The Hindu Business Line : Ban on duty-free permit issue for inputs with prior import condition

DFRC is a post-export replenishment scheme. The certificate is issued to a merchant-exporter or manufacturer-exporter for the import of inputs used in the manufacture of goods without payment of basic customs duty. DFRCs are issued only in respect of products covered under the Standard Input Output Norms (SIONs)

"No DFRC would be allowed for the inputs with prior import condition because it defeats the very purpose of prior import condition," a Directorate-General of Foreign Trade (DGFT) circular said.

Informed sources said that the main purpose of a prior import condition on inputs is to ensure that the inputs are directly used in the manufacture of exported product and that such products are not made from domestically made inputs.

The latest move of DGFT has in a way partially reversed the decision taken on the DFRC scheme by the erstwhile National Democratic Alliance (NDA) Government. The scheme was amended in January (mini-Exim Policy) to specify that in respect of SIONs which are subjected to "actual user" condition or where the input(s) is allowed with prior import condition or for import of fuel under the general norms, the DFRCs would be issued with actual user condition for these inputs.

Now the DGFT has held that the main purpose of the amendment of January 2004 was to replenish the inputs utilised in the export product with actual user condition. This was otherwise not available to exporters availing themselves of DFRC. According to the DGFT circular, the words "where the input(s) is allowed with prior import condition" were added inadvertently in the amended paragraph of the DFRC scheme in the Exim Policy.

Informed sources said that the move to prohibit issuance of DFRCs for inputs with prior import condition might impact the sugar industry as well as certain segments of the chemicals sector.

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