SCHEME FOR REMISSION OF DUTIES AND TAXES ON EXPORTED PRODUCTS (RoDTEP)
The Cabinet Committee on Economic Affairs had given its approval for introducing the scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) in March 2020.The scheme, replacing the Merchandise Export from India Scheme (MEIS), aims at creating a mechanism for reimbursement of taxes, duties and levies at the central, state and local level, that were earlier not rebated / refunded.
As per the Press Release dated 31 December 2020, the benefit of RoDTEP scheme shall be allowed on all export goods with effect from 1 January 2021.
The Government has now recently notified the rates under the scheme along with certain guidelines.
However, for certain export items, a fixed quantum of rebate amount per unit may also be notified.
The overall budget for the scheme would be finalized by the Ministry of Finance in consultation with the Department of Commerce (DoC). The scheme will operate in a budgetary framework for each financial year. Necessary calibrations and revisions shall be made to the scheme benefits, as and when required. The rebate allowed will be subject to the receipt of sale proceeds within time allowed under the FEMA Act, failing which, such rebate shall be deemed never to have been allowed.KEY FEATURES & OBJECTIVES
- RoDTEP is made part of Chapter 4 (duty exemption / remission schemes) of the Foreign Trade Policy 2015- 20 (FTP). The scheme will be effective for exports made from 1 January 2021.
- The objective of the scheme is to refund the following duties or taxes which are currently not being refunded:
- Duties/ taxes/ levies at the central, state and local level, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in the production of the exported product, and
- Such indirect duties/ taxes/ levies in respect of distribution of exported product.
- Rebate shall not be available in respect of duties and taxes already exempted or remitted or credited.
- Under the scheme, a rebate would be granted to eligible exporters at the notified rate as a percentage of FOB value with a value cap per unit of the exported product, wherever required.
- The rebate amount will be granted in the form of a transferable duty credit/ electronic scrip (e-scrip), which will be maintained in an electronic ledger by the CBIC.
- The scrips would be used only for payment of duty of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 i.e. Basic Customs Duty (BCD).
- Necessary rules and procedure regarding grant of RoDTEP claim and implementation issues (including manner of application, time period for application and other matters) would be notified by the CBIC on an IT enabled platform.
- Provisions for recovery of rebate amount where foreign exchange is not realized, suspension/ withholding of RoDTEP in case of frauds and misuse, as well as imposition of penalty will also be built suitably by CBIC.
- The highest RoDTEP rate is 4.3 percent and lowest is 0.01 percent.
- The incentive rates are nothing compared to MEIS. However, the RoDTEP covers 8555 ITC (HS) Codes whereas MEIS covered only 4914 ITC(HS) Codes.
- Export of imported goods covered under Para 2.46 of the FTP 2015-20 i.e., export of imported product in same or substantially the same condition.
- Exports through trans-shipmente., goods not entering India but routed through India.
- Exports subject to Minimum Export Price (‘MEP’) or Export Duty
- Exports which are restricted or prohibited under Schedule 2 of Export Policy in ITC (HS)
- Deemed Exports and Supply by DTA to SEZ/FTWZ.
- Products Manufactured in EHTP/BTP or a warehouse operating under Section 65 of the Customs Act i.e., MOOWR Scheme
- Products manufactured and exported under Jobbing contracts [Notification No. 32/1997- Customs dated April 1, 1997]
- Exports from Non-EDI Ports
- Goods taken into use after manufacture.
- Products manufactured or exported in discharge of export obligation against an Advance Authorization (AA) or Duty Free Import Authorization (DFIA)
- Products manufactured or exported by 100% Export Oriented Unit
- Products manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or SEZ
- This scheme is at present covering around two-third exports of the country, which is expected to make a substantial contribution in easing the liquidity for exporters, ensuring predictability and stability. Prescription of rates may also help them in determining the competitive export prices.
- The point to be noted here is that the export of certain products including steel, chemicals and pharmaceuticals are not covered under the scheme.
- The budgeted allocation under RoDTEP is much lower as compared to the government’s annual outlay under MEIS that has been replaced.
- RoDTEP Committee will decide on the fate of EOU/SEZ/EPZ/FTZ units and Advance License holders. Kindly note that MEIS scheme was available to these units only for direct exports and not on the exports made through a DTA unit (Para 3.06 of FTP). It is expected that the same will be the case for RoDTEP too, if at all allowed.
- Exclusion of EHTP/BTP units or warehouses operating under Section 65 of the Customs Act i.e., under MOOWR scheme, seems irrational & illogical. These units also incur huge non-creditable taxes on domestically procured raw materials or capital goods, transport cost, fuel, and local taxes. Some of these units avail benefits on imported capital goods only.