Benefits for Deemed Exports

Foreign Trade Policy

To provide a level-playing field to domestic manufacturers in certain specified cases, as may be decided by the Government from time to time.

Hand Book of Procedures

Supplier / Recipient of goods shall submit application for claiming deemed export benefits, in ANF-7A, along with the documents prescribed therein, to the concerned RA.

Foreign Trade Policy

To provide a level-playing field to domestic manufacturers in certain specified cases, as may be decided by the Government from time to time.

Our clients are the cornerstone of our firm. They are not dependent on us; we are dependent on them. Our clients do not interrupt our work; they are the reason for it.

Deemed Exports

For the Foreign Trade Policy (FTP), “Deemed Exports” refer to transactions where goods supplied do not leave the country, and payment is received in Indian rupees or foreign currency. Goods must be manufactured in India.
For GST purposes, “Deemed Exports” include only the supplies notified under Section 147 of the CGST/SGST Act, as recommended by the GST Council. Benefits and conditions are specified by the GST Council and relevant rules.

Categories of Supply

Goods supplied under the following categories by a manufacturer or main/sub-contractors are considered “Deemed Exports”:

By Manufacturer:

Against Advance Authorization/Annual Requirement/DFIA
To EOU/STP/EHTP/BTP
Against EPCG Authorization

By Main/Sub-contractors:

To projects financed by multilateral or bilateral agencies as notified by the DEA, MoF, where tender evaluation excludes customs duty.
Supply and installation under turnkey contracts to projects financed by such agencies, with bids evaluated on DDP prices.
Supplies under International Competitive Bidding (ICB) as per the agencies’ procedures.
Goods for projects exempt from customs duty under Notification No. 50/2017-Customs, provided the supply follows specified procedures.
Goods for setting up mega power projects as listed in Notification No. 50/2017-Customs, conforming to specified generation capacity.
Mega power projects may waive ICB if power is secured through tariff-based competitive bidding.
Goods to the United Nations or international organizations for official use or their financed projects.

For a detailed list of agencies covered under these benefits, refer to the relevant appendix.

United Nations or International Organizations:

Supplies to the United Nations or an international organization approved by the Government of India under Section 3 of the United Nations (Privileges and Immunities Act), 1947, are detailed in Customs Notification No. 84/97-Customs dated 11.11.1997, as amended. Refer to Appendix-7B for the list of organizations and applicable conditions.

Supply of Goods to Nuclear Power Projects:

Eligible supplies for nuclear power projects include:

Goods required for projects listed in Customs Notification No. 50/2017-Customs dated 30.6.2017, as amended.
Projects must have a capacity of at least 440 MW.
Certification by an officer of Joint Secretary rank or higher in the Department of Atomic Energy is required.
Tenders should be invited through National Competitive Bidding (NCB).

Benefits for Deemed Exports:

Deemed exports may qualify for the following benefits, subject to conditions in the HBP and ANF-7A:

Advance Authorization/Annual Requirement/DFIA.
Deemed Export Drawback for Basic Customs Duty (BCD).
Refund of Terminal Excise Duty for excisable goods listed in Schedule 4 of the Central Excise Act 1944, provided no CENVAT credit/rebate is availed.

Categories and Applicable Benefits:

Advance Authorization: Yes for intermediate supplies with an invalidation letter; Yes against ARO; Yes for terminal excise duty.
Deemed Export Drawback: Yes for all supplies listed in Para 7.02.
Terminal Excise Duty: Yes for excisable goods, provided no CENVAT credit/rebate is availed.

Refund Conditions:

Terminal Excise Duty: Refund eligibility as per Para 7.03 (c) of FTP, provided no CENVAT credit/rebate is claimed.
Deemed Export Drawback: Refund of Basic Customs Duty on inputs used in manufacturing, given on a brand rate basis with proper documentation.

General Conditions:

Supplies must be made directly to designated projects/agencies/units/authorization holders. Third-party supplies are not eligible.
Sub-contractors can supply to main contractors, with payments made by the main contractor.
Direct supplies by Indian sub-contractors to projects/agencies are eligible if indicated in the main contract before supply. Payments are made directly to the sub-contractor.

Specified Supplies:

Cement: Deemed export benefits for supplies under Para 7.02 (e).
Steel: Benefits for supplies to Advance Authorization/Annual Advance Authorization/DFIA holders or multilateral/bilateral funded agencies.
Fuel: Benefits for supplies to projects listed in Customs Notification No. 50/2017-Customs under Sr. No. 404, EOUs, and Advance Authorization holders.

Interest Liability:

Interest at 6% per annum is payable on delayed refunds beyond 30 days from the issue of the final Approval Letter by RA.

Risk Management and Internal Audit:

A risk management system randomly selects 10% of cases for audit each month. An internal audit team, led by a Joint DGFT, reviews these cases. RAs may reassess any case with erroneous payments and recover the amount with 15% interest per annum.

Penal Action:

Mis-declared claims will result in recovery and penal action under the F.T. (D&R) Act, rules, and orders.

Transitional Provisions:

Benefits from FTP 2015-20 are available for supplies until 30.06.2017 under the same terms. New provisions apply for supplies made after 30.6.2017.

