India: Foreign Trade Policy Amnesty Scheme

published on 13 April 2023 | reading time approx. 3 minutes

The Directorate General of Foreign Trade (DGFT) via Public Notice No. 2/2023, dated 1 April 2023 has announced a one-time facility for grant of EODC/regularisation of cases of Export Obligation (EO) defaults of Advance Authorisations (AA) and Export Promotion Capital Goods (EPCG) licence holders. It is pertinent to note that, in order to avail the benefits of the amnesty scheme, an application is to be filed on the DGFT website, before 30 June 2023, and payment of exempted customs duties and interest should be made before 30 September 2023. This newsflash will cover the key takeaways from the proposed scheme.

Who can benefit? »
Who is excluded from availing the scheme? »
What are the benefits? »
How to calculate the benefit in monetary terms? »
What is the procedure to claim the benefits under the scheme? »
Can cases which have been already adjudicated be regularised under this scheme? »

Who can benefit?

AA and EPCG Authorisations issued under Foreign Trade Policy (FTP) 2009-2014 until 31 March 2015
Authorisations issued under FTP 2004-2009 and before, but available only to the extent the EO Period was valid beyond 12 August 2013

Who is excluded from availing the scheme?

Cases under investigation or cases adjudicated for/involving fraud, misdeclaration or unauthorised diversion of material/capital goods will be excluded from this scheme
If duties along with applicable interest has already been deposited in full, the case would not be eligible for coverage under the scheme

What are the benefits?

All pending cases of the above nature can be closed on payment of all customs duties which were exempted, in proportion to unfulfilled EO.
The interest is to be capped at 100 per cent of customs duties so exempted.
However, no interest is payable on the portion of Additional Customs Duty (ACD) and Special Additional Customs Duty (SAD).

How to calculate the benefit in monetary terms?

The authorities have provided illustrations for calculations in case of 100 per cent default and partial default of EO.

Case I: 100 % default in EO

	Particulars	Amounts (INR)
1.	Total CIF value of exempted imports	100
2.	Total customs duties exempted	50
3.	ACD and SAD exempted portion in 2. above	18
4.	Customs duties other than ACD and SAD	32
5.	Interest liability capped at 100 % of 4.	32
6.	Maximum amount payable under the scheme (2. + 5.)	82

Case 2: 40 % default in EO

	Particulars	Amounts (INR)
1.	Total CIF value of exempted imports	500
2.	Import value of default (40 %)	200
3.	Total customs duties exempted	100
4.	ACD and SAD exempted portion in 2. above	36
5.	Customs duties other than ACD and SAD	64
6.	Interest liability capped at 100 % of 4.	64
7.	Maximum amount payable under the scheme (3.+ 5.)	164

What is the procedure to claim the benefits under the scheme?

Application

Authorisation holders who want to avail the benefit of the scheme shall register on the website in a separate application form provided for this purpose. This process must be completed on or before 30 June 2023 in order to avail the scheme.

Payment

In case the entire authorisation is under default, the applicants will be required to pay the entire customs duty plus interest with the Jurisdictional Customs Authorities and submit proof thereof to the Regional Authority (RA) of DGFT.
In cases of partial defaults the RA of DGFT, based on the specific request of the application and application for Export Obligation Discharge Certificate (EODC), shall intimate the applicant of the details of the default on which customs duty and interest are payable. The applicant on the basis of which can make payments with the Jurisdictional Customs authorities and submit proof thereof to the RA of DGFT.
All payments of Customs duty along with interest must be completed before 30 September 2023.
No CENVAT or Refund under any provision of the law of any amount shall be allowed on duties paid under the scheme. The applicant shall also give an undertaking that they will not file any application for CENVAT/Refund of duties paid, before any authority or court of law.

Closure

Based on the payments made and other relevant documentation, the RA may issue a letter granting Export Obligation Discharge Certificate (EODC). A detailed procedure including a system of filing required reports with the RA, would be notified separately.

Can cases which have been already adjudicated be regularised under this scheme?

Yes, cases adjudicated or pending adjudication, either original or in appeal, can also be regularised under this scheme.
Where the case is adjudicated (or pending) and no appeal has been filed, the applicant will produce a copy of the closure letter from the RA to the adjudicating authority.
Where an appeal has been filed, the closure letter will have to be submitted to the appellate authority, which will decide the closure and will inform the applicant.