Advance Authorisation / Advance License Scheme

Advance Authorisation/ Advance License Scheme

Overview Stage -I - Definitions / Meanings / Overview

Sl No	Particulars	Meanings / Definitions
1.	AA Definition	Advance Authorisation / Advance License Scheme
2.	AA Purpose	To get “Duty Free Imported Materials” viz Principle Raw Material, Additives, Consumables, Packing Material Jig & Tool to manufacture “Export Product” to make Indian Products so competitive in Global Market.
3.	Benefits	All Duty-Free Scheme (including Anti-Dumping Duty & Safeguard Duty).
4.	Obligation	Needs to fulfil “Export Obligation” by exporting “Finished Goods”. Pre-Import condition is applicable for few Raw Items as listed in Appendix.
5.	Stipulation – Import	12 Months from AA Date (1st Revalidation 6 Months & 2nd Revalidation another 6 months – Total 24 Months Max Import Validity).
6.	Stipulation – Export	18 Months from AA Date (1st EO Period Extn 6 Months & 2nd EO Period Extn another 6 months – Total 30 Months Max Export Validity).
7.	Initial Cost / Financial Implication	Govt Fees for Advance Authorisation, Certification Charges for CA, Chartered Engineer, & Consultancy Fee (Service Charges) + 18% GST.
8.	Liability	In case of non-fulfilment of Export Obligation (EO) within stipulated time, then require to pay Customs Duty Saved along with applicable Interest to Customs Dept.

Critical Procedure

SI	No Check Points
1	Figure out Import Item & Export Product Nomenclature duly mentioning technical specifications which is essentially required.
2	Classify both Imports Item and Export Products at appropriate ITC (HS) Codes before applying for AA.
3	Please do not mention lengthy Import Product Descriptions (do not keep Pre-fix / Suffix / Brand Name) which may lead to complications while monitoring / Final Closure of AA.
4	Apply AA only for sizable / reachable / achievable Export Obligation targets.
5	Generation of more and more AA may lead to confusion / errors / difficult for record-keeping / procedural lapses / timely non-filing of final closure applications to DGFT / more importantly cost burden.

Import Procedure
Stage -III - Import Procedure

Register AA with concerned Customs Authority (Port of Import mentioned on AA) with executing general Bond (LUT) in prescribed form on ₹ 100 Stamp Paper duly notarised with or without BG. BG exemption, you may contact us.
Before filing of Bill of Entry (BE) with Customs, please ensure for the correctness of Import details viz Import Item Description, ITC (HS) Code, Qty, UOM, CIF Value (US$ / ₹) mentioned on AA. “Import Invoice Details” & “AA Import Details” should match.
Import the materials mentioned in AA and get Import clearance from Customs without payment of Customs Duty (All Duty Free) by ensuring proper AA details endorsement on Bill of Entry.
Bring the material to your Factory Address mentioned on AA to manufacture Export Product.

1.	Register AA with concerned Customs Authority (Port of Import mentioned on AA) with executing general Bond (LUT) in prescribed form on ₹ 100 Stamp Paper duly notarised with or without BG. BG exemption, you may contact us.
2.	Before filing of Bill of Entry (BE) with Customs, please ensure for the correctness of Import details viz Import Item Description, ITC (HS) Code, Qty, UOM, CIF Value (US$ / ₹) mentioned on AA. “Import Invoice Details” & “AA Import Details” should match.
3.	Import the materials mentioned in AA and get Import clearance from Customs without payment of Customs Duty (All Duty Free) by ensuring proper AA details endorsement on Bill of Entry.
4.	Bring the material to your Factory Address mentioned on AA to manufacture Export Product.

Export Procedure
Stage -IV – Export Procedure

Manufacture Finished Products for Export purposes using Imported Material or material in stock (replenishment). This is applicable only where pre-import conditions are not applicable.
Execute Exports (Finished Product) duly mentioning Export Product, ITC (HS) Code, Qty, UOM, FOB Value (US$ / ₹), AA No & AA Date which should exactly be mentioned on AA on Export Documents viz Shipping Bill / Bill of Export / GST Invoice by opting Direct Export / Third Party / Export to SEZ / Deemed Export (Supplies to EOU, ICB Supplies, Supplies against Invalidation Letter / ARO).

