The Policy relating to the Duty Exemption/Remission Scheme is prescribed in Chapter 4 of the Policy.

An application for grant of an Advance Licence/ Advance Licence for Annual Requirement/DFRC/ DEPB may be made by the Registered office or Head office or a branch office or manufacturing unit of the eligible exporter, to the licensing authority concerned.

Where the SION have been published, an application in ‘Aayaat Niryaat Form’, along with documents prescribed therein, shall be submitted to the licensing authority concerned.

In case of export of gold /silver / platinum jewellery and articles thereof, the quantity, wastage and the value addition norms shall be as prescribed in paragraph 4A of the Policy and Handbook (vol.1).

In case where norms have not been published, an application in ‘Aayaat Niryaat Form’, along with prescribed documents, shall be furnished to the concerned Advance Licence Committee (ALC) at DGFT Headquarter for fixation of Norms.

In such cases, the original copy of the application along with prescribed fee shall be filed with the Regional Licensing Authority concerned and a self attested copy of the same shall be filed with ALC. The Licenses in such cases shall be issued by the RLA on the basis of recommendation of ALC.

The Committee shall also function as a recommendatory authority for SION. The Director General of Foreign Trade may notify such norms as recommended by the ALC.

4.4.3

Applications, where Acetic Anhydride, Ephedrine and Pseudo-ephedrine is required as an input for import, either in such cases where norms are fixed or in such cases where norms are not fixed, shall be filed with the regional licensing authorities concerned.

Copies of such applications shall also be simultaneously endorsed to the Drug Controller of India, Nirman Bhawan, New Delhi, Narcotics Commissioner, Central Bureau of Narcotics, Gwalior and the respective Zonal Director of the Narcotics Control Bureau, alongwith a declaration that the applicant will maintain the prescribed records and also submit the prescribed returns.

4.4.4

The licensing authority, while issuing the advance licence for the import of Acetic Anhydride, Ephedrine and Pseudo- ephedrine, shall endorse a condition that before effecting imports, NOC shall be obtained from the Narcotics Commissioner of India, Central Bureau of Narcotics, Gwalior and shall also endorse a copy of the licence to the Drug Controller, Nirman Bhawan, New Delhi and the concerned Zonal Director of the Narcotics Control Bureau.

4.4.5

Exports made against the Government of India/EXIM Bank Line of Credit would be entitled for benefits under the Advance Licence Scheme. Further, exports made under Deferred Payment/Suppliers Line of Credit Contract backed by ECGC Cover would also be entitled for the benefit under the Scheme.

4.5

Transfer of any duty free material imported or procured against advance licence from one unit of the company to another unit of the same company for manufacturing purpose shall be done with the prior intimation to the jurisdictional Excise Authorities with a clear understanding that no benefit of CENVAT shall be claimed on such transferred inputs. In case of non excisable company/products, the units should maintain a proper record of the same. However to avail the facility, all such units should be available in the IEC certificate and follow the rules and regulation of Central Excise for jobwork.

4.6

In terms of paragraph 4.1.8 of the Policy, an exporter may apply for an Advance Licence for import of items mentioned in paragraph 4.1.3 of the Policy, some or all of which may also include items that are supplied free of cost.

In such cases, a specific endorsement shall be made on the exchange control copy of the Advance Licence disallowing remittances for the material being supplied free of cost. All inputs imported shall be utilised in the manufacturing of the product except the wastage.

The value addition in the case of such advance licences would be computed by adding the notional value of the free of cost material to both the CIF value of imports and FOB value of exports.

4.7

The licensing authority may also issue Advance licences, where SION are not fixed, based on self declaration and an undertaking by the applicant for a final adjustment as per Adhoc/SION fixed by ALC. However, no Advance Licence for import of horn, hoof and other organ of animal, pepper or the categories of agricultural items listed below or for any item for which DGFT may so notify, shall be issued under paragraph 4.7 by the licensing authority.

 

1. All vegetable/edible oils classified under Chapter – 15 and all types of oilseeds classified under Chapter – 12 of ITC (HS) book;

    

2. All types of cereals classified under Chapter – 10 of ITC (HS) book;
3. All spices having a duty of more than 30%, classified under Chapter-9 and 12 of ITC (HS) book; and
4. All types of fruits/vegetables having a duty of more than 30%, classified under Chapter 7 and 8 of ITC (HS) book.

