Advance Authorisation Scheme PPT - Latest Updates Included | Afleo

Advance Authorisation Scheme is introduced to import duty-free raw materials and to export those finished goods.
Advance Authorisation Scheme PPT gives all the information about objective of Advance Authorisation scheme / Types of Schemes under Chapter- 4 / SION Norms / Self Declaration Norms / Self Ratification Norms / Prior Fixation of Norms / Value Addition / Pre-Import Condition / Actual User Condition / Validity Period of Import & Re-validation / Export Obligation (Extension in EO) / Duty Free Import Authorisation (DFIA).

1. AFLEO CONSULTANTS
ADVANCE AUTHORISATION
SCHEME
Presented by:
AFLEO CONSULTANTS
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Foreign Trade Policy 2015 -2020
Under Chapter -4

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ABOUTUS -AFLEO CONSULTANTS

3. AFLEO CONSULTANTS
OBJECTIVE :
AdvanceAuthorisationSchemeisintroducedtoimportduty-
freerawmaterialsandtoexportthosefinishedgoods.
ThisSchemeisintroducedtoincreaseexportconcerning
quality.
Toavailofthisschemeandtoincreaseproduction,theexporter
hastotakeanAdvanceAuthorisationlicensefromDGFTRA.
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4. AFLEO CONSULTANTS
SCHEMES UNDER CHAPTER -4
In Chapter-4,FTP 2015-20, there are three types of Schemes:-
DutyExemptionScheme-InthisScheme,theexportercanimport
therawduty-freei.e.atZerocustomsduty.ThisSchemeinclude:-
AdvanceAuthorisationScheme(AAS)
Duty-FreeImportAuthorisation(DFIA)
DutyRemissionScheme-InthisScheme,theexportercanimport
rawmaterialsbypayingCustomdutyandafterexportingcanavailfor
thepaidcustomduty.ThisSchemeincludes:-
DutyDrawbackScheme
SchemeforRebateonStateandCentralTaxesandLevies(RoSCTL),
asnotifiedbytheMinistryofTextileson07.03.2019and
implementedbytheDGFT.
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5. AFLEO CONSULTANTS
Toincreaseexportfromthecountry,ourgovernmenthasintroduced
variousschemes.AndoneofthemistheAdvanceAuthorisationScheme,
inwhichwecanimportrawmaterials/inputsduty-freei.e.zerocustom
dutywhichwillbeusedintheproductionoftheexportproduct.
Fuel,oil,andcatalystwhichisutilizedintheprocessofproductionof
exportproducts,mayalsobeallowed.Anexportobligationistosetasa
conditionforissuingAdvanceAuthorization.
Advance Authorisation can be applied by the following Basis :
Standard Input Output Norms (SION)
Self-Declaration
Prior fixation of Norms by the Norms Committee
Self Ratification Basis
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ADVANCE AUTHORISATION SCHEME :
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6. AFLEO CONSULTANTS
ManufacturerexporterorMerchantexportertiedtosupportingManufacturing
AdvanceAuthorisationforpharmaceuticalproductsmanufacturedthrough
Non-Infringing(NI)processshallbeissuedtomanufacturerexporteronly.
PhysicalexportincludingexporttoSEZunit,DeemedExport.
IntermediateSupply.
AdvanceAuthorisationisalsogiventotheexportertoimportspicesmentioned
underchapter9ITCHSforactivitieslikecrushing/grinding/sterilization/
manufactureofoilsoroleoresins.Thelicenseshallnotbegivenforsimply
cleaning,grading,re-packing,etc.
Is Advance License Transferable?
No, the Advance license is not transferable even after the holder has fulfilled
the export obligation.
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ELIGIBILITY CRITERIA :
Advance Authorisation Scheme is eligible for the below categories:

