Executive Summary:
This public notice amends Chapter 4 of the Handbook of Procedures 2015-2020, addressing the clubbing of Advance Authorizations, the extension of Export Obligation (EO) periods, and the regularization of defaults for drug imports from unregistered sources with pre-import conditions. It outlines revised procedures and conditions for these activities, effective from the date of the notice, October 18, 2017. The amendments aim to provide clarity and flexibility while maintaining regulatory oversight.
Key Points / Main Content:
Advance Authorization Clubbing:
* Authorizations issued before March 31, 2009, cannot be clubbed.
* Clubbing requests must be submitted in ANF 4C to the issuing Regional Authority (RA).
* Clubbing is allowed only for redemption/regularization, without enabling further imports or exports.
* Clubbing is available for Annual Requirement Authorizations issued under FTP 2009-14 & 2015-20, provided exports and imports followed notified Standard Input Output Norms (SION).
* Only authorizations with similar duty exemptions can be clubbed, even across different financial years.
* Exports made outside the EO period can have the EO extended before clubbing, subject to a composition fee as per Para 4.42.
* Exports must be within the initial/extended EO period of the earliest issued authorization for clubbing eligibility.
* Clubbing is permitted when there's an EO shortfall in the first authorization and excess exports in subsequent ones, unless import validity runs concurrently.
* Authorizations with differing EO periods can be clubbed.
* Exports outside the initial/extended EO of the earliest authorization won't count towards EO fulfillment post-clubbing.
* Only common inputs across authorizations can be clubbed; duty-free inputs are calculated per SION/Ad-Hoc norms.
* Minimum value addition must be maintained after clubbing; shortfalls are regularized under Para 4.49 of HBP 2015-20.
* Post-clubbing, authorizations are treated as one, with value addition calculated on total CIF and FOB values.
* Clubbing is disallowed if misrepresentation/fraud is detected or if an EODC/redemption letter or adjudication orders have already been issued.
* Additional provisions apply to authorizations under Appendix 30A (FTP 2009-14) and Appendix 4J (FTP 2015-20), and those with EO periods under 18 months.
* The export obligation period of clubbed authorizations will be reckoned from the date of the earliest import in any of the Authorisations proposed to be clubbed.
Export Obligation Period Extension:
* For authorizations under Appendix 4J (FTP 2015-20), EO extension is limited to half the stipulated EO period.
* A composition fee applies: 0.5% per month of unfulfilled FOB value if exports exceed 50% within the initial EO, and 1% per month if less than 50% are exported.
Regularization of Bonafide Default for Drug Imports:
* For drug imports from unregistered sources with pre-import conditions, regularization requires:
* Submission of documents showing full consumption as per norms.
* If EO fulfillment is short, either a certificate from Central Excise/Customs Authority confirming destruction of unutilized imported quantity or proof of re-export to the original supplier (per Para 4.43A of HBP 2015-2020).
* Exports under free shipping bills using unutilized drugs after the EO period are acceptable if the drug's description matches the Advance Authorization, in lieu of a destruction certificate.
* The authorization holder must pay customs duty with interest on the unutilized imported quantity.
* Exports after the EO period are only considered for waiver of the destruction certificate, not for duty and interest liabilities.
Impact Analysis:
Authorization Holders:
* Impact: Amended procedures for clubbing authorizations, extending EO periods, and regularizing defaults in drug imports affect compliance requirements and potential liabilities.
* Action Required: Review current authorizations, assess eligibility for clubbing or EO extensions, ensure compliance with revised procedures, and address any defaults according to the new guidelines.
Regional Authorities (RA):
* Impact: Must process clubbing requests according to the new guidelines.
* Action Required: Adhere to the revised procedures for evaluating and approving clubbing applications and ensure staff are trained on the new requirements.
Customs Authorities:
* Impact: Responsible for collecting duties and interest on unutilized imported quantities and verifying destruction certificates or re-export documents.
* Action Required: Enforce the revised procedures for duty collection and verification of documentation related to drug imports and communicate any relevant changes to field officers.
Key Entities Referenced
Directorate General of Foreign Trade: The issuing authority for the public notice, responsible for foreign trade policy.
Foreign Trade Policy 2015-2020: A key policy document governing India's foreign trade, referenced as the basis for the amendments.
Hand Book of Procedures 2015-2020: A detailed guide outlining the procedures related to the Foreign Trade Policy, which is being amended by this notice.
Advance Authorisations: An authorization scheme related to import/export, the clubbing of which is a central topic of the notice.
Export Obligation: A condition attached to certain authorizations, requiring a specific amount of export to be achieved.
Standard Input Output Norms: It is a norm notified for the quantity of input required for manufacturing export product
Alok Vardhan Chaturvedi: The Director General of Foreign Trade, who is the signatory of the public notice.
New Delhi: The location where the public notice was issued.
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EXTRAORDINARY
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PART I—Section 1
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MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
(DIRECTORATE GENERAL OF FOREIGN TRADE)
PUBLIC NOTICE
New Delhi, the 18th October, 2017
No. 32/2015-2020
Sub: Amendments in Chapter-4 of Hand Book of Procedures 2015-2020, related to clubbing of
Advance Authorisations, extension of Export Obligation period and regularisation of bonafide
default in the cases where Authorisations were issued for import of drugs from unregistered
sources with pre import condition-reg
F. No. 01/94/180/186/AM18/PC-4.—In exercise of powers conferred under Para 2.04 of the Foreign
Trade Policy 2015-2020, as amended from time to time, the Director General of Foreign Trade, in public
interest, makes the following amendments in Hand Book of Procedures 2015-2020 as under:.