For export of perfumes, perfumery compounds and various feed ingredients containing vitamins, no licence shall be issued under Para 4.7 by the licensing authority and the applicants may apply under Para 4.4.2 of this Handbook. Where export and/or import of biotechnology items are involved, licence under Para 4.7 shall be issued by the licensing authority only on submission of a ‘No Objection Certificate’ from the Department of Biotechnology.

4.7.1

The CIF value of one or more such licences shall be 200% of the FOB and/or FOR value of preceding year exports and/or supplies in case of status holders and Rs. 1 crore or 100% of the FOB and/or FOR value of preceding year exports and/or supply, whichever is more, for others.

 However, in cases where ALC has already ratified the norms for the same export import product in respect of a licence obtained under paragraph 4.7, such norms shall be valid for a period of six months reckoned from the date of ratification.

The licence holder in such cases shall be entitled for further licence(s) as per the norms ratified by ALC without the need for subsequent ratification by ALC. In such cases the applicant would file the application under Adhoc Norms Fixed category.

Licences shall be issued by the Licencing Authority concerned under " Adhoc Norms Fixed" category and in such cases the application copies need not be forwarded to the ALC for fixation/ratification of norms.

4.7.2

Once the norms are fixed by ALC, the value limits mentioned in sub paragraph 4.7.1 above would not be applicable to advance licences issued under this paragraph. Such licences, subsequent to fixation of norms by ALC, may be enhanced .

4.7.3

An applicant shall be entitled for licence under this paragraph in excess of entitlement mentioned in paragraph 4.7.1 subject to furnishing of 100% Bank Guarantee to Customs authority to cover the exemption from Customs duties. A specific endorsement to this effect shall be made on the licence.

4.7.4

The original application with prescribed documents shall be submitted to the concerned Regional Licensing Authority. The licensing authority shall forward a copy of the application within 7 days from the date of issue of such licences to ALC for fixation of norms within the prescribed time.

4.7.5

The applicant shall give an undertaking that he shall abide by the norms fixed by ALC and accordingly pay duty, together with 15% interest, on the unutilised inputs as per norms fixed by ALC. However the licencee has the option to undertake additional export obligation in proportion to the excess unutilized inputs.

4.7.6

In such cases, where the norms are not finalised by ALC within four months from the date of issuance of licence, the norms as applied for shall be treated as final and no adjustment will be made. However, where the application for fixation of adhoc/ SION is rejected on account of non-furnishing of required documents/ information, the licence holder shall be liable for penalty as stated in the above paragraph. In case SION for the said product is notified, the SION would be made applicable for the purpose of deciding the wastage norm and export obligation.

In such cases where the export obligation is completed pending fixation of norms by ALC, the entitlement for the licence as given in paragraph 4.7.1 may be re-credited upon production of documentary evidence (copies of Shipping bill/ bill of export /Central Excise certified copies of invoices) showing fulfillment of export obligation in respect of the previous licenses. However, bond waiver/ redemption shall not be allowed pending fixation of norms in such cases.

The financial powers of the licensing authority and ALC are given in the table below:

For standardization of norms, an application may be made by the manufacturer exporter or merchant exporter tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to the Advance Licensing Committee (ALC) in the form given in ‘Aayaat Niryaat Form’.

Import of fuel may also be allowed under SION by ALC subject to the following: -

The facility of import of fuel shall be allowed only to the manufacturer having captive power plant .

In cases where SION specifically allows fuel, the same shall be permitted under advance licence. However, If fuel is not covered specifically under SION, it may be allowed as per general fuel Policy for products covered under SION or under paragraph 4.7.

Fuel should be allowed only against an actual user licence. However in case of DFRC, fuel can only be transferred to agencies granted marketing rights by the Ministry of Petroleum and Natural Gas.

Even where fuel is included as an input under SION, it shall not be taken into account while fixing the DEPB rate for such products against which fuel has been allowed as an input.

