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Advance Authorization Scheme – Export Obligation

Home Advance Authorization Scheme – Export Obligation

ADVANCE AUTHORIZATION SCHEME
(AA)

AA is a Duty exemption scheme for importing raw materials required for manufacturing the export products under the foreign trade policy, If the final product is to be exported using these inputs, they can be imported without paying basic customs duty, Integrated GST and Compensation cess.

APPLICATION MODE: Online mode in ANF 4A for SION norms / Adhoc norms / Self declaration basis for the concerned Jurisdictional authority by the IEC holder.

APPLICATION FOR: Advance authorization / Special advance authorization for export of articles of apparels or clothing accessories / Advance authorization of annual requirement / Duty free import authorization 

ADVANCE AUTHORIZATION FOR ITEMS PROHIBITED FOR EXPORTS:

Items covered under chapter 7 and 15 of ITC (HS) Schedule 2.

Exports under Advance authorization is allowed subject to the norms specified by norms committee / pre-import conditions specified under SION.

Import and Export are permitted only through EDI enabled ports

Export obligation period for these items is 90days from the date of clearance of import consignment and no extension is allowed, Except for Wheat which is 180days.

No transfer of input material for any purpose even for job work will be permitted.

A penalty of five times of CIF value of the imported material will be levied on Non-fulfillment of EO / non-achievement of stipulated value addition.

FIXATION OF SION / ADHOC NORMS:

Norms committee can act as Recommendatory authority for notification in SION / ADHOC norms periodically under DGFT upon the Exporter / EPC providing the data of production or consumption for past three years.

Norms committee can extend the validity period not more than two years from the date of fixation of adhoc norms for the grant of further authorizations under such norms.

SELF-DECLARED AUTHORIZATIONS:

Regional authority may issue Advance authorization where there is no SION / ADHOC norms notified for an Export product or where there are notified norms but the manufacture is intending to use additional inputs in the process of manufacturing, based on self-declaration by the exporter. The applicant should submit an undertaking by abiding the decision of Norms committee.

In case of revision / rejection by the norms committee of DGFT the applicant must pay duty and interest within 30 days as notified by DoR.

No Authorization will be permitted to the items mentioned in para 4.11 of the FTP.

Various cases involving Advance authorizations:

Cases involving Acetic anhydride, ephedrine or pseudo ephedrine as input An application to be filed online to the regional authority and the same need to be sent to:

· Drug Controller of India, New Delhi.
· Narcotics Commissioner, Central Bureau of Narcotics, Gwalior
· Respective Zonal Director of Narcotics Control Bureau.

A No Objection Certificate needs to be obtained from the Drug Controller and Narcotic Commissioner.
Cases requiring Sanitary import permit Import of meat and meat products including fresh, chilled and frozen meat, tissue or organs of poultry, pig, sheep, goat, egg and egg powder, milk and milk products, bovine, ovine and caprine embryos, ova or semen and pet food products of animal origin.
AA for applicants with multiple units Transfer of duty-free imported goods between the other units of a company for manufacturing process shall be done upon prior intimation to the jurisdictional customs authority.
AA for free of cost and paid material Authorizations granted in terms of para 4.19 of FTP, a specific endorsement made by regional authority shall be made in the condition sheet of Advance Authorization, disallowing remittances for inputs supplied free of cost.
Authorization in Entitlement Norms ratified by Norms committee in O/o DGFT on or after 1/4/2023 in respect of any AA obtained under para 4.07 shall be valid for 3 years from the date of ratification.

AA obtained under para 4.07, 2015-2020 shall be valid up to 31/03/2026.
Authorization in excess of entitlement An applicant shall be entitled for authorization in excess of entitlement of CIF mentioned as 300% of FOB for status holders and 300% of FOB or ₹10 crores for others, subject to furnishing of 100% bank guarantee to Customs to cover exemption from customs duties.
Provisions for Pharmaceutical products Regional authority may issue Advance Authorization for pharmaceutical products manufactured through non-infringing process.

Input combination permitted under NI process, as approved by the concerned agency of the regulated markets shall be exporter-specific and country-specific.
Amendment of Export items and inputs An application for amendment of export items or inputs or quantity of input under SION / Adhoc norms shall be filed online in ANF 4B.
Export / Deemed Export for Authorization Export/Deemed export supplies made from the date of EDI generated file number for an Advanced Authorization may be accepted towards discharge of EO.

Shipping bills/Tax invoices should be endorsed with Authorization number to establish correlation of exports/deemed exports with the authorization.
Enhancement / reduction in value of Advance authorization Regional authority may consider request for enhancement or reduction in CIF value of Advance Authorization; it shall be filed online in ANF 4D.

Application fee is based on the difference in CIF value of initial and final Authorization.
No fee if ₹1,00,000 already paid for AA/DFIA.
Validity period for import and revalidation of Authorization 12 months for import under Advance Authorization.
One revalidation of 12 months for supplies under Chapter 7 of FTP.
Export obligation period 18 months for items under Chapter 7 of FTP.
24 months for defence, military stores, aerospace and nuclear energy items.
Extension in export obligation Fee for 6-month extension:
• Up to ₹2 crore CIF – ₹5,000
• ₹2–10 crore CIF – ₹10,000
• Above ₹10 crore – ₹15,000

For a further 6-month extension, fee is doubled in each category.
Advance authorization for annual requirement · Authorization issued only if SION/adhoc norms exist at time of issue.
· Exporter must mention characteristics/specifications, attested on bill of entry/invoice by customs for:
Stainless steel, copper alloy, synthetic rubber, bearings, solvents, perfumes, essential oils, aromatic chemicals, surfactants, relevant fabrics, marbles.
Fulfilment of export obligation Bond waiver and Export Obligation Discharge Certificate must be submitted to regional authority, which will forward it to customs via EDI at port of registration.
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