7. AFLEO CONSULTANTS
Special Advance Authorisation Scheme :
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InSpecialAdvanceAuthorisationScheme,wecanimportduty-freefabric
fortheexportofarticlesofapparelandclothingaccessories.
TheexportercanapplyasperSIONorpriorfixationofNormsbyNorms
CommitteeDGFTDelhi.
TheAuthorisationHoldercanimportrelevantfabricsandnootherinputslike
packingmaterial,fuel,oil,andcatalystwillbeallowedtoimportunderthis
specialadvanceauthorization.
Thefabricimportedagainsttheauthorizationisasperactualusercondition
anditisnon-transferablealsoafterfulfillmentofExportObligation.
However,fabricimportedmaybetransferredforjobworkintermsof
provisionsofGSTActsunderintimationtotheCustomsauthorityattheport
ofregistration(excludingtounitslocatedinareaseligibleforarea-based
exemptionfromCentralExciseDuty).InvalidationoftheAuthorisationshall
notbepermitted.
Thefabricimportedshallbebasedonpre-importcondition.AndonlyDirect
exportcanfulfilltheexportobligation.

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IfanExporterwhoisimportingaparticularinput&
manufacturingfinishedproductduringthewholeyear.So,the
Exporterhastotakelicenseasperhisexportordermeansifhe
getsexportorderforpermonthitbecomesdifficulttotake
licensemanytimesinonefinancialyear.
ToavoidthisDGFThasintroducedtheschemeAdvance
AuthorisationforAnnualRequirement.Inthisscheme,
authorizationholderscanimportduty-freeinputfortheexport
ofmanufacturedgoodsfivetimesduringtheyearatone
licenseofthesameexportproductgroup.
Withthesameportofregistrationandcanbeappliedbasedon
SIONorAdhocnormsalreadyfixedbeforeapplyingforthe
application.
Contd...
AdvanceAuthorisation for Annual Requirement :

9. AFLEO CONSULTANTS
ELIGIBILITY CRITERIA :
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AnnualAdvanceAuthorisation Schemeiseligibleforthebelow
categories:
ThestatusexportholderiseligibletoapplyforAdvanceAuthorisation
forAnnualRequirement.
Exporterhavingpastexportofatleastprecedingtwofinancialyears.
EntitlementbasedontheCIFvalueofimportsshouldbeupto300%
oftheFOBvalueofdirectexportand/FORvalueofdeemedexportin
precedingfinancialyearorRs.1CR,whicheverishigher.
OnlyOne-timeenhancement/reduction oftheauthorizationcanbe
done.

10. AFLEO CONSULTANTS
STANDARD INPUT OUTPUT NORMS (SION):
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StandardInput-OutputNorms(SION)inotherwordswecansaystandard
normswhichdefinethenumberofinputsrequiredtomanufactureoutputfor
exportpurpose.
InthisStandardNormsforthousandsofproductsfallingunderdifferent
segmentslikeChemicalandalliedproducts,Electronics,Engineering,Food
products,Handicrafts,Leather,Plastics,Sports,textile,etc.arepre-fixedby
DGFT.
SIONisnotifiedbyDGFTandapprovedbytheBoardofDirectorsatDGFT
Delhi.
TomodifytheexistingStandardInput-Outputnormsmaybefiledby
manufacturerexporterandmerchant-exporter.DGFTupdatestheexporter
fromtimetotimeregardingfixationoradditionofSIONfordifferentexport
products.
FixedStandardInputOutputNormswillallowtoissuesAdvanceLicensetothe
exportersoftheitemswithoutanyneedforreferringthesametotheDGFT
DelhiHeadquartersonarepeatbasis.