The applications of fixation for fuel entitlement for new sectors and modification of the existing entitlement as per the General Note for Fuel in the Handbook of Procedures (Vol.2) would be made to the Advance Licencing Committee along with the requisite data in ‘Aayaat Niryaat Form’ pertaining to the "Data Sheet for Fuel Rate".

The Advance Licence holders wishing to procure the fuel indigenously may apply for an Advance Release Order or Back to Back Inland Letter of Credit. The indigenous supplier supplying fuel shall be entitled for deemed export benefits given in paragraph 8.3(a), (b) & (c) of the Policy. In case the indigenous supplier is not willing to avail of deemed exports benefits under such supplies of fuel to the Advance Licence holder, he may issue a disclaimer on the basis of which the Advance Licence holder can avail of the deemed export benefits as per procedure given in Chapter 8 of this Handbook.

An application for modification of existing SION may be filed before the ALC by manufacturer exporter or merchant-exporter, tied to supporting manufacturer, in the form given in ‘Aayaat Niryaat Form’.

An application for amendment of an export item or inputs under SION or under Adhoc Norms may be filed by any manufacturer or merchant exporter as per ‘Aayaat Niryaat Form’ of this Handbook.

The applicant would give the justification for seeking the amendment and the same would be considered by the Regional Licensing Office with the specific approval of the head of the Office. In case of any major change in the input or the request for more wastage to that allowed under SION or the adhoc norm, the same should be referred to ALC for ratification.

the quantity of each item to be imported or wherever the quantity cannot be indicated, the value of the item shall be indicated. However, if in Standard input output norms, the quantity and value of individual inputs is a limiting factor, the same shall be applicable.

Exports/supplies made from the date of issuance of file no for an Advance Licence by the licensing authority, may be accepted towards discharge of export obligation. However in case of E-commerce application, Exports/supplies made from the date of EDI generated file no. for an Advance Licence, may be accepted provided the hard copy is submitted within 15 days. If the application is approved, the licence shall be issued based on the input/output norms in force on the date of receipt of the application by the licensing authority in proportion to the provisional exports/ supplies already made till any amendment in the norms is notified. For the remaining exports, the Policy/ Procedures in force on the date of issue of the licence shall be applicable.

The exports/supplies made in anticipation of the grant of an Advance Licence shall be entirely on the risk and responsibility of the exporter.

The conversion of duty free shipping bills to drawback shipping bills may also be permitted by the customs authorities in case the application for an Advance Licence is rejected or modified by the licensing authority.

The application for grant of Advance License or DFRC for Intermediate supply may be made on the basis of a tie-up agreement with the exporter holding an Advance license or DFRC. The licensing authority concerned shall consider such requests.

The Advance License or DFRC for Intermediate supply shall be issued after making the licence invalid for direct import of items to be supplied by the intermediate manufacturer. In such cases, a copy of the invalidation letter will be given to the licence holder and copy thereof will be sent to the intermediate supplier as well as the licensing authority of the intermediate supplier. The licensee in such case has an option either to supply the intermediate product to holder of Advance Licence or to export directly.

The facility of advance licence shall be available even in cases where the intermediate supplier has supplied or intend to supply the material subsequent to fulfilment of export obligation by the exporter holding the Advance Licence from where the invalidation letter was issued.

The application shall specify (i) the name, description and quantity of the items and (ii) the individual value of items to be procured. An ARO may be issued along with the Advance Licence / DFRC or subsequently, and its validity shall be co-terminus with the validity of the Advance Licence as specified in this Handbook.

An ARO issued for the procurement of an individual item shall be automatically valid for procurement from one or more indigenous sources.

The exporter may alternatively avail the facility of a back to back inland letter of credit from the banks. An Advance Licence holder and a DFRC holder, may approach a bank for opening an inland letter of credit (LC) in favour of an indigenous supplier.

Before opening the LC, the bank will ensure that the necessary BG / LUT has been executed by the Advance Licence holder and an endorsement to that effect has been made on the licence.

