Policy Circular No. 23 dated 1^st February 2002

Attention is invited to Policy Circular No. 28 (RE-2000)/ 2000-2001 dated 22^nd September 2000 wherein the method regarding regularization of Value Based Advance Licences in case of shortfall in value or quantity or both has been prescribed.

2.     References have been received from Regional Licensing Authorities and representations have also been received from the exporters seeking clarifications as to how Value Based Advance Licences are to be regularized where the minimum prescribed value addition has been achieved but stipulated value addition mentioned in the licence could not be achieved.

3.     After careful consideration of the references in this regard, it has been clarified by the Policy Review Committee meeting that in case of Value Based Advance Licence, the import entitlement is with reference to value addition and not minimum value addition as is the case with Quantity Based Advance Licences.  Therefore, if a firm fails to achieve declared value addition, the case of the firm has to be regularized as per Policy Circular No.28/ 2000-2001 dated 22.9.2001, irrespective of the fact that minimum prescribed value addition has been achieved, where shortfall in terms of quantity or value or both is not more than 15% of total export obligation imposed.  In case where shortfall is more than 15%, such VABAL has to be converted into QABAL.

4.     This issues with the approval of Director General of Foreign Trade.