11. AFLEO CONSULTANTS
SELF DECLARATION NORMS :
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TheexportercanapplyforAdvanceAuthorisationbasedonSelf
DeclarationwhereNoSION/AdhocNormsarefixedfortheexport
product.
TheexportercanalsoapplyforAdvanceAuthorisationagainstSelf
DeclarationiftheexportproductismentionedinSION/AdhocNormsbut
hewantstoputadditionalinputinthemanufacturingprocess.
IftheNormsCommitteehasrevisedthenormsorrejectedthe
applicationtheexporterhastopayproportionateorfulldutyand
interestasfixedbyDirectorateofRevenue(DoR)fromthedateof
uploadingofNormsCommitteeDecisiononDGFTWebsite.
Contd…

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TheauthorisationwillnotbeissuedtotheExporterforimportingbelow
mentionedproductlist-
As per Para 4.11 FTP 2015-20, Ineligible categories of import on Self Declaration
basis.
1.All vegetable / edible oils classified under Chapter-15 and all types of oilseeds
classified under Chapter-12 of ITC (HS) book
2.All types of cereals classified under Chapter–10 of ITC (HS) book
3.All Spices other than light black pepper (light berries) having a basic customs
duty of more than 30%, classified under Chapter-9 and 12 of ITC (HS) book
4.All types of fruits/ vegetables having a basic customs duty of more than 30%,
classified under Chapter-7 and Chapter-8 of ITC (HS) book
5.Horn, Hoof and any other organ of the animal
6.Honey
7.Rough Marble Blocks/Slabs; and Rough Granite
8.Vitamins except for use in the pharmaceutical industry
Below Are Some Important Points
Under Self Declaration Norms : (Slide -1/2)

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Below are some important Points
Under Self Declaration Norms : (Slide -2/2)
UndertheSelfDeclarationbasis,theexportercanapplyforadvance
authorizationfortheexportofperfumes,containingperfumery
compoundsandvitaminstotheNormsCommittee.
Also,theexportercanavailadvanceauthorizationbasedontheSelf
Declarationforexportand/orimportofbiotechnologyitemsandrelated
productsareinvolvedandonlyonsubmissionofa“NoObjection
Certificate”fromtheDepartment ofBiotechnologytoDGFTRA.

14. AFLEO CONSULTANTS
SELF RATIFICATION NORMS :
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TheExporterwantstoexportaproductthatisnotmentionedinSIONnora
validAdhocNormsorwheretheexportproductismentionedinSIONbuthe
wantstoincreaseininputs.Forsuchexportproducts,theexportercantake
AdvanceAuthorisationonthebasisoftheSelfRatificationScheme.
InthisScheme,NormsarenotratifiedbytheNormsCommitteeofDGFT
Delhi.Whateverimportorexportdetailsmentionedintheapplicationfora
licensearefinal.
Eligibility:
TheExportercanbeamanufacturerormerchantexporterwhoholdsAEO
Certificate,eligibletoapplyunderthisScheme.
ThisSchemeisnotvalidforfollowingexportproducts:
1.ItemsandrelatedtoBiotechnology
2.SCOMETitems
Contd…

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1.All vegetable / edible oils classified under Chapter-15 and all types of oilseeds classified
under Chapter-12 of ITC (HS) book
2.All types of cereals classified under Chapter–10 of ITC (HS) book
3.Horn, hoof and any other organ of animal
4.Wild animal products, organs and waste thereof
5.Honey
6.All items with basic customs duty of 30% or more
7.All types of fruits/ nuts/ vegetables classified under Chapter-7 and Chapter-8 of ITC
(HS) book
8.Items covered under heading 2515, 2516, 3301, 3302, 3303 6801 and 6802 of ITC(HS)
Classification
9.Items covered under Chapter 50 to 63 of ITC (HS) classification
10.Acetic Anhydride, Ephedrine and Pseudoephedrine
11.Vitamins
12.Biotechnology items and related products
13.Insecticides, Rodenticides, Fungicides, herbicides, Anti sprouting products, and plant
growth regulators, disinfectants and similar products of all forms, types and grades
14.Waste/Scrap of all types
15.Second hand goods
TheexportproductmentionedinChapter1to24and71of
ITCHSCodeandbelowtheexportproduct:-

