Advance Authorisation Scheme - How it Works, Procedure to Obtain License and Documentation

What is Advance Authorisation Scheme? Advance Authorization Scheme is a Duty Exemption Scheme introduced in Chapter 4 of Foreign Trade Policy that allow duty free import of raw materials, that are physically incorporated in manufacturing an export product. Who are eligible to claim its benefits? With regards to the eligibility, both manufacturer exporters and merchant exporters who are tied up with a supporting manufacturer are eligible to claim the benefits of Advance Authorization. The only criteria of Advance Authorization is that the raw materials imported duty free should be used to manufacture export products and should not be consumed domestically. How does Advance Authorisation Scheme Function? The government has issued SION Norms for proper functioning of this scheme. These norms give an accurate indication of the quantity of raw materials allowed to be imported duty free for manufacturing of a single unit of export products while taking into account a normal allowance for wastages. What are the obligations to be followed after issuing an Advance Authorisation License? The benefits of advance authorization always come with certain obligations attached with it. It is mandatory to fulfill these obligations: 1. Minimum value addition: The FOB value of the export product should be equal to or more than 15% of the CIF value of raw materials imported duty free that used to manufacture the same export product. 2. Time obligation: The raw materials should be imported within 12 months after the license issue date. Additionally, these raw materials should be used for manufacturing and the resultant finished product should be exported within 18 months from the license issue date. If the exporter fails to abide by this timeline then he will have to pay the customs duty and taxes that were saved along with interest. What is the procedure of obtaining Advance Authorisation License? Step 1: Based on the quantity of your exports; check SION Norms and calculate the quantity of raw materials that are allowed to be imported duty free to manufacture your export product. Step 2: Apply for Advance Authorisation with DGFT by submitting all the required documents including IEC, RCMC, export and import product details and quantities etc. Step 3: After obtaining the Advance License register the same at the customs port where the raw materials will be imported. A bond or bank guarantee will be required to be executed at this stage. Step 4: Import the raw materials and put them in the manufacturing process to manufacture export products within 12 months from the license issue date Step 5: Export these products and complete the obligation within 18 months from the license issue date. Step 6: After completing the export obligation within the timeline; proceed for redemption of the license by submitting all the requisite documents including Bill of entries against imports, shipping bills against exports, proof of payment received etc. Step 7: After obtaining redemption from DGFT; go for bond cancellation or releasing Bank Guarantee from the customs where the bond or bank guarantee was executed in Step 3. How can A V International help you? We are A V International and we take pride as being one of the oldest and leading DGFT consultants in India. We offer end-to-end Advance Authorisation license consulting services i.e. we can help you right from studying SION Norms for your specific export product, Documentation, Application of advance license , maintaining regular follow-ups with DGFT office, obtaining advance license, its redemption and bond cancellation at customs. We are woking with more than 300 manufacturer exporters for obtaining their advance license and closure of the same. To know more about our company please visit our website www.avigroup.in