However, execution of BG/LUT shall not be required against DFRC. After opening the inland LC, the bank shall make the following endorsement on the Exchange Control and Customs copy of the Advance Licence DFRC;

The value of this Advance Licence DFRC stands reduced by a sum of Rs. ________ , being the value of the inland LC No.________ opened today by the licensee in favour of M/s ____________________ (name and address of the indigenous supplier).

The licence shall be invalidated by the bank for direct import only in respect of the full quantity and value of the item being sourced indigenously.

The original Letter of credit (L/C) may be retained by the bank for negotiation and only the non-negotiable copy of the L/C may be given to the indigenous supplier.

The responsibility of the bank shall be confined to making the endorsement. The bank shall not be liable for any misrepresentation or false statement made by the licensee while requesting the bank to make the endorsement. The inland LC opened by the bank in favour of the indigenous supplier shall not be canceled for any reason whatsoever.

The non negotiable copy of inland LC together with the photocopy of the Advance Licence duly carrying endorsements made by the bank shall be sufficient for the indigenous supplier to claim deemed export benefits. LC issued against DFRC shall, however, be entitled only to benefit given in paragraph 8.3(b) of Policy, whereas LC for other categories shall be entitled to benefits given in paragraph 8.3 (b) and (c) of the Policy.

Where the import of gold/silver is permitted as an input under this scheme, such gold/silver can be sourced through the nominated agencies as given in paragraph 4A onwards in Chapter-4 of the Policy for supply against the Advance Licences issued in this behalf. Before supply of the material, the nominated agencies should follow the same procedure as given in paragraph 4.15.1 above.

The imported material may be used in any of the units of the licence holder or jobber/ supporting manufacturer provided the same is endorsed on the licence by the regional office. If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. Such endorsement shall be mandatory where prior import before export is a condition for Advance Licence and the licence holder desires to have the material processed through any other manufacturer or jobber.

Upon such endorsement made by the licensing authority, the licence holder and co-licensee shall jointly and severally be liable for completion of export obligation. Any one of the co-licensees may import the goods in his name or in the joint names. The BG/LUT shall also be furnished in their joint names.

However if the licence holder is registered with the Central Excise, he has an option of getting the names of the jobber endorsed by the Central Excise as per the Central Excise Rules in lieu of the endorsement on the licence by the regional office. In case the manufacturer exporter holding the advance licence is not registered/not required to be registered with the Central Excise authority, the job work may be allowed as per the central Excise rules and regulations without insisting for endorsement of the name of the supporting manufacturer. However, the licence holder shall be solely responsible for the imported items and fulfillment of export obligation.

In case Bank Guarantee/LUT has been redeemed, the licensee can get the duty free inputs processed from any manufacturer under Actual User condition.

Deleted.

At the time of issue of the licence, the acceptance of the undertaking given by the applicant to the licensing authority concerned in the form given in ‘Aayaat Niryaat Form’ will be endorsed on the reverse of the Advance Licence.

Note :-

No BG/LUT will be required where the specified export obligation has been fulfilled before making any import. In case of partial fulfillment of export obligation before effecting any imports, the BG/ LUT may be reduced proportionately.

The licence holder shall also produce EP copy of the shipping bills and Bank Certificate of Export and Realisation, and a statement of exports giving details of shipping bill wise exports indicating the shipping bill number, date, FOB value as per shipping bill and description of export product substantiating the completion or the partial fulfillment of the export obligation to the licensing authority concerned.

However, realization of export proceeds shall not be insisted if the shipments are made against irrevocable letter of credit or bill of exchange is unconditionally Avalised/ Co- Accepted/ Guaranteed by a bank and the same is confirmed by the exporters bank. In both these arrangements, certification of this is to be made by the bank in column 14/ 15 of Appendix 22A.

In respect of an advance licence on which "No BG/LUT" facility has been provided, the licensing authority shall forward a copy of the "No Bond Certificate" indicating the shipping bill number, date, FOB value as per shipping bill and description of export product, in respect of shipment which were taken into account for calculating fulfilment of export obligation to the customs authorities with whom the licence is/required to be registered.

Before allowing the imports against Advance Licence, the Customs shall verify that the details of the exports as given in the "No Bond Certificate" are as per their records.

