| 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 / sub-contractors
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 10% 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 100% EOU
(Domestic freight containers-manufacturers) provided said containers are
exported out of India within 6 months or such further period as
permitted by customs;
(i) Supply to projects funded by UN Agencies; and
(j) 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.
|
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 10% 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. 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. 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.
- 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. A declaration to this effect,
in Annexure II of ANF 8, from recipient of goods, shall be submitted by
applicant. Similary, supplies will be eligible for deemed export
drawback in terms of para 8.3 (b) of FTP of Central Excise duty paid on
inputs/componets, provided CENVAT credit /rebate has not been availed of
such duty paid by supplier of goods. A declaration to this effect, in
Annexure III of ANF 8, from supplier of goods, shall be submitted by
applicant. Such supplies shall however be eligible for deemed export
drawback on customs duty paid on inputs/components.”
Vide DGFT NOTIFICATION No 28(RE-2010)/2009-2014, DT.01-03-2011
[Old]
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 22C of HBP v1. |