Frequently Asked Questions

1. IEC (Importer Exporter Code)
1) What is an IEC Certificate and who can procure it?
a. IEC stand for Import Export Code Certificate issued by the Director General of Foreign trade registering an individual, firm, organization, entity, etc as an Exporter or Importer.
b. An IEC can be obtained by any PAN Holder desirous of conducting Exports or Imports.
2) What is the tenure of an IEC?
a. An IEC once issued is permanent in nature till the same is surrendered by the IEC holder or cancelled by the Licencing Authority upon any default made be the IEC holder.
3) How often is the IEC required to be updated?
a. An IEC once issued needs to be updated within 90 days in the case of the following:
1. If there is any change in the
1. Name of the IEC holder;
2. Address of Registered / Branch office / Factory address;
3. Constitution viz. Change in Directors, conversion from Proprietorship concern to Firm, Firm to Company, Pvt Ltd to Public Ltd, change in Bank details, etc.
4. PAN Details of the IEC holder.
2. Any change is required by the Government for moving towards an Integrated One Number Regime;
b. Upon the change being intimated beyond a period of 90 days, the changes shall be registered by the RLA upon payment of a penalty;
2. DEPB
1) What is DEPB?
a. Duty Entitlement Pass Book (DEPB) is a Duty Credit Entitlement issued on Post Export Basis to neutralise the incidence of Customs duty on the import content of the export product.
2) Who can claim a DEPB Entitlement?
a. Under the DEPB scheme, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency.
3) How does an exporter ascertain the eligibility of his product to claim DEPB?
a. Eligibility for claim of DEPB can be ascertained with reference to the DEPB Schedule wherein the description of the export product is either
1. On basis of manufacturing process i.e. forging, casting, extrusion, etc. or
2. On basis of content i.e. ferrous / non ferrous, alloy / non alloy, etc.
4) What if the export product is not mentioned in the DEPB Schedule?
a. In such case, exporter should undertake the exercise of getting SION (Standard Input Output Norms) fixed for his product and subsequently move for fixation of DEPB Rates.
b. For this, the exporter should be very clear of implication of custom duty and excise on input stage level for his product and effect of the tax component on his pricing.
5) How can this Duty Credit Entitlement be used?
a. Such DEPB claimed can be used in either of 2 ways:
1. To meet incidence of Customs duty of imports conducted be himself; or
2. Transfer such DEPB to an Importer against consideration;
3. ADVANCE AUTHORISATION
1) What is an Advance Authorisation?
a. An Advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in the export product. The underlying principal is to make available all kinds of inputs to an exporter free from duties and taxes.
b. Such authorisations are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty, if any
c. Advance Authorisation can be issued for:
1. Physical Exports;
2. Intermediate Supplies;
3. Deemed Exports;
2) Who can apply for an Advance Authorisation?
a. A manufacturer – exporter can apply.
b. A merchant exporter can also apply on the basis of a tie up arrangement with a supporting manufacturer.
3) What forms the basis of applying for an Advance Authorisation?
a. Govt. of India has announced SION for around 7200+ items against which an Advance Authorisation can be procured.
b. However there exists a provision for getting an Advance Authorisation on self declared norms which subsequently goes for ratification with the office of DGFT, New Delhi.
4) What are the conditions governing an Advance Authorisation?
a. Advance Authorisation and / or materials imported there under shall not be transferable even after completion of export obligation, i.e. Actual User condition applies.
b. Advance Authorisation shall be issued with a positive value addition while undertaking an Export Obligation against the duty free imports.
5) What is the necessity for a Bank Guarantee?
a. Whenever an exporter undertakes the imports before exports, he shall have to provide to the customs authority a bank guarantee to the tune of the duty that would be saved on such imports.
b. However the exporter is allowed to release the goods on LUT (Legal Undertaking) in lieu of a BG in specified cases.
6) Is it necessary to always import the goods first?
a. The exporter is allowed to procure the goods locally from an indigenous supplier against the advance authorisation.
b. In cases where exports are conducted prior to imports, no Bank guarantee shall be required.
7) What is the validity of the authorisation?
a. Validity of the authorisation is 24 months from date of issue for both and export and import with a provision of extension for both on paying appropriate fees.
8) Which exports are considered in fulfillment of E.O.?
a. The export made has to be a DEEC shipment in the Customs records to be qualified as an export against the advance authorisation.
b. The E.O. is treated to be fulfilled when proper accounting is being placed before the regional authority who when satisfied will issue a discharge letter.
4. Others
1. What qualifies as “Capital Goods” for the EPCG Scheme?
a. "Capital Goods" means any plant machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion.
b. Capital goods also include packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control.
c. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in the services sector.
2. Who can get exemption from Bank Guarantee?
a. All the exporters who have an export turnover of at least Rupees 5 Crore in the current or preceding licencing year and have a good track record of three years of exports will be exempted from furnishing a BG for any of the schemes under this Policy and may furnish a LUT in lieu of BG.
3. Is Export of Spares allowed? a. Warranty spares, whether indigenous or imported, of plant, equipment, machinery, automobiles or any other goods, except those restricted under ITC (HS), may be exported along with the main equipment or subsequently but within the contracted warranty period of such goods subject to approval of RBI.