FOREIGN TRADE

POLICY
A BIRDS’EYE-VIEW ON

CH-07:DEEMED EXPORT
Trg on RAE2021
Presented by
BISWAJIT DUTTA
AAO-CRAD/DGA(C)/KOL
Virtual venue: RTI/KOLKATA/ 29-05-2021
DEEMED EXPORT

‘FOREX
additional

CONSERVATION’
 Introduction

• “Deemed Exports” refer to those transactions, in which,

goods (manufactured in India) supplied, do not leave
the country and the payment is received either in Indian
Rupees or in free foreign exchange. “Deemed Exports"
for the purpose of GST would include only the supplies
notified under Section 147 of the CGST/SGST Act.
• The motive of the scheme is to increase foreign exchange
reserve of the country conserving FOREX by way of
inhibiting imports.
 Categories of Supply :

A. Supply by manufacturer:

a) goods to AA/AAAR/DFIA holder.

(b) goods to EOU / STP / EHTP / BTP licensee.

(c) Capital goods against EPCG Authorisation.

B. Supply by main/sub-contractor (s):
(e)(i) goods to projects financed by multilateral or bilateral
Agencies / Funds as notified by DEA, MoF; where tender
evaluated without including Customs duty.

(f) Supply to project in r/o which MoF permits import at zero

Customs duty under Notfn 12/2012-Cus dt 17.03.2012 and
under International Competitive Bidding (ICB).
(g) Supply of goods to UN for their Official use or to projects
financed by UN and approved by GoI.
(h) Supply of goods to nuclear power projects (>=440MW)
through National Competitive Bidding (NCB) or through
ICB.
 Deemed Exports in GST regime

“Deemed Exports” refers to supplies of goods manufactured in

India (and not services) which are notified as deemed exports
under Section 147 of the CGST/SGST Act, 2017. The supplies
do not leave India. The payment for such supplies is received
either in Indian rupees or in convertible foreign exchange.
Deemed exports are not zero rated supplies by default,
unlike the regular exports. Hence all supplies notified as supply
for deemed export will be subject to levy of taxes i.e. such
supplies can be made on payment of tax and cannot be supplied
under a Bond/LUT. However, the refund of tax paid on the
supply regarded as Deemed export is admissible to either the
supplier or the recipient. The application for refund has to be
filed by the supplier or recipient.
 academic
(GST)Categories of supply of goods notified as Deemed Exports
As per Section 147 of the CGST Act, r/w Notification no. 48/2017-
Central Tax dated 18.10.2017, the following categories of supply of goods
has been declared as Deemed Exports: -
01. Supply of goods by a registered person against AA.
02. Supply of CG by a registered person against EPCGA.
03. Supply of goods by a registered person to EOU.
04. Supply of gold by a bank or PSU specified in 50/2017-Cus, dt 30-06-
2017 against AA.
 Benefits
Any/all of the following:

(a)Advance Authorisation / Advance Authorisation for

Annual Requirement /Duty Free Import Authorisation.

(b) Deemed Export DBK for BCD only under Brand Rate.

(c) Refund of Terminal Excise Duty for excisable goods of

Schedule 4 of Central Excise Act 1944 provided the supply is
eligible under that category of deemed exports and there is
no exemption.
 Condition for TED refund.

(i) Recipient does not avail CENVAT credit/Rebate.

(ii)TED exempted goods are ineligible for TED refund.

TED exemption is allowed on:
(a) supplies under ICB.
(b) supplies of intermediate goods by an AA holder to
another AA holder.
(c) goods procured by EOU/EHTP/STP/BTP unit from
a unit in DTA.
(d) supply to UN/IO or project funded by it.
 Common Conditions:

• Direct supply. Third-party supply shall not be eligible.

• ‘Sub-contractor’ may supply to ‘Main-contractor’.

Payments shall be made by main-contractor (not by
project-authority) to sub-contractor.

• ‘Sub-contractor’ may supply directly to ‘Project’, provided

his name is indicated in main ‘contract’. Here, payments
shall be made by Project-authority directly to sub-
contractor.
 $ Benefits on specified supplies:

Supply of ‘Cement’ under Para 7.02 (e). [plz see FTP 15-20].

Supply of ‘Steel’ :
(a) as an inputs to AA/AAAR/DFIA/EOU.
(b) to multilateral/bilateral funded Agencies under Para 7.02(e).
[plz see FTP 15-20].
Supply of ‘Fuel’ made to
(a) Projects listed for petroleum operations as per Notfn.
12/2012-Cus dt 17.03.2012 under Para-7.02 (f). [plz see FTP 15-20].
(b) EOU.
(c) AA/AAAR.
Interest payment

Interest @ 6% per annum will be payable to

supplier or recipient, on delay in refund of
DBK and TED, if the case is not settled by
RLA (DGFT/DC) within 30 days of issue of
final Approval Letter by RA/DC.
Recovery:
The RA may, either on the basis of report from Internal
Audit/External Audit Agency or suo-moto, reassess any case,
where any erroneous or in-eligible payment has been made /
claimed. RA will take necessary action for recovery of payment
along with interest @of 15% p.a. on the recoverable amount.

Penal Action:
For mis-declaration or mis-representation, the applicant is
liable for action under FT(D&R) Act/Rules in addition to
recovery of above.
 Application to…

The claim of benefit by supplier of Goods to EOU shall be

filed to RA/DGFT, but claim by EOU on ‘Disclaimer’ from
supplier shall be filed with the Development
Commissioner.

• In respect of supply under other head,

the claim should be filed with the
jurisdictional RA/DGFT.
 Application

• Claim of benefits in respect of supply under Para 8.2(a) to

8(c) shall be filed within 12 month from the date of
receipt of payment. In case of advance payment, last
date for submission of application shall be correlated with
the last date of supply instead of date of receipt of
payment.

• Claim of benefits in respect of supply under Para 8.2(e) to

8(h) shall be filed within 12 month from the date of
receipt of payment, or proof of supply, as per option of
applicant. However benefit will be limited to the extent of
payment received.
 Extent of Payment

• 100% TED refund may be allowed after 100%

supplies have been made physically and payment
received at least up to 90%.

• Grant of deemed export DBK shall be limited to the

extent of payment received.