Advance Authorisation (AA) Scheme is a Scheme which allows Duty Free Import of Input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed.
Eligible Applicant
Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer.
Advance Authorisation for pharmaceutical products manufactured through Non-Infringing (NI) process shall be issued to manufacturer exporter only.
Advance Authorisation shall be issued for
Advance Authorisation
Advance Authorisation (AA) Scheme is a Scheme which allows Duty Free Import of Input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed.
Eligible Applicant
Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer.
Advance Authorisation for pharmaceutical products manufactured through Non-Infringing (NI) process shall be issued to manufacturer exporter only.
Advance Authorisation shall be issued for
Basis for Issuance of AA
Advance Authorisation is issued for inputs in relation to resultant product, on the following basis
SION
As per Standard Input Output Norms (SION) notified (available in Hand Book of Procedures)
Self Declaration
On the basis of Self Declaration as per paragraph 4.07 of Handbook of Procedures
Prior Fixation
Applicant specific Prior Fixation of Norm by the Norms Committee
Self Ratification
On the basis of Self Ratification Scheme in terms of Para 4.07A of Foreign Trade Policy.
Value Addition
Value Addition (VA) for the purpose of this Chapter (except for Gems and Jewellery sector for which
value addition is prescribed in
VA = (A-B)*100/ B
A =FOB value of export realized/FOR value of supply received.
B =CIF value of inputs covered by Authorisation, plus value of any other input used on which benefit of DBK is claimed or intended to be claimed.
Eligible Export/ Supply under Advance Authorisation
(i) Physical Export
(ii) Export to SEZ
(iii) Intermediate Supply; and/or
(iv) Supply of goods
(v) Supply of ‘Stores’ on board of Foreign going Vessel / Aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.
Minimum Value Addition
Actual User Condition for Advance Authorisation
Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation.
Annual Advance Authorization
Subject to certain conditions, where an item is specified in SION, Advance Authorization can be issued for the annual requirements. It is not available on a self-declaration basis. Exporters need to have a past export performance in at least two preceding financial years, in order to be entitled to such authorization. The eligible quantum under AAA Scheme is higher of: 300% of FOB Value of Physical Export and/ or FOR Value of Deemed Export in preceding F.Y. OR Rs. 1 Crore.
Actual User Condition for Advance Authorisation
Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation.
Annual Advance Authorization
Subject to certain conditions, where an item is specified in SION, Advance Authorization can be issued for the annual requirements. It is not available on a self-declaration basis. Exporters need to have a past export performance in at least two preceding financial years, in order to be entitled to such authorization. The eligible quantum under AAA Scheme is higher of: 300% of FOB Value of Physical Export and/ or FOR Value of Deemed Export in preceding F.Y. OR Rs. 1 Crore.
Actual User Condition for Advance Authorisation
Advance Authorisation and / or material imported under Advance Authorisation shall be subject to ‘Actual User’ condition. The same shall not be transferable even after completion of export obligation.
However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed.
DEFINITIONS
“Actual User” is a person (either natural or legal) who is authorized to use imported goods in his/its own premise which has a definitive postal address.
"Actual User (Industrial)" is a person (either natural & legal) who utilizes imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit which has a definitive postal address.
"Actual User (Non-Industrial)" is a person (either natural & legal) who utilizes the imported goods for his own use in:
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Any commercial establishment, carrying on any business, trade or profession, which has a definitive postal address; or
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Any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital which has a definitive postal address; or
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Any service industry which has a definitive postal address.
Currency for Realisation
of Export Proceeds
Export proceeds shall be realized in freely convertible currency except otherwise specified. Provisions
regarding realisation and non realisation of export proceeds
Export to SEZ Units shall be taken into account for discharge of export obligation provided payment
is realised from Foreign Currency Account of the SEZ unit.
Export to SEZ Developers / Co-developers can also be taken into account for discharge of export
obligation even if payment is realised in Indian Rupees.
Authorisation holder needs to file Bill of Export for export to SEZ unit / developer / co-developer in
accordance with the procedures given in SEZ Rules, 2006.
Details of Duties Exempted
General Exemptions
Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti- Dumping Duty, Countervailing Duty, Safeguard Duty, TransitionProduct Specific Safeguard Duty, wherever applicable.
Exceptions
Import against supplies covered under paragraph 7.02 (c), (d) and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, Countervailing Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any.
Integrated Tax and Compensation Cess Exemptions
However, imports under Advance Authorisation are also exempt from whole of the integrated tax and Compensation Cess leviable under sub-section (7) and sub-section (9) respectively, of section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be provided in the notification issued by Department of Revenue, and such imports shall be subject to pre-import condition.
Physical Exports
Imports against Advance Authorizations for physical exports are exempted from Integrated Tax and Compensation Cess upto 31.03.2021 only.
Validity Period for Import and its Extension
Validity period for import under Advance Authorisation shall be as prescribed in Handbook of Procedures.
Validity period for import of Advance Authorisation shall be 12 months from the date of issue of Authorisation.
Regional Authority may consider a request of original Authorisation holder and grant one revalidation for six months from expiry date. Request(s) for revalidation of Authorisation shall be filed online in ANF 4D. Second Re-Validation for Six Months is also now allowed to be applied at RA.
Export Obligation Period
and its Extension
Period for fulfilment of export obligation and its extension under Advance Authorisation shall be as
prescribed in Handbook of Procedures.
Period for fulfilment of export obligation under Advance Authorisation shall be 18 months from the date of issue of Authorisation. Period of EO fulfilment under an Advance Authorisation shall commence from date of issue of Authorisation, unless otherwise specified.
Export Obligation for items falling in categories of Defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization or co- terminus with contracted duration of the export order whichever is more.
Extension in export obligation period for Authorizations issued under Appendix-4J (issued under FTP 2015-20) shall be allowed for a period not more than the half of the stipulated export obligation period. In such cases, composition fee shall be levied @ 0.5% per month of unfulfilled FOB value, in case exports effected are more than 50% within initial Export Obligation period and @ 1% per month where less than 50% exports have been effected within initial export obligation period.
Regional Authority may consider a request of Advance Authorisation holder for one extension of EO period upto six months