Closure
Stage -V - Post Export Procedure

Submission of Proof of Export: This involves providing documentary evidence that the goods have been exported. This proof could include shipping documents, customs declarations, bills of lading, or airway bills.
Realization of Export Proceeds: Ensuring that the payment for the exported goods is received from the overseas buyer in accordance with the terms of the sale. This is often monitored by banks to ensure compliance with foreign exchange regulations.
Obtaining Export Incentives: If applicable, claiming export incentives such as Duty Drawback, Merchandise Exports from India Scheme (MEIS), or Rebate of State and Central Taxes and Levies (RoSCTL).
Closure of Export Order: Completing all administrative tasks related to the specific export transaction, including updating records, closing sales contracts, and filing necessary reports with regulatory authorities.
Compliance with Regulatory Requirements: Ensuring compliance with all export-related regulations, including those related to customs, taxation, and foreign trade policy.

1.Apply for Export Obligation Discharge Certificate (EODC) after completion of Export Obligation.
2.On receipt of EODC, approach Customs for Bond Cancellation & BG Release.

FAQ'S
Stage -VI – Challenging Grounds / Critical Stages / Policy Relaxations Required in (AA) Scheme (Special Relaxations)

1. Arrangement of Norms Fixation / Ratification / Adhoc Norms from DGFT Delhi

2. AA Revalidation for balance / left out import against AA

3. AA Export Obligation Period (EOP) Extension

4. AA Pre-Import Condition

5. AA Free Shipping Bills / Non-endorsement of AA No on Shipping Bill (SB)

6. Clubbing Provisions Relaxation in Advance Authorisation (AA) / Advance License Scheme (ALS)

7. Counting / Transfer of Excess Exports in Shipping Bills from One AA to another AA

8. Merger / De-merger / Amalgamation / Acquisition / Takeover / Outright Selling / Slump Sale

9. Import Shipment Prior to AA issuance / obtainment

10. Consideration of SB after expiry Export Obligation Period (EOP)

11. Exports proceedings realised in INR for Nepal & Bhutan

12. Consideration of DBK SB against AA

13. Conversion of Free / DBK Shipping Bill into AA Shipping Bill

14. Export Obligation Period (EOP) beyond initial period expiry of EO – Special Relaxation

15. Removal of IEC from Denied Entity List (DEL) from RLA (Local DGFT)

16. 2nd (Second) AA Export Obligation Period (EOP) Extension (Special Relaxation)

Our Suggestion

1. Always better to Export first and then go for proportionate Import to avoid excess Import.

2. Keep close “Accountability” for Import & Export on daily basis (AA-wise) and compile the data for a quick AA-wise summary to restrict “Excess Import” and “Excess Export” against each AA.

3. Better to use / keep some kind of office tool (Customised Software) to keep Import & Export accountability atleast for Duty Exemption Schemes (AA) wherever sizable EXIM volume happening.

4.Always better to hire an “External Agency” to keep 2nd check of EXIM (Scheme related) transactions and also to validate EXIM Transaction documents.

5. Please reach us to get our expertise which will help you with proper Awareness, Guidance, Understanding & Quality Services to have leak proof mechanism to avoid unwanted financial implication on account of Penalty for late filing of Bill of Entry, Detention Charges & Demurrage Charges.

EXIM (Import & Export) (DGFT / Customs / GST) Consultant for Import Export Related Matters

EXIM (Import & Export) Audit

EXIM (Import & Export) Awareness

EXIM (Import & Export) Orientation Programmes Virtual (Online) / Class Room Sessions

EXIM (Import & Export) (DGFT / Customs / GST) Consultant

EXIM (Import & Export) Consultation

EXIM (Import & Export) Retainership

Filing of Appeal for Order in Original (O-i-O), Show Cause Notice (SCN) Reply, Demand Notice reply, Export Obligation Monitoring (EOM) Reply, Directorate of Revenue Intelligence (DRI) Reply, Customs Audit Query.