The cancellation of BG/LUT would be undertaken by the Customs within 30 days of issue of EODC /bond waiver by the regional licencing office.

The licence and the Advance Licence shall be issued for the purpose of import and export through one of the sea ports or airports or ICDs or LCS specified below. The licence holder shall register the licence, the port specified in the licence and thereafter all imports against the said licence shall be made only through that port, unless he obtains permission from the customs authority concerned to import through any other specified port. However, exports may be made through any of the specified ports.

Mumbai, Kolkata, Cochin, Kakinada, Kandla, Mangalore, Marmagoa, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Dahej, Nagapattinam, Okha, Mundhra , Surat (Magdalla) and Jamnagar

Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.

Agra, Bangalore, Coimbatore, Delhi, Faridabad, Gauhati (Amingaon), Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad, Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur(Nainital), Dighi (Pune), Vadodara, Daulatabad, (Wanjarwadi and Maliwada), Waluj (Aurangabad), Anaparthy, Salem Mallanpur, Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry ,Garhi Harsaru Bhatinda, Dappar, Chheharata ( Amritsar), Karur, Miraj, Rewari, Bhusawal, Jamshedpur, Surajpur and Dadri.

Ranaghat , Singhabad , Raxaul, Jogbani, Nautanva (Sonauli), Petrapole and Mahadipur

i

Mumbai seaport, Nhava Sheva & Mumbai Airport

ii

iii

iv

Chennai airport and Chennai seaport

v

vi

Hyderabad Airport and Hyderabad ICD

Any SEZ notified by the Central Government shall also be one of the specified ports for import and export under this paragraph

The Commissioner of Customs may, either by a public notice or on the written request of the licence holder, by a special order and subject to such conditions as may be specified by him, also permit imports and exports from any seaport/airport/ICD or land custom station other than those mentioned above.

In such cases, where the licence has not been registered at the port specified in the licence and no import has taken place, the request for change in the Port of Registration may be considered by the licensing authority concerned provided the licence has not been redeemed.

For imports from the Airport/Seaport/ICD other than the port of registration, a Telegraphic Release Advice(TRA) shall also be issued by the customs authority at the port of registration to the customs authority at the port of import.

The facility of clubbing shall be available only for redemption/ regularisation of the cases and no further import or export shall be allowed. For this facility, licences are required to have been issued under similar Customs notification even pertaining to different financial years. However in case of licences issued in 2004-09 period, advance licences of different customs notification can be clubbed.

The regional licensing authority, under whose jurisdiction the licence is issued or ALC in other cases, shall consider a request for clubbing all imports and exports of more than one Advance Licence provided the imported inputs are properly accounted for as per norms. The value addition of the licences so clubbed shall be the average of the prescribed minimum value addition imposed on individual licences. Upon clubbing, the licences shall, for all purposes, be deemed to be one licence.

The facility is available only for Advance Licence(s) where there is shortfall in fulfillment of export obligation, and which is sought to be clubbed with an advance licence(s) which is valid for imports. For expired licence(s) with EO shortfall and which is sought to be clubbed with an advance licence(s) which is valid for imports, the applicant shall pay the composition fee for E.O. period extension as per the provision of paragraph 4.22.

 In such cases, the exports effected beyond the E.O. extension period (allowed in terms of paragraph 4.22) after the issuance of the earliest licence shall not be considered for clubbing.

Notwithstanding the provisions of para 4.20.3 and 4.20.4 above, Clubbing of all expired licences may also be permitted provided all the expired licences have been issued during the Exim Policy period 1992-1997 & 1997-2002 i.e., 1st April, 1992 to 31st March, 2002.

In respect of an Advance Licence, the licensing authority concerned (as per their financial powers) may consider a request for enhancement/ reduction in the CIF value of the licence, provided the value addition after such enhancement does not fall below the stipulated minimum value addition and provided there is no change in the input-output norms and the Policy under which the licence was issued.

The licensing authority concerned (as per their financial powers) may also consider the request for enhancement/ reduction in CIF value, quantity of inputs, FOB value of export obligation and quantity of exports of an advance licence provided there is no change in the input output norms and value addition after such enhancement does not fall below the stipulated minimum value addition.

