foriegn trade and customs

[Former Member]

Dear Friend,

Can any body tell about what is meant by advance licensing system(imports/exports) FT?

your answers will be rewarded.

advance thanks

b sreenivas

[Lakshmipathi]

1) What is an Advance Licence?

a. An Advance Licence 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 licences are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty, if any

c. Advance Licence can be issued for:

1) Physical Exports;

2) Intermediate Supplies;

3) Deemed Exports;

2) Who can apply for an Advance Licence?

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 Licence?

a. Govt. of India has announced SION for around 7200+ items against which an Advance Licence can be procured.

b. However there exists a provision for getting an Advance licence on self declared norms which subsequently goes for ratification with the office of DGFT, New Delhi.

4) What are the conditions governing an Advance Licence?

a. Advance Licence and / or materials imported there under shall not be transferable even after completion of export obligation, i.e. Actual User condition applies.

b. Advance Licences 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 licence.

b. In cases where exports are conducted prior to imports, no Bank guarantee shall be required.

7) What is the validity of the licence?

a. Validity of the licence is 24 months from date of issue for both and export and import with a provision of extension for both on paying appropriate fees.

😎 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 licence.

b. The E.O. is treated to be fulfilled when proper accounting is being placed before the licencing authority who when satisfied will issue a discharge letter.

I am sure this answers your query. Dont forget to reward points please.

Regards

G. Lakshmipathi