06 April 2015
can anyone supply us the rules regarding procurement of input agst advance license.
Further I am under impression that by getting the advance license, exporter are eligible for import input without basic custom duty & can be exported the FG without paying excise duty.
24 July 2024
Yes, you are correct about the benefits and rules regarding Advance Licenses (AL) under the Export Promotion Capital Goods (EPCG) scheme in India. Here’s a detailed explanation:
### Advance License (AL) and its Benefits:
1. **Procurement of Inputs**: Under the Advance License scheme, exporters can procure raw materials, components, consumables, intermediates, parts, and packing materials duty-free from domestic sources. This is specifically meant for use in the manufacture of goods to be exported.
2. **Exemption from Customs Duty**: The main benefit of an Advance License is that it allows duty-free import of inputs required for manufacturing goods meant for export. This exemption typically covers Basic Customs Duty (BCD), Additional Customs Duty (ACD), and Education Cess.
3. **Exemption from Excise Duty**: When the finished goods manufactured using inputs procured under an Advance License are exported, exporters are exempted from paying Excise Duty (now GST) on those goods.
### Rules Regarding Procurement of Inputs Against Advance License:
- **Eligibility**: Exporters need to apply for an Advance License from the Directorate General of Foreign Trade (DGFT) before procuring inputs. The license specifies the quantity and value of inputs that can be imported duty-free based on the export obligation.
- **Export Obligation**: Exporters must fulfill a certain export obligation, which means they need to export a specified quantity/value of goods within a fixed period. The duty exemption on inputs is contingent upon meeting this export obligation.
- **Usage of Inputs**: Inputs imported under an Advance License must be used in the manufacture of goods meant for export. They cannot be diverted for any other purpose.
- **Validity and Compliance**: The Advance License is valid for a specific period and requires compliance with various regulatory conditions, including submission of documents and periodic reporting of exports.
### Documentation and Application:
- **Application**: Exporters need to submit an application to the DGFT providing details such as the type of license required, export product details, quantity/value of inputs required, and the expected export obligation.
- **Customs Documentation**: While importing inputs duty-free, exporters need to comply with customs documentation requirements and provide the necessary declarations and documents.
### Conclusion:
Advance Licenses are crucial for exporters looking to reduce their production costs by importing duty-free inputs and exporting finished goods without paying excise duty (now GST). It promotes exports by enhancing the competitiveness of Indian goods in international markets. Ensure to consult with DGFT guidelines and customs regulations for specific details and procedures tailored to your business needs.
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