- How a user can claim the credit and generate the e-credit scrips on the online ICEGATE Portal?
Ans: Once the RoDTEP scroll is generated, the credits allowed will be available within their ICEGATE login of the exporter to claim and covert into a credit scrips. In case the exporters have not registered on ICEGATE already with their digital signatures, they may refer to this advisory (2_Advisory_Registration_APPROVED.pdf (icegate.gov.in)) and complete registration in order to avail the benefits of RoDTEP.
The exporter will be able to club the credits allowed for any number of Shipping Bills at a port and generate a credit scrip for the same on ICEGATE portal. Scrips once generated will reflect in the exporter’s ledger and will be available for utilization in paying eligible duties during imports or for transfer to any other entity having IEC and a valid ICEGATE registration. A detailed advisory for the benefit of the exporter on the scrip generation, ledger maintenance and transfer facilities will be published soon on ICEGATE. These facilities will be made available once the final RoDTEP rates are notified and scroll generation is enabled.
- What is the procedure for transfer of the e-credit scrips?
Ans: Once a person has created an electronic credit ledger account in its ICEGATE portal, then it can transfer a scrip to another person. It is important to note that the person to whom the e-scrip is issued must also possess a valid credit ledger account. The following steps needs to be carried out to transfer the scrips:
- Select the “Transfer scrip” tab to transfer a particular scrip to any other user.
- The scrip to be transferred from the generated scrips must be selected. The list of the generated scrips is available in the drop-down menu along with the “Scrip Available” Option.
- Upon selection, the user can view the scrip amount and enter the IEC of the user to which the scrip is to be transferred. These details, of the IEC holder to whom the user wants to make a transfer, can be entered in the textbox alongside the “Enter Transferee” option.
- OTP is generated and sent to the user who has initiated the transfer on the registered mobile number and email ID.
- After successfully transferring the request, Scrip will be viewed in a grid on the same page. The user who has initiated the transfer scrip request can cancel the request at this stage using the cancel button as shown below.
- An approval request is sent to the IEC for whom a transfer request has been initiated by the user. This IEC holder to whom the request has been sent can either approve or reject the request in the “Approve scrip transfer” tab.
- After clicking the Approve button, the transferee is directed to fill OTP which is sent to the transferee over the registered mobile number and email ID. The Scrip will be transferred to the transferee after successful OTP validation.
- What is the declaration that needs to be filed at the time of filing the Shipping Bill?
Ans: At the time of filing the shipping bill under the RoDTEP scheme, following declaration must be filed:
“I/We, in regard to my/our claim under RoDTEP scheme made in this Shipping Bill or Bill of Export, hereby declare that:
I/ We undertake to abide by the provisions, including conditions, restrictions, exclusions and time-limits as provided under RoDTEP scheme, and relevant notifications, regulations, etc., as amended from time to time.
Any claim made in this shipping bill or bill of export is not with respect to any duties or taxes or levies which are exempted or remitted or credited under any other mechanism outside RoDTEP.
I/We undertake to preserve and make available relevant documents relating to the exported goods for the purposes of audit in the manner and for the time period prescribed in the Customs Audit Regulations, 2018.”
Ans: The administration of the Scheme would be done by the Ministry of Finance. The generation and utilisation of rebate benefit should be done through portal designed by the MoF. Hence, there do not appear any use of DGFT portal in the process.
- Whether ledger to be maintained at GSTIN level or IEC level?
Ans: The ledger should be maintained at IEC level.
- Whether I need to register at the port for the purpose of claiming and utilisation and RoDTEP benefits?
Ans: Registration on the ICEGATE online portal and creation of the e-credit ledger seems to be the sufficient compliance to avail the benefit of this scheme. The registration at the port code of export as was required under the erstwhile MEIS scheme seems not required under this scheme. This is more so because the entire mechanism of issuance, processing, generation and utilization of the scrips is being carried out through a common portal in the ICEGATE. However, we need to await for the detailed rules and guidelines to get complete clarity on this requirement.