1) Para 4.38 of handbook of procedures 2015-20 is amended to read as under:
“4.38 Facility of Clubbing of Authorisations
(i) No clubbing of Authorisations issued on or before 31st March, 2009 shall be allowed.
(ii) Request for clubbing shall be made in ANF - 4C to the concerned RA who has issued the
Authorisations.
(iii) Facility of clubbing of Advance Authorisations shall be available only for redemption/
regularisation of such Authorisations and no further import or export shall be allowed.4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SEC. 1]
(iv) Facility of clubbing shall also be available for Advance Authorisations for Annual Requirement
issued during Foreign Trade Policy period 2009-14 and 2015-20, wherever exports and imports
have taken place as per Standard Input Output Norms (SION) notified.
(v) Only Authorisations under which similar duty exemption has been availed shall only be allowed
to be clubbed. Such Authorisations may pertain to different financial years.
(vi) In case, exports are made outside EO period of any Authorisation, EO extension may be allowed
before clubbing of such authorisation, as per Para 4.42 of Handbook of procedures on payment of
composition fee.
(vii) Only such Advance Authorisations shall be clubbed where exports under all Authorisations have
been made within the initial/ extended EO period of the earliest issued Authorisation.
(viii) Clubbing shall be permitted only when there is shortfall in fulfillment of export obligation
occurred in first authorisation and excess exports are made in subsequent Authorisations.
However, this condition may not be insisted when validity period (for import) of Authorisations
runs concurrently and imports made in subsequent authorisation falls within validity period (for
import) of first authorisation and such import made within validity period of first authorisation are
on pro-rata, equal to or in excess to the extent of exports made in first authorisation. Subsequent
Authorizations issued after expiry of validity of first Authorisation shall not be allowed to be
clubbed.
(ix) Clubbing of Authorisations issued with different EO periods shall also be allowed.
(x) Accounting of exports made outside expiry of initial or extended EO period of earliest issued
authorisation shall not be taken into consideration for EO fulfillment after clubbing of such
Authorisations.
(xi) Inputs which are common in all Authorisations shall only be clubbed and duty free inputs shall be
accounted for as per SION/Ad-Hoc Norms fixed by NC. In other words all inputs covered in all
Authorisations need not be same.
(xii) Minimum value addition as prescribed in FTP and Procedures for the export product will be
required to be maintained on clubbing. Upon clubbing, if shortfall in value or quantity is noticed,
the same shall be regularized under the provisions of Para 4.49 of HBP 2015-20.
(xiii) After clubbing, Authorisations shall for all purposes, be deemed to be one Authorisation. The
value addition would be calculated on the basis of total CIF and total FOB arrived at after
clubbing the Authorisations.
(xiv) No clubbing shall be permitted in respect of Authorisations where misrepresentation / fraud have
come to the notice of RA. Further, no clubbing of Authorisations, where EODC/redemption letter
has already been issued or adjudication orders have already been passed by RA/Customs
Authority, shall be permitted.
(xv) Additional provisions for clubbing of Authorisations covered under Appendix-30A (issued
under FTP 2009-14)/Appendix-4J (issued under FTP 2015-20) and Authorisations issued
with EOP less than 18 months:
(a) Export obligation period of clubbed Authorisations shall be reckoned from the date of earliest
import in any of the Authorisations proposed to be clubbed.
(b) Clubbing of such Authorisations shall be allowed provided all exports are completed within
initial/extended Export Obligation period reckoned from date of earliest import in any of the
Authorisations proposed to be clubbed.
2) Para 4.42 (d) is amended to read as under:
(d) Extension in export obligation period for Authorisations issued under Appendix-4J (issued under
FTP 2015-20) shall be allowed for a period not more than the half of the stipulated export
obligation period. In such cases, composition fee shall be levied @ 0.5% per month of unfulfilled
FOB value, in case exports effected are more than 50% within initial Export Obligation period and
@ 1% per month where less than 50% exports have been effected within initial export obligation
period.¹Hkkx Iµ[k.M 1º Hkkjr dk jkti=k % vlk/kj.k 5
3) Sub-Para (g) is inserted in Para 4.49:
(g) Regularization of Bonafide default in the cases where Authorisation was issued for import of
drugs from unregistered sources with pre import condition:
Import of drugs from unregistered sources issued with pre import condition shall be regularised in
the following manner:
(i) The Authorisation holder shall submit documents showing consumption of full imported
quantity as per norms. In case, there is shortfall in fulfilment of EO and unutilised imported
quantity remains with the authorisation holder, the Authorisation holder shall either submit a
certificate from the jurisdictional Central Excise / Customs Authority certifying destruction of
the unutilised imported quantity in their presence or proof of re-export of the same to the
same supplier in-terms of para 4.43A of HBP 2015-2020.
(ii) Exports made under free shipping bills/under same authorisation after expiry of EO period
using unutilised quantity of drugs shall also be accepted in-lieu of submission of destruction
certificate as stated in para (i) above, provided the exact description and technical
characteristics of the drug exported matches with that of export item described in the Advance
Authorisation. However, the Authorisation holder shall pay customs duty with applicable
interest to the Customs Authority on unutilized quantity imported under Advance
Authorisation. The exports made outside EO period shall only be considered for waiver of
destruction certificate and not for waiver of liability of applicable duties and interest.
Effect of this Public Notice:
Amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020, related to clubbing of
Advance Authorisations, extension of Export Obligation period and regularisation of bonafide default in the
cases where an Authorisation was issued for import of drugs from unregistered sources with pre import
condition.
ALOK VARDHAN CHATURVEDI, Director General of Foreign Trade
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.