The Finance Ministry has prescribed recovery of the amount of duty credit given under the scheme for remission of duties and taxes on exported products, if exports proceeds are not realised in India, within the time frame stipulated by the Reserve Bank of India.
This is part of the mechanism, prescribed by the Ministry, for issuance of duty credit for goods exported under the scheme for remission of duties and taxes on exported products, technically known as RoDTEP. Duty credit means the amount of credit of duty allowed by Customs against a claim under the Scheme.
Filing claims
Eligible exporters are allowed to obtain scrips under the scheme (effective from January 1, 2021) at the notified rate as a percentage of free onboard value of the said goods or up to 1.5 times the market price of the said goods, whichever is less, with a value cap per unit of exported product (as applicable). Exporters are required to file the claims by providing the appropriate declaration at the item level in the shipping bill or bill of export in the customs automated system.
Tanushree Roy, Director (Indirect Tax) with Nangia Andersen LLP said that the rebate amount would be granted by way of a transferable duty credit/electronic scrip (e-scrip) which will be maintained in an electronic ledger by the CBIC (Central Board of Indirect Taxes & Custom). Only basic customs duty can be discharged using the RoDTEP scrips. The export categories or sectors ineligible for the RoDTEP scrips (such as SEZ, FTWZ, EOUs) have also been notified.
The notification makes it clear that exporters need to realise and repatriate the sale proceeds within the time period prescribed under the Foreign Exchange Management Act (FEMA). As on date, the time period is nine months. If exporters fail to do so, then, “the exporter shall, himself or on demand by the proper officer, repay the amount of duty credit, along with interest.”
Contravention of law
The notification mentioned that in case of contravention of law or regulations related with the scheme of duty credit or even in relation to the e-scrip, duty credit or e-scrip will be cancelled post enquiry. “Where the e-scrip is so cancelled, the duty credit amount in the said e-scrip shall be deemed never to have been allowed and the proper officer of Customs shall proceed to recover the duty credit amount used in such e-scrip or transferred from such e-scrip,” it said.
If amount of duty credit has been allowed in excess of what the exporter is entitled to, the notification said that the exporter will repay the excess amount himself or on demand by the tax official along with interest.
“Presently, the government has set aside ₹12,454 crore for tax refunds under the RoDTEP scheme. Being a successor to the MEIS scheme, RoDTEP comes as a big relief to exporters, as this is likely to boost their working capital management as well as give a fillip to India’s exports significantly along with making Indian exports more competitive,” Roy said.