Ans: It is pertinent to note that the benefit of this scheme is allowed subject to the receipt of sale proceeds within the time allowed under the Foreign Exchange Management Act, 1999 failing which such rebate shall be deemed never to have been allowed. Although, the rebate would not be dependent on the realization of the export proceeds at the time of issuance of the rebate, however adequate safeguards would be put in place to avoid mis-use on account of non-realization of the export proceeds.
Since, in the case of issuance of samples on FOC basis, no export proceeds are realised in the convertible foreign exchange, therefore the exporter would not eligible for the RoDTEP benefit in respect of goods issued as free samples. However, if the free samples are exported well within the limit provided vide Guidelines of RBI under FEMA the possibility of RoDTEP could be evaluated.
- I am a textile manufacturer and exporter. Can I claim ROSCTL along with RoDTEP?
Ans: It is pertinent to note that the Rebate of State and Central Taxes and Levies (RoSCTL) Scheme is eligible for the export of apparels and made-ups only, i.e., the textile goods covered under Chapter 61, 62 & 63 of the HS Tariffc Code. The RoSCTL scheme is effected from 07.03.2019 to 31.03.2020 as per Para 4.01 (c) of FTP 2015-20. Further, On July 14, the Cabinet approved the continuation of the Rebate of State and Central Taxes and Levies (RoSCTL) scheme under which garment exporters will continue to get a rebate on central and state taxes on their outward shipments till March 2024.
Now, upon review of the Appendix 4 issued under the RoDTEP scheme along with the Notification No. 19/ 2021, it is noted that the simultaneous benefit under the RoDTEP scheme is not provided for goods covered under HS Chapter Code 61, 62 and 63, which inter alia means that an inbuilt restriction is put in place to ensure that the simultaneous benefit of both the schemes are not availed.
Ans: In case of merchanting transaction, the movement of goods commences and concludes outside India. These are covered in the ineligible categories for the benefit of RoDTEP.
Ans: It is to be noted that the benefit under the scheme can be claimed only in respect of the duties/ taxes/ levies etc. borne on the exported product either used for production of the exported product or for its distribution. However, the present scheme does not allow the benefit in case of service exports outside India.
- I am a work contractor and have been executing works contract internationally. Can I claim the benefit of RoDTEP?
Ans: Since, a works contract involves a composite contract covering the supply of goods along with the provision of a service. Therefore, if any person is executing a works contract internationally and in the course of execution of such contract, if any goods are exported outside India, then the said person must be eligible for the RoDTEP in respect of the goods so exported. However, as explained above the service exports in the course of works contract would not be eligible for the benefit.
- Some of the ports in the country may not be functioning as EDI port and exports are made through such ports. Can I claim the benefit of RoDTEP in respect o goods exported through such ports?
Ans: Since, the entire scheme is designed under the backbone of the electronic interface, it has been specifically provided by the Department of commerce vide its Notification No. 19/2021 Dt. 17.08.2021 in para 4.55 that exports for which the electronic documentation in ICEGATE/ EDI has not been generated or the goods are exported through a non-EDI Ports, then the same would be qualified under the ineligible supplies/ items/ categories under the scheme. In our view, this restriction is unjust, incorrect and arbitrary as the exporter could not suffer due to failure of government to technologically update its IT infrasture and must be challenged by way of a Writ petition before the jurisdictional High Court.
- There could be State specific taxes (i.e. varying rate of tax on petrol and diesel in different States). Whether RoDTEP scheme considers the State specific impacts of such taxes?
Ans: Although, the very objective and purpose of implementation of this scheme is to provide rebate of the various taxes, duties and levies at central, state and local level. However, to the extent of the details of the scheme notified vide Notification No. 19/2021 Dt. 17.08.2021, it is seen that there is no mechanism provided to claim the benefit based on the actual cost incurred by the exporters due to these levies. Instead, a standard percentage is prescribed either as a rate to be derived on the FOB value along with a value cap in some cases or as a fixed quantum of rebate amount per unit. Different rate, value cap etc. has been provided for different products. However, no option is provided for the exporter to compute the benefit on actual cost basis, thereby not considering the impact of the differential levies at a local level.
- What should I do if my products have not been covered in the RoDTEP Scheme?