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Importedproductsshouldbeusedasperthepre-importcondition
i.e.Theexportedproductshouldbeproducedfromtheimportedraw
materialsasperlicenseandthesameconditioniswhenraw
materialsareindigenouslyprocured,shouldbefullyutilizedinthe
productionoftheexportproduct.
Whileapplyingonlineapplication,theexportershouldsubmitaCE
certificateasperAppendix4Eand4K.TheCharteredEngineer
certifyingthecertificateshouldbeofthatfieldandheshouldhave
notpenalizedinthelastfiveyearsbyanyAuthority.
Oncethelicensereceivedandstartsexportingfromthefinished
goodproducedfromimportedrawmaterials.
Theexporterhastomaintainproperaccountofconsumptionand
utilizationofduty-freeimported/domesticallyprocuredraw
materialsagainstthelicense.
Below are some important Points Under Self
Ratification Norms: (Slide-1/2)

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WhilesubmittingdocumentsforEODC,hehastosubmitimportas
perexportdetailsasprescribedinAppendix4Hformat.
TheDGFTwillcompareAppendix4Hwithalicense,thatthe
exporterhasimportedandexportedasperlicenseornot.
AfterreceivingEODC,theexporterhastomaintainproductionand
consumptiondataasDGFTcanassignanauthorizedpersontoaudit
withinthreeyearsfromtheissueofLicense.
Theauditorwillcheckeachandeverydataiffoundanymis-
declarationorinputsimportedarenotfullyutilizedintheproduction.
TheauditorwillsubmitthedataandasperthatDGFTwillconducta
specialaudit.ThesamehasresultedthantheDGFTwilltakeaction
againstthemanufacturerandCharteredEngineer.
Below are some important Points Under Self
Ratification Norms: (Slide-2/2)

18. AFLEO CONSULTANTS
PRIOR FIXATION OF NORMS :
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Inthis,theExporterhastoapplyforthenormsfixationatDGFT
HeadquartersDelhiandiftheNormscommitteeapprovesthe
detailsgivenbytheexporter,hecanapplyforAdvance
Authorisation.

19. AFLEO CONSULTANTS
Procedure for applying Advance Authorisation on the basis of SION / SELF
DECLARATION / PRIOR FIXATION OF NORMS / SELF RATIFICATION
19
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20. AFLEO CONSULTANTS
VALUE ADDITION :
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TheExporterwhilefulfillingtheexportobligationhastofulfillvalue-
wise.
Belowistheformulaforreference:
Value Addition = (A –B / B) * 100
Where,
A=FOBvalueofexportrealized/FORvalueofsupplyreceived.
B=CIFvalueofinputscoveredbyAuthorisation,plusthevalueofany
otherinputusedonwhichbenefitofDBKisclaimedorintendedto
beclaimed.
TheminimumValueAdditionneedstobemaintainedis15%.
Contd…

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ExportProduct Minimum
Value Addition
Tea 50%
CopperAnode/CopperCathode/CopperWireRods(Manufacturedfrom
Copperconcentrate)
8%
Petroleumproduct(s)coveredunderSIONSl.No.A2688,A-2689andA-2690of
theproductGroup“Chemicals&AlliedProducts”i.e.:
(i)LightEnds(LE)viz.,Naphtha,MotorSpirit,Gasoline,Solvents,Reformate,
Hexane,TAME,excludingC3,C4Hydrocarbonsandmixturesthereof;
(ii)MiddleDistlliates(MD)viz.,ATF,SKO,HSD,GasOil,MTO,LABFS,
AROMEX,JBO,LDO,VGO,Solvents;and
(iii)HeavyEnds(HE)viz.FO,FurnaceOil,FuelOil,LSHS,HPS,Puch,Asphalt,
PetroleumBitumen,RawPetroleumCoke&CalcinedPeroleumCoke,Slack
Wax,ParaffinWax,MicrocrystallineWax,CBFS,RPO,Sulphur.(Excluding
lubricatingoilsandpetrochemicalproductslikeBenzene,Toluene,MTBE
etc.)
8%
Differentexportproducthasdifferentminimum value
additionandbelowarethedetails:

22. AFLEO CONSULTANTS
IMPORT OF MANDATORY SPARES :
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SometimestheExporterhastoimportMandatorysparewiththe
rawmaterialswhichhavetobeexportedwithfinishedgoods.To
importofthesesparesispermittedduty-freetotheextentof
10%ofCIFvalueofAuthorisation.