The request for prorata enhancement in value and quantity may be made either before or after exports. In such cases where there is a change in the SION prior to the export of the said product, the prorata enhancement shall be given after calculating the entitlement on the revised SION.

The application for the enhancement/ reduction in the value of the licence shall be made in ‘Aayaat Niryaat Form’ of the Handbook (Vol 1).

The application fee leviable for enhancement would be on the difference in the CIF values of the original and final licence. However, no application fee would be charged if the value of the licence is being reduced or the applicant has paid the maximum fee of Rs 150,000 ( for manual applications) and Rs 75,000 (for digitally signed applications) respectively in the original application for Advance Licence.

The period of fulfillment of export obligation under an Advance Licence shall commence from the date of issuance of licence. The export obligation shall be fulfilled within a period of 24 months except in the case of supplies to the projects/turnkey projects in India/abroad under deemed exports category where the export obligation must be fulfilled during the contracted duration of execution of the project/ turnkey project.

However, in case of Advance Licences for drugs, which have been issued against a specific export order and with pre-import condition the period of fulfillment of export obligation shall commence from the date of import of the first consignment and shall be fulfilled within a period of 6 months. Similarly in the case of advance licence for tea, the period of fulfillment of export obligation shall commence from the date of import of first consignment and should be fulfilled within a period of six months.

The request for extension in export obligation period may be made in the form given in ‘Aayaat Niryaat Form’. The regional licensing authority shall grant one extension for a period of six months from the date of expiry of the original export obligation period to the licensee subject to payment of composition fee of 2% of the duty saved on all the unutilized imported items as per licence;

Request for a further extension of six months may be considered by the regional licensing authorities subject to payment of composition fee of 5% of the duty based on all the unutilized imported items as per licence.

However any further extensions beyond 36 months from the date of issuance of the Advance Licence or the duration of the contracted project (in the case of Deemed Exports) or on the lapse of any other extension (s) granted by this office would be permitted on payment of the composition fee @ 2% per month of the duty saved amount proportionate to the balance export obligation.

For all the three cases of export obligation extension above, the composition fee on the duty saved on all the unutilized imported items would be computed with reference to the actual exports and imports made by the licence holder.

However, the facility of extension of export obligation period shall not be allowed in case of advance licence wherein import of penicillin and its salts (ITC(HS) Code No. 29411 010) and 6 – APA (ITC(HS) Code No. 29411 050) have been allowed as an input. The licensing authority shall make an endorsement in the advance licence to this effect.

However such extensions would not be permitted in the case of the erstwhile Value Based Advance Licences (VABALs) . Additionally, no extension in export obligation would be allowed in respect of licences where misrepresentation/ fraud has come to the notice of the licencing authorities. Further, in respect of licences where adjudication orders have already been passed, no extension in export obligation period shall be admissible

The Customs may allow provisional clearance of export consignment as and when the licence holder produces documentary evidence of having applied for EO extension to the concerned RLA.

The regional licensing authority may consider a request of the original licence holder and grant one revalidation for a period of six months from the date of expiry of the original licence. The request(s) for revalidation of licence shall be made in the form given in ‘Aayaat Niryaat Form’.

The licensing authority, with whom the Undertaking is executed by the Advance Licence holder, shall maintain a proper record in a master register indicating the starting and closing dates of obligation period and other particulars to monitor the export obligation.

 Within two months from the date of expiry of the period of obligation, the licence holder shall submit requisite evidence in discharge of the export obligation in accordance with paragraph 4.25 of the Handbook.

However, in respect of shipments where six months period (one year in case of status certificate holder) for realisation of foreign exchange has not become due, the licensing authority shall not take action for non submission of bank certificate of exports and realisation provided the other document substantiating fulfillment of EO have been furnished.

In case the licence holder fails to complete the export obligation or fails to submit the relevant information/ documents, the licensing authority shall take action by refusing further licences, enforce the condition of the licence and Undertaking and also initiate penal action as per law.

The exporters eligible for such licences shall file an application in ‘Aayaat Niryaat Form’ to the licensing authority under whose jurisdiction the manufacturing unit of the applicant is located.