Ans: It is pertinent to note that unlike the earlier MEIS scheme, the present RoDTEP scheme operates under the budgetary framework wherein the budget would be derived towards this scheme for each financial year and necessary caliberations and revisions shall be made to the scheme benefits, as and when required. The sequence of introduction of the scheme, across sectors, prioritization of the sectors to be covered, degree of benefit to be given to the various items would be decided and notified by the Department of Commerce in consultation with the Department of Revenue.
Accordingly, the rate of rebate/ value cap per unit is notified in Appendix 4. It is provided in Notification No. 19/2021 issued by the Department of Commerce, that efforts would be made to review the RoDTEP rates on an annual basis and to notify them well in advance before the beginning of the financial year.
Therefore, if any sector or goods are not covered under the scheme or having been covered, the quantum of benefit is low as compared to the actual cost of taxes incurred, then a timely representation must be filed before the ministry so that an appropriate rate/ value cap gets covered/ caliberated at the time of next review.
Ans: Correct classification of goods at a proper 8 digit HS code level plays a very important role under the RoDTEP scheme as the entire rate/ value structure of the scheme is derived based on the HS Code system. In other words, if one has to identify the rate/ value of rebate available to their product, then the same can be done based on the corresponding 8 digit level HS code assigned to the product. Therefore, it is suggested that the exporters thoroughly review their HS codes for various products that are exported by them and reassure the correctness of the claim under the scheme. E.g. auto mobile parts classifiable under general purpose items under chapter 73 are not eligible for RoDTEP whereas as other automobile parts covered in chapter 87 are entitled for the benefit of RoDTEP.
Ans: Now that the various products on which the benefit under the scheme is eligible along with the rate/ value cap of the benefit is provided by the government, it would be imperative for the businesses to make an impact assessment of the rebate on the business. Various aspects to be looked into in the course of this assessment are as under:
- Eligibility of the scheme on the various products along with the rate/ value cap must be clearly identified;
- HS classification codes opted must be revisited and reclibrated to correctly avail the benefit under the scheme;
- Evaluation of opting for RoDTEP benefit or to opt for MOOWR, EOU, Advance Authorisation benefits etc. A detailed cost benefit analysis must be performed so that an appropriate, informed and a timely decision can be taken;
- Review of the actual cost of taxes, levies incurred vis-à-vis the benefit expected under this scheme and the net marginal cost/ benefit;
- Change in the pricing of the goods considering the benefit given under the erstwhile MEIS/ SEIS and the RoDTEP scheme i.e., passing on the benefit/ cost in the supply chain;
- Reviewing the vendor contracts and the pricing fixed considering the benefit now available under the RoDTEP scheme;
- Review of the customer contracts in case of manufacturer exporting the goods through a merchant.
- Various other suitable implementation actions must be immediately taken depending upon the impact on the each exporter.
- Whether there is concept of special rate fixation under RoDTEP similar to the special brand rate of drawback?
Ans: No, As per the concept note and various other policy level documents available in the public domain and as per the Notification No. 19/2021 Dt. 17.08.2021, it is seen that presently there is no mechanism to fix a brand rate as in the case of drawback based on the actual actual cost incurred by the exporters on account of various taxes and levies. As per the present understanding of the scheme, only a standard percentage is prescribed either as a rate to be derived on the FOB value along with a value cap in some cases or as a fixed quantum of rebate amount per unit. Different rate, value cap etc. has been provided for different products. Further, since the claim processing is automated based on the details submitted in the shipping bill, it looks that presently no option is provided for the exporter to compute the benefit on a brand rate basis of the actual cost.
- Whether RoDTEP benefit can be claimed on the export of goods exempted from levy of GST?
Ans: It is pertinent to note that one of the essential feature of this scheme is that the benefit if available in respect of the goods exported i.e., the benefit is available in case where the goods are physically exported out of India to a place outside India. Further, no restriction is carved out in cases where the goods exported are exempted from GST. In other words, even if the goods exported outside India are exempted from GST, still the benefit of RoDTEP can be claimed as long as the said goods are physically exported outside India and all other conditions provided in the scheme are satisfied.
- What would be impact on the RoDTEP benefit if one has been selected as risky exporter?