23. AFLEO CONSULTANTS
DUTIESEXEMPTED UNDER ADVANCE AUTHORISATION :
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WhileapplyingforAdvanceAuthorisation,theexporterisexemptedfrom
belowcustomdutiesdependsontheimportedproduct–BasicCustomsDuty,
AdditionalCustomsDuty,EducationCess,Anti-dumpingDuty,Countervailing
Duty,SafeguardDuty,TransitionProductSpecificSafeguardDuty,wherever
applicable.
Importagainstsuppliescoveredunderparagraph7.02(c),(d),and(g)of
FTPwillnotbeexemptedfrompaymentofapplicableAntidumpingDuty,
CountervailingDuty,SafeguardDutyandTransitionProductSpecific
SafeguardDuty,ifany.
However,importsunderAdvanceAuthorisationfordirectexportsarealso
exemptfromthewholeoftheintegratedtaxandCompensationCessleviable
undersub-section(7)andsub-section(9)respectively,ofsection3ofthe
CustomsTariffAct,1975(51of1975),asmaybeprovidedinthenotification
issuedbyDepartmentofRevenue,andsuchimportsshallbesubjecttopre-
importcondition.
ImportsagainstAdvanceAuthorisationsforphysicalexportsareexempted
fromIntegratedTaxandCompensationCessupto31.03.2020only.

24. AFLEO CONSULTANTS
PRE-IMPORT CONDITION :
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Inthepre-importcondition,againstAdvanceAuthorisation,
theAuthorisationholderhastoimporttherawmaterials
compulsorilyinthemanufacturingprocessandthenexport
thefinishedgoods.
TheAuthorisedholderhastousetheduty-freeimportedraw
materialintheproductionandthenexport;heisunableto
usethependingordomesticallyprocuredrawmaterials.The
exportercanapplyinputsmentionedinAppendix-4Jand
SION.

25. AFLEO CONSULTANTS
ACTUAL USER CONDITIONS :
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TheActualUserConditionistoimporttherawmaterialsduty-
freeagainsttheadvanceauthorizationlicenseandthedetails
ofactualimportedrawmaterialsshouldbementionedinthe
licenseandexportthefinishedgoodsproducedfromtheraw
materialsimported.
ActualUserConditionisvalidtillExportObligationisfulfilled
andredemptionletterreceivedfromDGFTRA.
ItisnottransferablealsoaftercompletionofExport
Obligation.

26. AFLEO CONSULTANTS
VALIDITY PERIOD OF IMPORT AND REVALIDATION :
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ValidityPeriod:
InAdvanceAuthorisation,regardingtheValidityperiodofImportis
12monthsfromthedateofissueoflicense.
ValidityforsuppliesunderDeemedexportistheexpiryofthecontractof
project12monthsfromtheissueoflicense,whicheverislater.
Revalidation:
TheExportercanrevalidatethelicensetwiceeachofsixmonthsfromthe
expiryofthelicense.
TorevalidatetheauthorizationholderhastofulfilltheformANF-4D.
Incaserevalidationofadvanceauthorizationissuedpriorto27.08.2009,
ValueAdditionmaintainedisat15%orasperAdvanceAuthorisation
whicheverishigher.

