Chapter-07

Part VII

Export by Advanced Licence Holder

1. Introduction

1.1 An advance Licence holder and Duty Exemption Entitlement Certificate under the EXIM Policy issued under foreign Trade (Development and Regulation) Act, 1992, who is also a manufacturer and exporter (who has been termed as ultimate exporter may procure intermediate goods from the place of manufacture without payment of duty for the purpose of use in the manufacture or processing of all articles(hereinafter referred to as the "resultant articles") and export them out of India, to any country except Nepal and Bhutan. Notification No. 44/2001-Central Excise (N.T.), dated 26-6-2001 was issued for this purpose, which lays down the conditions and procedures for suchexports.

2. Conditions

2.1 The manufacturer of the intermediate goods should hold an advance intermediate licence. He is also covered by this Scheme if he has applied for such licence to the Licensing Authority and has obtained an acknowledgement for the same or has been permitted by the licensing authority or the Committee to manufacture for supply of such goods to the ultimate exporter. As per EXIM Policy, the advance Intermediate licence is given to the supplier of intermediate goods after invalidating those quantities specified in an Advance Licence, which the Advance Licence holder (manufacture ofresultant articles) wants to procure indigenously.

2.2 The provisions of the Central Excise (Removal of Goods at Confessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 has to be followed, with such modifications, as may benecessary for this Scheme. It is clarified that only the procedure specified in this rule has to be applied to the extent they are to be applicable to manufacture and export under this Scheme. The bond for procurement has to be the same as under applicable under this rule.

2.3 The quantity of intermediate goods removed without payment of duty shall not exceed the duty exemption entitlement indicated in the DEEC;

2.4 The intermediate goods has to be utilised by the ultimate exporter for manufacture of resultant articles to be exported or for use as replenishment of duty paid excisable goods of identical specifications and technical characteristics which have been used in the manufacture of resultant articles already exported indischarge of export obligations under a Duty Exemption Entitlement Certificate;

2.5 It has been provided that the intermediate goods obtained for replenishment of duty paid excisable goods may be utilised for further production in the factory of the ultimate exporter or may be disposed of in such manner asmay be specified by the Commissioner of Central Excise having jurisdiction over the factory of the ultimate exporter in terms of the provisions of Export and Import Policy notified under the Foreign Trade (Development andregulation) Act, 1992 (22 pf 1992);

2.6 It has also been provided that the ultimate exporter has to make necessary arrangements for facilitating drawl of samples and subjecting them to such tests as may be directed by the Commissioner ofCentral Excise having jurisdiction over the factory. Frequency of drawl of sample will depend upon the nature of a commodity. If the commodity is of special nature where physical verification about its composition or quality is not possible sample may be drawn from each export consignment. Otherwise, sample may be drawn in random manner.

2.7 Any waste or by-product arising from the process of manufacture undertaken by the ultimate exporter on theintermediate goods obtained under this notification has to be removed on payment of appropriate duty as ifsuch waste is manufactured in the factory of the manufacturer.

2.8 The export of resultant products made out of intermediate products, namely, nylon fibre, nylon yarn, nylon fabrics, polyester fibre, polyester yarn, polyester fabrics, stainless steel sheets, stainless steel strips, magnetic tapes, precious metals, metals clad with precious metals and articles thereof, be made only through - any of the sea ports at Kandla, Mumbai, Nhava Sheva, Cochin, Chennai, Visakhapatnam and Kolkata; or any of the airports at Mumbai, Kolkata, Delhi, Chennai and Bangalore.

3. Export procedure

3.1 The goods shall be exported following the procedure specified in the Ministry of Finance (Department of Revenue) notification no. 42/2001-Central Excise (N.T.), dated 26th June, 2001. It is clarified that this only refers to furnishing of undertaking if the manufacturer is a Central Excise registrant and preparation of A.R.E. 1and acceptance of proof of export etc. This Scheme is only available to amanufacturer-exporter. If the manufactured item is fully exempted and the manufacturer is not manufacturing any other dutiable goods in the same factory, they may work under the simplified export procedure meant for fully exempted goods. In any case, the Advance Licence (DEEC Book) is endorsed on the place of export by customs authorities, which may also be used for accepting proof of export.

3.2 The ultimate exporter submits within thirty days of the expiry of the period specified in the Duty Exemption Entitlement Certificate orAdvance Licence or within such extended period as may be permitted by the Licensing Authority or the Committee a detailed summary of the accounts maintained in theproforma specified under the Duty Exemption Entitlement Scheme, along with attested copies of the shipping bills, bills of lading and the Duty Exemption Entitlement Certificate with appropriate entries made by the officers of Customs.

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