Ans: Several cases of monetisation of credit fraudulently obtained or ineligible credit through refund of Integrated Goods & Service Tax (IGST) on exports of goods have been detected in the past. In order to restrict such fake exports being done mainly to avail the GST refund and other benefits and incentives under the Customs law. The CBIC through Directorate General of Analytics and Risk Management (DGARM) has been identifying the risky exporters. Once an exporter is identified to be a risky exporter, then the refund claim under GST including other benefits viz., drawback, MEIS etc. for that exporter is blocked i.e., the scrolls in respect of such exportered would be kept in abeyance for verification until the completion of the verification by jurisdictional CGST or by Customs officials.
Further, it is provided in the Notification No. 19/ 2021 issued in the context of RoDTEP that necessary provisions would be provided for suspension/ withholding of the RoDTEP in case of frauds and misuse, as well as imposition of penalty will be built suitably by the CBIC.
- Whether SWS, health cesses etc may be paid by utilsing the credit scrip?
Ans: Social Welfare Surcharge (SWS) is levied under Section 110 of Finance Act, 2018 as a duty of Customs. For instance, the SWS is calculated at the rate of ten per cent on the aggregate of duties, taxes and cesses which are levied and collected under section 12 of the Customs Act, 1962 and it is in addition to any other duties of Customs or tax or cess chargeable on imported goods.
The RoDTEP benefit is provided by way of an e-credit scrips issued under remission scheme for exporters under the Foreign Trade Policy. As per Para 4.56 of the Foreign Trade Policy 2015-20, these scrips can be used for payment of Basic Customs Duty only.
It is to be noted that the cesses are a separate levy made under a separate enactment and the collections generated out of the proceeds for cesses are used for some specific purposes. Although, it is levied as a duty of customs, but that by itselves does not make it a Basic Customs Duty. Hence, it is to mention that the debit of SWS through e-credit scrip is not envisaged in the FTP and hence the same needs to be paid through a separate challan in cash.
This aspect is also clarified by the CBEC vide its Circular No. 2/2020-Cus., dated 10-1-2020 in the context of utilisation of SWS for the purpose of MEIS, SEIS etc. The analogy explained above may also apply to Health cess.
- Whether the e-credit scrip issued under RoDTEP can be used for making payment of Additional duties of Customs/ IGST?
Ans: It is to be noted that additional duties of customs and IGST are levied under section 3(1), 3(3) and 3(5) of the Customs Tariff Act. Earlier, as per Para 3.02 of the Foreign Trade Policy 2015-20, these duty credit scrips would be used for payment of Basic Customs Duty and Additional Customs Duty specified under sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods and for payment of Central Excise duties on domestic procurement of inputs or goods. However, under the RoDTEP scheme, this benefit is restricted to only the Basic Customs Duty. Therefore, in our view the e-credit scrip issued under the RoDTEP cannot be used for the debit for payment of additional duties of customs.
- Some of the goods exported by me are used goods. Whether RoDTEP benefit could be claimed in respect of such goods?
Ans: It is pertinent to note that a restriction is brought under Notification No. 19/ 2021 vide para 4.55 providing that the benefit of the scheme would not be available in respect of the goods which have been taken into use after manufacture.
- Whether rebate could be claimed on international jobbing transactions?
Ans: No, these are specifically covered in the excluded categories.
- Whether RoDTEP benefit can be claimed on the goods exported through e-commerce operator?
Ans: Sale of goods through an online platform by way of an e-commerce is now very common and the same is not an exception for transactions that are undertaken in the course of international trade and commerce. If any goods are sold based on the orders placed by the customers outside India through an online platform, then the benefit of the scheme should be eligible provided there is a physical export of the goods from an EDI port. Also, the corresponding shipping/ Airway bill must be in the name of the exporter.
- Whether there would be any audit by department to validate the correctness of claims made by me?
Ans: It is provided in the Notification No. 19/ 2021, that the exporter would be required to keep records substantiating the claim made under the scheme. A monitoring and audit mechanism with an IT based Risk Management System (RMS) would be put in place by the CBIC, Department of Revenue to physically verify the records of the exporters on a sample basis. Sample cases for physical verification will be drawn objectively by RMS, based on risk and other relevant parameters.