terminal excise duty where supplies are
made against ICB. In other cases, refund of terminal excise duty
will be given. Exemption from TED shall also be available for
supplies made by an Advance Authorisation holder to a manufacturer
holding another Advance Authorization if such manufacturer, in turn,
supplies the product(s) to an ultimate exporter.
|
Benefits to the Supplier
|
8.4.1 |
- In respect of supplies made against Advance Authorisation
/ DFIA in terms of paragraph 8 .2(a) of FTP, supplier shall be
entitled to Advance Authorisation / DFIA for intermediate supplies.
- If supplies are made against Advance Release Order (ARO)
or Back to Back Letter of Credit issued against Advance
Authorisation / DFIA in terms of paragraphs 4 .1.11 and 4 .1.12 of
FTP, suppliers shall be entitled to benefits listed in paragraphs
8.3(b) and (c) of FTP, whichever is applicable.
|
|
8.4.2 |
In respect of supply of goods to EOU / EHTP / STP / BTP in terms of
paragraph 8 .2(b) of FTP, supplier shall be entitled to benefits listed
in paragraphs 8.3(a), (b) and (c) of FTP, whichever is applicable. |
| 8.4.3 |
In respect of supplies made under paragraph 8 .2(c) of FTP, supplier
shall be entitled to the benefits listed in paragraphs 8 .3(a), (b) and
(c) of the Policy, whichever is applicable. |
| 8.4.4 |
- In respect of supplies made under paragraphs 8 .2(d), (f)
and (g) of FTP, supplier shall be entitled to benefits listed in
paragraphs 8 .3(a), (b) and (c), whichever is applicable.
- In respect of supplies mentioned in paragraph 8 .2(d),
supplies to projects funded by such Agencies alone, as may be
notified by DEA, MoF, shall be eligible for deemed export benefits.
A list of such Agencies / Funds is given in Appendix 13 of HBP v1 .
- Benefits of deemed exports under para 8.2(f) of FTP shall
be applicable in respect of items, import of which is allowed by DoR
at zero customs duty, subject to fulfillment of conditions specified
under Notification No. 21/2002-Customs dated 1.3.2002,
as amended from time to time.
- Supply of Capital goods and spares upto 1 0% of FOR value
of capital goods to power projects in terms of paragraph 8 .2(g),
shall be entitled for deemed export benefits provided the ICB
procedures have been followed at Independent Power Producer (IPP) /
Engineering and Procurement Contract (EPC) stage. Benefit of deemed
exports shall also be available for
renovation / modernization of power plants. Supplier shall be
eligible for benefits listed in paragraph 8.3(a) and (b) of FTP,
whichever is applicable. However, supply of goods required for
setting up of any mega power project as specified in S.No. 400 of
DoR Notification No. 21/2002-Customs dated 1.3.2002, as amended,
shall be eligible for deemed export
benefits as mentioned in paragraph 8.3(a), (b) and (c) of FTP,
whichever is applicable, if such mega power project complies with
the threshold generation capacity specified therein, in Customs
Notification.
Further, supply of goods required for the expansion of existing mega
power project as specified in Sl. no 400A of DoR Notification
21/2002- Customs dated 1.3.2002, as amended shall also be eligible
for deemed export benefits as mentioned in paragraph 8.3 ( a), (b)
and (c) of FTP, whichever is applicable.(This para is added by
DGFT NOTIFICATION No 28/2009-2014, Date : 08-02-2010).
However, in regard to mega power projects, the requirement of ICB
would not be mandatory, if the requisite quantum of power has been
tied up through tariff based competitive bidding or if the project
has been awarded through tariff based competitive bidding.(This para is added by
NOTIFICATION NO 24 (RE 2010/2009—2014), Dated : 14.1.2010
).
- Supplies under paragraph 8 .2(g) of FTP to new refineries
being set up during Ninth Plan period and spilled over to Tenth Plan
period, shall be entitled for deemed export benefits in respect of
goods mentioned in list 17 specified in S.No. 228 of Notification
No. 21/2002-Customs dated 1 .3.2002, as amended from time to time.
Supplier shall be eligible for benefits
listed in paragraphs 8 .3(a) and (b) of FTP, whichever is
applicable.
|
| 8.4.5 |
In respect of supplies made under paragraph 8 .2(e) of FTP, supplier
shall be eligible for benefits listed in paragraph 8.3(a) and (b) of
FTP, whichever is applicable. Benefit of deemed exports shall be
available in respect of supplies of capital goods and spares to
Fertilizer Plants which are set up or expanded / revamped / retrofitted
/ modernized during Ninth Plan period. Benefit of deemed exports shall
also be available on supplies made to Fertilizers Plants, which have
started in the 8 th / 9th Plan periods and spilled
over to 10th Plan period. |
| 8.4.6 |
Supplies of goods to projects funded by UN Agencies covered under
para 8.2(i) of FTP are eligible for benefits listed in paragraph 8 .3(a)
and (b) of FTP, whichever is applicable. |
| 8.4.7 |
In respect of supplies made to Nuclear Power Projects under para 8
.2(j) of FTP, the supplier would be eligible for benefits given in para
8.3(a), (b) and (c) of FTP, whichever is applicable. Supply of only
those goods required for setting up any Nuclear Power Project specified
in list 43 at S.No. 401 of Notification No. 21/2002-Customs dated 1
.3.2002, as amended from time to time, having a capacity of 440MW or
more as certified by an officer not below rank of Joint Secretary to
Government of India in Department of Atomic Energy, shall be entitled
for deemed export benefits in cases where procedure of competitive
bidding (and not ICB ) has been followed. |
Eligibility for refund of
terminal excise duty /
drawback |
8.5 |
Supply of goods will be eligible for refund of terminal excise duty
in terms of para 8 .3(c) of FTP, provided recipient of goods does not
avail CENVAT credit / rebate on such goods. Similarly, supplies will be
eligible for deemed export drawback in terms of para 8 .3(b) of FTP on
Central Excise paid on inputs / components, provided CENVAT credit
facility / rebate has not been availed by
applicant. Such supplies will however be eligible for deemed export
drawback on customs duty paid on inputs/ components. |
|
8.5.1 |
Simple interest @ 6% per annum will be payable on delay in refund of
duty drawback and terminal excise duty under deemed export scheme, if
the case is not settled within 3 0 days of receipt of complete
application (as in paragraph 9.10.1 of HBP v1). |
Supplies to be made
by the main /
sub-contractor |
8.6.1 |
In all cases of deemed exports, supplies shall be made directly to
designated Projects / Agencies / Units / Advance Authorisation / EPCG
Authorisation holders. Sub-contractor may, however, make supplies to
main contractor instead of supplying directly
to designated projects / Agencies. Such supplies shall be eligible for
deemed export benefits as per procedure laid down in paragraph 8 .4 of
HBP v1. |
|
8.6.2 |
Supplies made by an Indian sub-contractor of an Indian or foreign
main contractor directly to the designated projects / Agencies, shall
also be eligible for deemed export benefits provided sub-contractor is
indicated either originally or subsequently in the contract, and payment
certificate is issued by project authority in the name of sub-contractor
as in Appendix 2C of HBP v1. |