Duty Exemption / Remission Schemes

Objective of the Scheme

The general requirement for the prosperity of the country is that exports are more than imports. The Government keeps track of the schemes and introduces various new schemes to maintain a healthy balance between the two. The Advance Authorization Scheme is one such Government scheme where the import of input is allowed to be duty-free, if it is to be physically used in the product to be exported. This is done after making a normal allowance for wastage. The Government in general sets export obligation as a condition for the issue of such Advance Authorizations.

Main features of the scheme

The main features of the scheme are to enable:

  • A. Duty free import of inputs for export production (up front exemption),

  • B. Tax free domestic sourcing of inputs (under refund route),

  • C. Replenishment of inputs used in export production or

  • D. Remission of duty paid on inputs for export production.

Components of the Scheme

This Scheme consists of the following:

1. What is actual user condition under Advance Authorizations?

Ans. Actual user condition means, raw material imported under Advance Authorization shall not be transferable even after completion of export obligation. Goods imported against such Advance Authorization shall be utilized only in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer like job worker). Waste / scrap arising out of manufacturing process, as allowed, can be disposed of on payment of applicable duty even before fulfilment of export obligation. If any authorization holder not satisfying conditions of actual user (i.e. sale raw material to other person without processing) even satisfying the condition of export obligation, raw material which is imported under Advance Authorization shall require to pay all custom duties with interest on import of such goods.

2. Whether IGST is exempted under DFIA?

Ans. No. Duty Free Import Authorization shall be exempted only from payment of basic customs duty (BCD). Hence IGST is not exempt for import under DFIA.

3. Is DFIA issued on pre export or post export basis.

Ans. Duty Free Import Authorization shall be issued on post export basis.

4. What is the minimum value addition under DFIA scheme and Advance Authorization scheme.

Ans. The minimum value addition under DFIA scheme is 20% and under Advance Authorization scheme is 15%.

5. Whether DFIA and Advance Authorization are transferable.

Ans. DFIA is transferable but Advance Authorization is nontransferable.

6. Whether Advance Authorization and DFIA can be issued on self-declaration basis.

Ans. Advance authorization can be issued either on basis of:

— Standard input output norms (SION)

— Self-declaration basis

— Applicant specific prior fixation of norm by the Norms Committee

— Self-ratification scheme basis

However, DFIA can be issued only for those items having - Standard Input Output Norms (SION) notified.

7. What is self-declaration and self-ratification by applicant.

Ans. Where there is no SION / valid Ad Hoc norms for an export product and where SION has been notified but the exporter intends to use additional inputs in the manufacturing process, the eligible exporter can apply for an Advance Authorization under this Scheme on self-declaration and self-ratification basis.

8. What documents are required for applying for an Advance License from DGFT.

Ans. Documents required for filing Advance Authorization application depends as per the above four methods. The important documents required are -


(ii) Copy of IEC.

(iii) Application form ANF – 4A.

(iv) Copy of SSI / IEM / MSME

(v) Copy of Export House Certificate (if applicable)

(vi) Copy valid RCMC

(vii) Copy of GST Certificate.

9. What is SION.

Ans. SION stands for standard input-output norms. Under this method, norms for thousands of products falling under different segments are pre-fixed. In this method, one can apply for Advance Authorization license under the said Sr. No. of SION and get the license from DGFT.

10. What are self-declared norms.

Ans. Under this method, an exporter can apply for an Advance Authorization license on a self-declaration basis, if the required export product is not there in the SION or he is not satisfied with import quantity allowed. Here, he will select the import items and quantity of import items as per his requirement.