Advance Authorisation Scheme

PowerPoint Presentation By Tirth Dalal (03)

 (Erstwhile Advance License Scheme) Commenced around 1982 and was based on the concept of positive balance of trade at the micro level of a company. Scheme appeared in Appendix 13 ( C ).

 The Advance Authorisation enables exporters to import material in advance without payment of duty subject to they taking export obligation. The export is credited and the import is debited like any other accounting process.

 Issued on the basis of

Inputs and export given under Standard Input Output Norms (SION); or Adhoc norms or self declared norms
Para 4.7 of the Handbook of Procedure

Authorization can also be applied for annual requirement for a particular product group by Status holders and by the other exporters having at least past two years export performance

Eligibility
Manufacturer/Exporter as well as Merchant/Exporter tied up with supporting manufacturer

 Entitlement
Duty free imports of inputs & consumables are allowed for manufacture of export product
Normal allowance for wastage available

Duty free imports of spares upto 10% of the CIF value of the Authorization which are required to be exported

Imports allowable
All items except prohibited items

Conditions
Authorization is under actual user condition i.e. materials imported cannot be transferred, must be incorporated in the export product
Option with Authorization holder to dispose off the product manufactured out of the duty free inputs on completion of export obligation If imports made in higher quantity, then duty along with interest to be paid

 Limitation / Practical Issues

Strict enforcement of technical characteristics, quality and specification of inputs gives very little flexibility to exporters Problem in auditing of Duty Entitlement Exemption Certificate (DEEC) after fulfillment of export obligation Dual monitoring of export obligation by both DGFT and Customs with little coordination interse between them Payment of high interest on the unutilized quantity of raw material even in case of bonafide default