RoDTEP Scheme [16th January 2021] - vaishali kharde

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Preparedness and challenges of RoDTEP Scheme implemented for Exporter [4th July 2021] CA Vaishali Kharde (Founder and CEO of VBK and Company) Rollout of RoDTEP Scheme PIB Issued Time of Preparedness 31st December 2020 at 8.40 PM Even less than 24 hours Overview RoDTEP Scheme What Current What is Which Why 'readiness' Online Way FTP RoDTEP scheme is Challenges RoDTEP ? is Procedure Forward Policies Scheme beneficial? necessary FTP Policies Overview – form of Benefit Exemption Remission Overview GST refund Duty Drawback Import Benefit Objective Make Indian Zero rated Export exports competitive in Globally Types of Schemes Available Benefit at the time of Import • Advance Authorisation Scheme • Duty Free Import Authorisation Scheme • Export Promotion Capital Goods Scheme Benefit after Export • Duty Drawback Scheme • Merchandise Export from India Scheme (MEIS) • Service Export India Scheme (SEIS) Status based Incentives • Export Oriented unit Scheme (EOU) • Special Economic Zone Scheme (SEZ) Why RoDTEP? Why RODTEP USA has challenged export promotional Scheme included in FTP in India India is not complying with Articles of SCM Agreement What is WTO and SCM Agreement on 1 January 1995 as a successor of the GATT, WTO was born to ensure free trade between its members country. Thus 25 years of Completed on 1st January 2020. Almost 164 countries are the members of the WTO Agreement on Subsidies and Countervailing Measures (SCM) sets out the remedies which WTO Members have against injurious subsidization and the procedures 500 disputes brought to the WTO and approx. 350 ruling are disposed of in its 25 years of existence Key ASPECT WTO has three key functions comprising of Dispute Resolution, Negotiation for market taxes and Monitoring Dispute Resolution has two stages. At first stage panel is formed to hear the case and decide the matter. At second stage Appellate Body In case of Indian Subsidies US challenged that subsidies provided by India are inconsistent with Articles 3.1(a) and 3.2 of WTO’s SCM Agreement Article 3 (1) (a) or 3 (2) of SCM 3.1 Except as provided in the Agreement on Agriculture, the following subsidies, within the meaning of Article 1, shall be prohibited: ◦ (a) subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon export performance, including those illustrated in Annex I; ◦ (b) subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods. ◦ 3.2 A Member shall neither grant nor maintain subsidies referred to in paragraph 1. Decision of DRP DRP ruled that subsidies are Subsidies under Duty-Free Subsidies under the contingent upon export Imports for Exporters Scheme EOU/EHTP/BTP schemes, EPCG, performance and not in tune with (DFIS) within 90 days from and MEIS, within 120 days SCM agreement . adoption of the report SEZ scheme within 180 days Present Status of Indian Case Appeal has been filed by the India against the ruling of DRP with Appellate body Appellate Body requires maximum 7 judges and minimum 3 Judges On 10th December 2019 two judges retired thus only one functional judge thus appellate body has become difunctional Key Instances 14 March 2018 17 May 2018 28 May 2018 • Consultations requested • Panel requested • Panel established 31 October 2019 19th November 2019 10th December 2019 • Panel report circulated • Appeal is filed by India • Appellate body has become Dis- functional Present Status of Subsidy • Export Promotion Capital Goods (EPCG) Scheme • Special Economic Zones (SEZ) Scheme Subsidies Challenged at • Export Oriented Units (EOU) Scheme, EHTP Scheme and BTP Scheme WTO • Duty-Free Imports for Exporters Scheme (DFIS) • Merchandise Exports from India Scheme (MEIS) • Service Export India Scheme (SEIS) Subsidies Not Challenges • Advance Authorisation Scheme What is RoDTEP Scheme? Long Form Remission of Duties and Taxes on Exported Products Path towards Scheme Budget 2020 13 Mar. 2020 15th April 2020 • Budget 2020 has inserted • The Union Cabinet given an • Announced MEIS is available section 51B in the Custom Act, approval for introduction of only up to 31.12.2020 RoDTEP Scheme • Trade Notice 3/2020 30th July 2020 1st September 2020 31st December 2020 • RoDTEP Committee has been • Cap on MEIS • RoDTEP Scheme implemented constituted • Notification No. 30/2015-20 • Press Release • Order No. 605/12/2020-DBK/736] Key Features of RoDTEP Scheme The Scheme was Compliant with WTO guidelines RoDTEP scheme has been introduced to replace MEIS Aims to reimburse the embedded taxes It will cover reimburse of levies that are non-reimbursed currently There are certain taxes/duties/levies are outside GST, and are not refunded for exports It will result exports zero-rated along with IGST refunded under GST Which Are the Embedded Duties ▪ Mandi Tax ▪ Electricity Duty ▪ Excise and VAT on petroleum Product ▪ GST on URD purchases ▪ Road Tax ▪ Property Tax ▪ Stamp duty on export documents ▪ Embedded SGST paid on inputs such as pesticides, fertilizers etc. used in production of