The Head office/Registered office of the company can also file an application on behalf of the manufacturing unit. In such cases, the Head office/Registered office shall furnish full address of the factory where the inputs shall be used in the resultant product for exports.

In case of merchant exporters, the application shall be made by the Head office/ Registered office mentioning the name and address of the supporting manufacturer which shall be endorsed on the condition sheet attached to the licence.

The applicant shall have the flexibility to import any input in respect of items mentioned in the licence. Items reserved for imports by State Trading Enterprises cannot be imported against advance licence. However those items can be procured from State Trading Enterprises against ARO issued to advance licence holder. , the licence holder shall have to account for the inputs as per SION/ individual norms fixed by Advance Licensing Committee within the time period prescribed in this regard.

In respect of export products for which Standard Input Output Norms does not exist, the licence holder shall submit an application in ‘Aayaat Niryaat Form’ alongwith prescribed documents to ALC before making the shipment. The applicant shall also furnish Advance Licence for Annual Requirement number and date alongwith the file number from which the same was issued in the covering letter to the application.

In such cases where there is a change in SION/ individual norms fixed by Advance Licensing Committee during the validity period of the licence, the licence holder shall account for raw material in respect of the exports made prior to the date of amendment, as per pre-revised norms and for exports made on or after the date of amendment as per revised norms.

At the time of imports, the licence holder shall furnish the details of inputs to the Customs authorities for making entries in the imports column. The licence holder shall maintain the nexus in the imported inputs and the resultant product.

(d)

The applicant shall furnish details of the export product group, CIF value of licence and FOB value of the export obligation. However, the licence holder shall have the flexibility to export any product falling under the export product group using the duty exempted material.

The licence shall be valid for 24 months for imports and exports from the date of its issuance. Further extension of export obligation period or revalidation shall be governed by paragraph 4.22 and 4.23 of this handbook. Each licence will have One port of registration for imports. Exports can take place from any port mentioned in paragraph 4.19.

The request(s) for revalidation of licence and/or extension of the export obligation period shall be made in the form given in ‘Aayaat Niryaat Form’.

(f)

Within the eligibility, an exporter may apply for one or more than one licences in a licensing year, subject to the condition that against one port of registration only one licence can be issued for the same product group.

On completion of export obligation against one or more licences, all issued in the same licensing year, the entitlement of an exporter for that licensing year shall be deemed to be revived by an amount equivalent to the export obligation completed against the licence(s).  

(g)

After expiry of the export obligation period, including the extended export obligation period, if any, the licence holder shall furnish proof of having fulfilled export obligation by submitting the documents prescribing in paragraph 4.25. In case of bonafide default in fulfillment of export obligation, the licence holder can apply for regularization in terms of paragraph 4.28.

The provisions contained in paragraph 4.24A shall also be applicable to "for intermediate supplies" so far as they are not inconsistent with the following.

The facility is also available for intermediate supplies for the cases where the intermediate supplier intends to supply the material against invalidation letters issue to the holders of Advance license. In such cases, a copy of the invalidation letter which makes the licence invalid for direct import of items to be supplied by the intermediate manufacturer will be given to the licence holder and copy thereof will be sent to the intermediate supplier as well as the licensing authority of the intermediate supplier. Further the invalidation letters should also contain the licence number and date of ‘Advance Licence for annual Requirement ’ to enable proper accounting of the invalidation letters. These would be submitted to the Licensing authority concerned by the intermediate supplier for the purpose of closure of licence.

4.25

The licence holder shall furnish the following documents in support of having fulfilled the export obligation:-

For physical exports:-

Bank Certificate of Exports and Realisation in the form given at Appendix-22A or Foreign Inward Remittance Certificate (FIRC) in the case of direct negotiation of documents or Appendix –22B in case of offsetting of export proceeds. However, realisation of export proceeds shall not be insisted if the shipments are made against :

confirmed irrevocable letter of credit or

bill of exchange is unconditionally Avalised/ Co- Accepted/ Guaranteed by a bank and the same is confirmed by the exporters bank.

The stipulations at (a) or (b) above must be certified by the bank in column 14/15 of Appendix- 22A.

