Executive Summary:
This notification amends the Foreign Trade Policy (FTP) 2023, providing exemptions from mandatory Quality Control Orders (QCOs) for inputs imported by Advance Authorisation holders, EOUs, and SEZs. It takes effect immediately, superseding Notification No. 69/2023 dated 07.03.2024. The notification lists relevant Ministries/Departments in Appendix 2Y of FTP 2023.
Key Points / Main Content:
* **Advance Authorisation:**
* Import of inputs without QCO compliance requires a pre-import condition and utilization for export product manufacturing under the same authorization.
* Exemption from QCOs must be specifically endorsed on the Advance Authorisation upon request.
* Unutilized imports or products manufactured with non-QCO compliant inputs cannot be transferred to DTA, even after export obligation default regularization.
* Unutilized imports can be regularized by destruction (certified by GST/Customs) or re-export.
* Alternatively, unutilized imports are subject to effective duty on MFN basis, interest, and a composition fee of 10% of CIF value to DGFT.
* QCO exemption is only for physical exports, not deemed exports.
* Clubbing under para 4.36 of Handbook of Procedures (HBP) 2023 is not allowed.
* Export Obligation (EO) period is as per para 4.40 of HBP, but restricted to 180 days from import clearance for textile products with QCO exemption.
* Import of inputs under DFIA scheme without QCO compliance is prohibited.
* Exemption is subject to para 2.03 c of FTP.
* **EOUs:**
* Exemption from mandatory QCOs issued under the BIS Act, 2016, is provided for inputs required for export production.
* No DTA clearance of such inputs or goods manufactured from them is allowed.
* EOU must submit an undertaking to Customs authorities at the time of importation and to the Development Commissioner.
* QCO exemption is only for physical exports, not deemed exports.
* Exemption is subject to para 2.03 c of FTP.
* **SEZs:**
* Exemption from mandatory QCOs issued under the BIS Act, 2016, is provided for inputs required for export production.
* No DTA clearance of such inputs or goods manufactured from them is allowed.
* SEZ unit must submit an undertaking to the Development Commissioner at the time of importation.
* QCO exemption is only for physical exports.
* Exemption is subject to para 2.03 c of FTP.
* **Appendix 2Y:**
* Lists Ministries/Departments with notifications on mandatory QCOs exempted by DGFT for goods used in manufacturing export products.
Impact Analysis:
* **Advance Authorisation Holders:**
* Impact: Benefit from exemption from QCOs on imported inputs, subject to conditions like pre-import condition and export obligation. Potential cost savings and streamlined import processes. Increased compliance requirements related to utilization and potential penalties for non-compliance.
* Action Required: Request specific endorsement for QCO exemption, ensure proper utilization of inputs for export production, maintain accurate records, and comply with conditions for unutilized imports.
* **EOUs:**
* Impact: Benefit from exemption from QCOs on imported inputs for export production. Simplification of import procedures and potential cost savings. Restriction on DTA clearance of inputs and manufactured goods.
* Action Required: Provide undertaking to Customs and Development Commissioner, ensure inputs are used solely for export production, and comply with regulations regarding DTA clearance.
* **SEZs:**
* Impact: Benefit from exemption from QCOs on imported inputs for export production. Simplification of import procedures and potential cost savings. Restriction on DTA clearance of inputs and manufactured goods.
* Action Required: Provide undertaking to the Development Commissioner and ensure inputs are used solely for export production and comply with regulations regarding DTA clearance.
* **Customs Authorities:**
* Impact: Increased responsibility for monitoring and enforcing QCO exemptions. Need to verify undertakings provided by EOUs and SEZ units.
* Action Required: Implement procedures for endorsing QCO exemptions on Advance Authorisations, verifying undertakings, and overseeing the destruction or re-export of unutilized imports.
* **DGFT (Directorate General of Foreign Trade):**
* Impact: Responsible for implementing and monitoring the amended FTP provisions.
* Action Required: Update guidelines and procedures to reflect the new exemptions, ensure proper endorsement of QCO exemptions, and oversee compliance.
Key Entities Referenced
Foreign Trade Development Regulation Act, 1992: An Indian legislation that provides the legal framework for the development and regulation of foreign trade.
Foreign Trade Policy FTP, 2023: The current foreign trade policy of India, outlining guidelines and objectives for promoting exports and regulating imports.
Advance Authorisation: A scheme under the Foreign Trade Policy that allows duty-free import of inputs required for export production.
EOU: Export Oriented Unit, a scheme that allows units undertaking to export their entire production of goods and services to be established.
SEZ: Special Economic Zone, a specifically delineated duty-free enclave to be treated as a foreign territory for trade operations and duties and tariffs.
Quality Control Orders QCOs: Mandatory quality standards prescribed by the Indian government for certain products, adherence to which is required for import and domestic sale.
BIS Act, 2016: The Bureau of Indian Standards Act, the legislation governing the standardization and certification of goods in India.
Directorate General of Foreign Trade: The agency of the Ministry of Commerce and Industry responsible for implementing the Foreign Trade Policy of India.