agriculture goods Insertion of New Section-51B in Custom Act, 1962 1) The Central Government may, by notification in the Official Gazette, specify the manner in which it shall issue duty credit,–– (a) in lieu of remission of any duty or tax or levy, chargeable on any material used in the manufacture or processing of goods or for carrying out any operation on such goods in India that are exported; or (b) in lieu of such other financial benefit subject to such conditions and restrictions as may be specified therein. (2) The duty credit issued under sub-section (1) shall be maintained in the customs automated system in the form of an electronic duty credit ledger of the person who is the recipient of such duty credit, in such manner as may be prescribed. (3) The duty credit available in the electronic duty credit ledger may be used by the person to whom it is issued or the person to whom it is transferred, towards making payment of duties payable under this Act or under the Customs Tariff Act, 1975 in such manner and subject to such conditions and restrictions and within such time as may be prescribed.”. Amendment in Ledger for duty credit Provide for creation of an Authorize to prescribe the manner Electronic Duty Credit Ledger in Can be used by the person to for issue of duty credit for the customs system to Automate whom it is issued emmbeded duties the issue of benefit Can be transferred to other person who can use the same What ‘Readiness' is necessary? Process flowchart to claim RoDTEP benefit 1. 4. 2. 5. Declaration of 3. Claiming of Processing of Utilisation of intention on Generation of credits and claim by Script for Shipping bill Scroll Generation of custom import before filing credit script Declaration of claim From 01.01.2021 Indicate in shipping bill whether or not intent to claim RoDTEP on export items. The declaration is mandatory for all items in the shipping bill as final list of goods is not yet notified Unlike drawback there is no separate sr. nos as rates of RoDTEP rates as per RITC Code Declaration to be made – ‘SW INFO TYPE’ Table INFO TYPE INFO QFR INFO CODE INFO MSR INFO UQC • DTY • RDT • RODTEPY • Qty of items • UQC for Qty • RODTEPN Declaration to be Made – ‘Statement Table’ Statement Type Statement Code • DEC • RD001 Processing of Claim by Custom File EGM After filing of EGM, claim will be processed by custom. All shipping bill will be send to RMS Based on inputs by RMS shipping bill either come to officer for processing or will directly facilitated to the scroll queue without any officer intervention Generation of Scroll Option is available for officer for generation of scrolls. However now it is disable and remain disable till rates of scheme get notified. Once scroll get generated, the amount will be available to exporter as credit on ICEGATE Portal Claiming credit and Generation of Scroll Available credit on ICEGATE Login can be claimed by exporter or can covert in to a credit script. If exporter is not registered on IECGATE then required to register The detailed advisory on generation of script, ledger maintenance and transfer facilities will yet to be issued Utilisation of Script for Import Script once generated will reflect in the exporters ledger and will be available for • Utilisation in paying eligible duties during import for paying import duties [to be notified by CBIC] • Transfer to other entity having IEC Be Careful If RoDTEPY is not specifically claimed in the shipping bill. No RoDTEP would accrue to the exporter Intention of claim should be declared at the time of shipping bill filing itself even Government has not yet notified rates Once rates are notified, system would automatically calculate the RoDTEP amounts for all items where RoDTEPY is claimed. No changes in the claim would be allowed after the filing of EGM Online Procedure Procedure Site Credit Ledger Creation Script Management Module • www.icegate.gov.in • RoDTEP” tab under the “Our • Credit ledger Home Page select Scroll Services” Details Tab for scrip generation. • After Login Credit Ledger option Transaction Details Script Transfer Approve Script Transfer • Credit ledger Home Page select • Credit ledger Home Page select Request Transaction details tab “Transfer scrip” tab • Credit ledger Home page select “Approve Scrip” tab Credit Ledger Home Page Declaration under Scheme DECLARATION TO BE FILED AS PART OF SHIPPING BILL OR BILL OF EXPORT FOR EXPORT OF GOODS UNDER RoDTEP SCHEME “I/We, in regard to my/our claim under RoDTEP scheme made in this Shipping Bill or Bill of Export, hereby declare that: ◦ 1. 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. ◦ 2. 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. ◦ 3. 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.” Which scheme is beneficial? Comparison with MEIS MEIS RoDTEP Incentive is 2%-5% of FOB value of Product based % age way of reward export Not a WTO Compliant WTO compliant Transferable duty credit/electronic Incentive in the form of freely scrip which will be maintained in an transferable Scripts electronic ledger.