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DGFT Exempts IGST And Compensation Cess Under Advance Authorisation, EPCG And EOU Scheme

Mariya Paliwala
5 July 2022 10:00 AM GMT
DGFT Exempts IGST And Compensation Cess Under Advance Authorisation, EPCG And EOU Scheme
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The Directorate General of Foreign Trade (DGFT) has exempted Integrated Goods And Service Tax (IGST) and Compensation Cess under Advance Authorisation, Export Promotion Capital Goods (EPCG) Scheme and Export Oriented Units (EOU) Scheme.

The government empowered under Section 5 of the FT (D&R) Act 1992, read with Paragraph 1.02 of the Foreign Trade Policy, 2015–2020, has amended the Foreign Trade Policy, 2015–2020.

The Integrated Tax and Compensation Cess under Advance Authorization as per Para 4.14 of FTP 2015-20 is exempted as provided in Notification No. 37/2022-Customs dated June 30, 2022.

The Advance Authorisation Scheme allows the duty-free import of inputs which are physically incorporated into an export product. In addition to any inputs, packaging materials, fuel, oil, and catalysts which are consumed or utilised in the process of production of export products are also allowed. The quantity of inputs allowed for a given product is based on specific norms defined for that product, which consider the waste generated in the manufacturing process. DGFT provides a sector-wise list of Standard Input-Output Norms (SION) under which exporters may choose to apply. Alternatively, exporters may apply for their own ad-hoc norms in cases where the SION does not suit the exporter. Advance Authorisation is applicable to manufacturer exporters or merchant exporters who are linked to a supporting manufacturer(s).

The Integrated Tax and Compensation Cess under the EPCG scheme as per Para 5.01 (a) of FTP 2015-20 is exempt as provided in Notification No. 37/2022-Customs dated 30th June 2022.

The objective of the Export Promotion Capital Goods (EPCG) Scheme is to facilitate the import of capital goods for producing quality goods and services and enhance India's manufacturing competitiveness. The EPCG Scheme allows the import of capital goods for pre-production, production, and post-production at zero customs duty. Alternatively, the exporter may also procure capital goods from the domestic market in accordance with the provisions of paragraph 5.07 of FTP.

The Integrated Tax and Compensation Cess under the EOU scheme as per Para 6.01(d)(ii) of FTP 2015-20 is exempt as provided in Notification No. 37/2022-Customs dated 30th June 2022.

The EOU scheme is one of the export promotion schemes. Under this scheme, manufacturing or service sector units are allowed to be set up with the objective of exporting the entire production of goods manufactured or services.

Notification No. 16/2015-20

Dated: 01.07.2022

Click Here To Read/Download Notification

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