[Yo be Published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii)]
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Vanijya Bhawan
Notification No. 71 /2023
New Delhi, Dated the 11 March 2024
Subject:- Enabling provisions for import of inputs that are subjected to mandatory
Quality Control Orders (QCOs) by Advance Authorisation holders, EOU
and SEZ.
S.O. (E) In exercise of powers conferred by Section 3 read with Section 5 of the Foreign
Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para
1.02 and 2.03 of the Foreign Trade Policy (FTP), 2023, the Central Government hereby
makes the following amendments to FTP, 2023 with immediate effect, in supersession of
Notification No. 69/2023 dated 07.03.2024.
2 A new para 2.03 (A) is inserted below para 2.03 of FTP 2023, as follows:
“2.03A Importability of items under Advance Authorisation/EOU/SEZ without
compliance to the mandatory Quality Control Orders (QCOs)
Import of Inputs under Advance Authorisation/EOU/SEZ without compliance to the
mandatory QCOs, shall be subjected to the following conditions:
i) For Advance Authorisation:
a) Import of inputs under the Advance authorisation without compliance to the
mandatory QCOs shall be with pre-import condition. Such inputs shall be
utilised in the manufacturing of the export product (making normal allowance
for wastage) and shall be exported under the same authorisation.
b) Exemption from mandatory QCOs shall be specifically endorsed in the
Advance authorisation, upon the request of the authorisation holder. Imports
under Authorisation without specific endorsement of exemption shall be made
in accordance with mandatory QCOs.
c) Any unutilised imports or the products manufactured with inputs imported
without compliance to the mandatory QCOs, shall not be transferred to DTA,
even after regularisation of default in fulfilment of export obligation. For the
purpose of this para, unutilised imports means imported inputs (without
compliance of mandatory QCOs) which have not been accounted for, as per
SION/Ad-hoc Norms, in the product exported under the same authorisation.
d) The unutilised imports shall be regularised as follows:
(i) The unutilised material shall be destroyed in the presence of
jurisdictional GST/Customs authorities who shall certify the
destruction of the goods or same may be re-exported;
ocean(ii) In addition, such unutilised imports, irrespective of origin of goods,
shall be liable to payment of effective duty on MFN basis along with
interest on the exempted material, to Customs Authorities plus
composition fee of an amount equivalent to 10% of the CIF value of
unutilized imported inputs to DGFT. Proof thereof shall be submitted
to the RA concerned before grant of EODC.
(e) The exemption from QCO will be available for physical exports only and
such exemption will not be allowed for deemed exports for Advance Authorisation
Holders.
(f) The facility of clubbing under para 4.36 of Handbook of Procedures (HBP),
2023 shall not be available.
(g) The Export Obligation period for such authorizations shall be as per para 4.40
of Handbook of Procedures. However, EO period is restricted to 180 days from
the date of clearance of import consignment in respect of QCO exemption for
textile products.
(h) Import of Inputs without compliance to the mandatory QCOs under DFIA
scheme is not allowed.
(i) This exemption is further subject to para 2.03 (c) of FTP.
ii) For EOUs
(i) Exemption from applicability of mandatory QCOs issued under the BIS Act, 2016,
shall be provided to EOU on import of inputs which are required for export
production. No DTA clearance of such inputs or goods manufactured made out of
such inputs, are allowed. An undertaking to that effect will be submitted to the
Customs authorities by the EOU at the time of importation and a copy of the same
shall also be submitted to the Development Commissioner concerned. The exemption
from QCO will be available for physical exports only and such exemption will not be
allowed for deemed exports. This exemption is further subject to para 2.03 (c) of
EER:
iii) For SEZ
(i) Exemption from applicability of mandatory QCOs issued under the BIS Act, 2016,
shall be provided to SEZ on import of inputs which are required for export
production. No DTA clearance of such inputs or goods manufactured made out of
such inputs, are allowed. An undertaking to that effect will be submitted to the
concemed Development Commissioner of the SEZ by the SEZ Unit at the time of
importation. The exemption from QCO will be available for physical exports only.
This exemption is further subject to para 2.03 (c) of FTP”.
3. The following sub-para (c) is appended to the existing para 2.03 of FTP 2023:
“(c) The list of Ministries/Departments whose notifications on mandatory QCOs, that
are exempted by the DGFT for goods to be utilised/consumed in manufacture of
export products, are given in Appendix-2Y of FTP 2023”.
ionEffect of this Notification: Enabling provisions are made for exempting inputs imported by
Advance Authorisation holders, EOUs and SEZ from mandatory Quality Control Orders
(QCOs). Accordingly, list of Ministries / Departments [ i.e. Ministry of Steel, Department
for Promotion of Industry and Internal Trade (DPIIT) and Ministry of Textiles] are notified in
Appendix 2Y of FTP, 2023.
This issue with the approval of Minister of Commerce & Industry.
(Santosh Kumar Sarangi)
Director General of Foreign Trade &
Ex-Officio Additional Secretary to the Government of India
E-mail: dgft@nic.in
[Issued from File No.01/89/180/13/AM-15/PC-2[A]/E-5910]