Hand Book of Procedures

Procedure for claiming Benefits
a.Supplier / Recipient of goods shall submit application for claiming deemed export benefits, in ANF-7A, along with the documents prescribed therein, to the concerned RA.
b.In case of supply of goods to an EOU, claim shall be filed with the concern Development Commissioner. A DTA Unit shall claim benefits from the concerned RA.

Criteria for Claiming Benefits:

For supplying intermediate goods to an Advance Authorization/DFIA holder against an Invalidation Letter (per Paragraph 4.13 of HBP), applications for Advance Authorization to import duty-free inputs should follow Chapter 4 procedures of FTP 2015-20. TED refunds for such supplies will be granted as per para 7.03(c) of FTP 2015-20, provided no exemption applies.

For supplies against an ARO, the procedure in Chapter 4 of the HBP should be followed. TED refunds for these supplies are also covered under para 7.03(c) of FTP 2015-20, provided no exemption exists. Duty Drawback will be allowed on basic customs duty paid on inputs used in these supplies.

For goods supplied to EOU/EHTP/STP/BTP, Advance Authorization/DFIA should be obtained following Chapter 4 of HBP procedures. TED refunds for these supplies will follow para 7.03(c) of FTP 2015-20, provided there is no exemption. If Advance Authorization is not obtained for duty-free input imports, a Duty Drawback claim for basic customs duty paid on inputs used in the resultant product must be filed with the concerned DC.

For supplies to an EPCG Authorization holder against an Invalidation Letter, applications for Advance Authorization/DFIA should follow Chapter 4 procedures. If Advance Authorization/DFIA is not obtained, Duty Drawback on basic customs duty paid on inputs used in the resultant product will be allowed.

For other categories listed in Paragraphs 7.02 (e), (f), (g), and (h) of FTP, Advance Authorization/DFIA for duty-free input imports (under Chapter 4 of FTP 2015-20) may be obtained against a Project Authority Certificate as per Appendix-7C. If Advance Authorization/DFIA is not obtained, a Duty Drawback claim for basic customs duty may be filed as per ANF-7A. TED refunds for projects mentioned in para 7.08(iii)(a) of FTP 2015-20 for eligible items covered under Schedule IV of the Central Excise Act, 1944, will be available provided no exemption applies.

Eligibility Criteria for Claiming TED/Drawback:

Applications can be filed by the supplier or recipient of goods with an IEC. Applications can be made by the registered office, head office, branch office, or manufacturing unit. If the supplier claims TED refund, they must obtain a certificate of non-availment of CENVAT credit from the recipient as per Annexure-I to ANF-7A. If the recipient is the applicant, they must submit the certificate themselves.
If the recipient unit files for TED/Duty Drawback, a disclaimer certificate as per Annexure-III to ANF-7A from the supplier must be submitted. If the supplier is the applicant, they need a disclaimer certificate from the recipient. Claims can only be filed after full payment is received through the normal banking channel as per e-BRC. For supplies under Paragraphs 7.02(e) to (h) of FTP 2015-20, a payment certificate from the Project Authority in APPENDIX-7D is also required. Sub-contractors can file claims if their name is endorsed in the Project Authority Certificate/Contract before supplying the goods.

Procedure for Claiming TED Refund on Fuel:

For supplying High-Speed Diesel (HSD) from domestic oil PSUs under Paragraph 7.02(b) of FTP 2015-20, TED refunds are based on duty paid certificates issued by the domestic oil PSU, as per Annexure-IV to ANF-7A. Refunds are allowed for HSD quantities procured by EOU/EHTP/STP/BTP units for production, certified by the concerned DC/Bond authorities.

Frequency of Application and Time Period for Claiming TED/Drawback:

For supplies under Paragraphs 7.02(a) to (d) of FTP 2015-20, TED refund/drawback applications can be filed within 12 months from the realization of 100% payment. For advance payments followed by supplies, applications can be filed within 12 months from the last supply date. Claims can be filed ‘Invalidation Letter/ARO wise’ within the specified time. For supplies under Paragraphs 7.02(e) to (h), claims can be filed based on proof of supply or payment within 12 months from the date of receipt of supplies by the project authority or payment receipt by the supplier. Claims are allowed after 100% supplies, limited to the extent of received payments.

Fixation of Brand Rate:

Applications in ANF-7A, along with required documents, can be submitted to the RA or concerned DC for brand rate fixation, particularly for basic customs duty paid claims as brand rate of duty drawback per Paragraph 06 of FTP 2015-20.

Time-Barred/Supplementary Claims:

For late claims, provisions of late cut under Paragraph 9.02 of HBP and supplementary claims under Paragraph 9.03 of HBP apply.

Exemption from Payment of TED:

Procedures prescribed by the Central Excise Authority must be followed for TED exemption claims.

Applicability of Other Rules:

Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, or Customs and Central Excise Duties Drawback Rules, 2017, apply to the deemed exports scheme as per HBP procedures.

Payment of Interest:

RA must pay within 30 days of issuing the Approval Letter, adding interest if delayed as per Paragraph 7.09 of FTP 2015-20. No separate interest application is needed. If interest is not added, a separate application per ANF-7B can be filed within 30 days of receiving the principal amount.

Internal Audit Mechanism:

Zonal offices of Additional DGFT will form audit teams per Paragraph 7.10 of FTP 2015-20 for post-audit activities.