27. AFLEO CONSULTANTS
DOMESTIC SOURCING OF INPUTS :
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IncasetheexporterdoesnotwanttoimportdirectlyunderAdvance
Authorisationi.e.hewantstoprocureindigenouslyispossibleonly
throughapplyingforAdvanceReleaseOrder(ARO)orInvalidation
Letter.
ThedomesticsuppliercantakeAdvanceAuthorisationtoimportraw
materialduty-freeandsupplytheresultantproductorintermediate
producttoanotheradvanceauthorizationagainsttheinvalidation
letter.
InvalidationLetterorAROisissuedbyDGFTRAatthetimeof
AdvanceAuthorisationorsubsequently.
ThevalidityoftheInvalidationletterorAROisvalidtillthevalidity
ofAdvanceAuthorisation.

28. AFLEO CONSULTANTS
EXPORT OBLIGATION :
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ThegoodsexportedinwhichrawmaterialsimportedunderAdvance
Authorisationatzerocustomsdutyhavetofulfilltheexportobligation.
ExportObligationmeanstheobligationtoexportproductsintermsof
quantityandvalue-wiseasprescribedbyDGFTRA.
Quantity-wiseExportObligation:–Quantityofexportmade
shouldbeproportionatetothenumberofimportsmade,asper
norms.
Value-wiseExportObligation:–Minimum15%ofvalueaddition
hastobemaintainedinthisAdvanceAuthorisationScheme.

29. AFLEO CONSULTANTS
EXPORT OBLIGATION (EO) PERIOD AND
IT’s EXTENSION :
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TheperiodforfulfillmentofexportobligationinAdvance
Authorisationis18monthsfromthedateissueoflicense.
InthecaseofDeemedExport,theExportObligationperioddepends
onthecompletionoftheprojectthatiscontractedor18months
whicheverismore.
Butincaseofexportingproductsrelatedtodefense,militarystore,
aerospace,andnuclearenergy,theexportobligationperiodwillbeof
24monthsorco-terminuswithcontracteddurationoftheexport
orderwhicheverismore.
Also,pleasefindbelowtheimportproductlistwiththeirexport
obligationperiodspecifiedbyDGFTinAppendix-4J.
Contd…

30. AFLEO CONSULTANTS
APPENDIX-4J
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Sr.
No.
Import Product List Export Obligation
period
1 Spice
(a)Pepper;cardamomandchiliesforValueAdditionpurpose
likecrushing/grinding/sterilisationorformanufactureof
oilsandoleoresinsandnotforsimplecleaning,grading,
repackingetc.
120 days However, for
imports completed up
to 31.12.2008, Export
Obligation Period (EOP)
shall be 150 days.
(b)Spicesotherthanpepper,cardamom andchilliesfor
manufactureofSpiceoils.Oleoresins
12 months.
(c)Otherthan(a)&(b)above. 90 days
2 Drugs(withaspecificexportorderandpre-importcondition) 12 months.
3 Penicillinanditssalts[ITC(HS)CodeNo.29411010] 12 months.
4 Tea 6 months.
5 CoconutOil 90 days
6 Silkinanyform 9 months.
7 Drugsfromunregisteredsources 12 months.
8 PreciousMetal/Gold/Silver/Platinum 120 days

31. AFLEO CONSULTANTS
DUTY FREE IMPORT AUTHORISATION (DFIA) :
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InthisAuthorisation,theexportercanimporttherawmaterialsduty-
free.InadditiontotheimportofOilandCatalyst,whichisconsumedor
utilizedintheprocessofproductionoftheexportproductisalsoallowed.
InDFIA,theexporterhastoexportthefinishedgoodsandthenasper
exporthecanimportduty-freerawmaterials.
InDFIA,onlyBasicCustomDutyisexemptedwhileimportofraw
materials.InDFIA,whileapplyingapplicationtheexportercanapply
basedonSION.
MinimumValueAdditiontobeingmaintainedin20%.
Thevalidityofexportis12monthsfromthedateofthefilenumber
generated.
InDFIA,thevalidityofimportis12monthsfromtheissueoflicenseand
itstransferable.RevalidationisnotpermittedinDFIAbyDGFTRA.

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PLEASE DO VISIT US
@
www.afleo.com

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THANK YOU