EP copy of the shipping bill(s) containing details of shipment effected or bill of export in case of export to SEZ.

A statement of exports giving details of shipping bill wise exports indicating the shipping bill number, date, FOB value as per shipping bill and description of export product

A statement of imports indicating bill of entry wise item of imports, quantity of imports and its CIF value.

For deemed exports (including intermediate supplies):

A copy of the invoice or a statement of invoices duly signed by the unit receiving the material and their jurisdictional excise authorities certifying the item of supply, its quantity, value and date of such supply.

However in case of supply of items which are non excisable or supply of excisable items to a unit producing non excisable product(s), a project authority certificate (PAC) certifying quantity, value and date of supply would be acceptable in lieu of excise certification.

However, in respect of supplies to EOU/EHTP/ STP/ BTP, the supplier has the additional option to furnish a copy of ARE-3 duly signed by the jurisdictional excise authorities/Bond Officer certifying the item of supply, its quantity, value and date of such supply in lieu of the excise attested invoice (s) or statement of invoices as given above.

Payment certificate from the project authority in the form given in Appendix-22C. In the case of supplies to EOUs/EHTPs/ STPs / BTPs deemed exports (including Intermediate Supplies), documentary evidence from the bank substantiating the realisation of proceeds from the Licence holder or EOUs/EHTPs/ STPs/ BTPs or the Project Authority, as the case may be, through the normal banking channel, shall be furnished in the form given at Appendix-22B.  However realisation of proceeds shall not be insisted upon if the shipments are made against:

confirmed irrevocable inland letter of credit or

inland bill of exchange is unconditionally Avalised/ Co- Accepted/ Guaranteed by a bank and the same is confirmed by the exporters bank.

The stipulations at (a) or (b) above must be certified by the bank in column 5/6/7 of Appendix- 22B.

A statement of supplies giving details of supply invoices and indicating the invoice number, date, FOR value as per invoices and description of product.

A statement of imports indicating bill of entry wise item of imports, quantity of imports and its CIF value.

In case the export obligation has been fulfilled, the licensing authority shall redeem the case.

After redemption, the licensing authority shall forward a copy of the redemption letter indicating the shipping bill number(s), date(s), FOB value in Indian rupees as per shipping bill(s) and description of export product to the Customs authority at the port of registration.

Before discharging BG/LUT against r Physical Exports, the Customs shall verify that the details of the exports as given in the "Redemption Certificate" are as per their records. However before discharging BG/LUT against Intermediate Supplies and Deemed Exports, the Customs shall verify the details of the supplies from the Central Excise authorities/Bond Officer.

Ordinarily, redemption of BG/LUT shall not preclude the customs authority from taking action against the licence holder for any misrepresentation, mis-declaration and default detected subsequently.

The Advance Licence including Advance Licence for Annual Requirement issued upto 31.8.2004 shall be governed by the provisions contained in Chapter-7 of the Handbook (Vol.1) (RE-2001) and Chapter 4 of the Handbook (2002-2007 as Notified on 31.3.2002) respectively as amended from time to time, excepting the provision relating to clubbing which will be governed by the provisions of para 4.20 of this Handbook.

However, wherever Customs duty is to be paid on unutilised material, the same shall be paid alongwith interest @15% per annum thereon. This facility shall be available to all pending cases of regularisation of bonafide default advance licences irrespective of the date of its issuance including erstwhile Advance licence for physical exports, Annual Advance Licence, Advance Licence for deemed exports or Special Imprest Licence and Advance Licence for Intermediate supply or Intermediate licence.

The cases of a bonafide default in fulfillment of export obligation may be regularised by the licensing authority in the manner indicated below:

(i)

If the export obligation is fulfilled in terms of value, but there is a shortfall in terms of quantity, the licence holder shall, for the regularisation, pay:-

a)

To the customs authority, customs duty on the unutilised value of the imported material alongwith interest at the rate of 15% per annum thereon; and

b)

An amount equivalent to 3% of the CIF value of unutilised imported material through a TR in the authorised branch of central bank of India indicating the "Head Account: 1453, Foreign Trade and Export Promotion and Minor Head 102". However, the provisions of this sub paragraph shall not be applicable if