How to Surrender Advance Licenses

The Indian government introduced the Advance License Scheme under the Foreign Trade Policy to provide necessary inputs and duty-free materials for producing export goods. The government has previously introduced numerous programs to boost the value of exports.

Through the utilization of the Advance License Scheme, you can bring in inputs without any customs duty. The main aim of this initiative was to boost the global demand for Indian products. The goal of the government was to reduce the price of the finished export item. For a country's trade in export and import to be profitable, the value of exports must exceed the value of imports.

What is Advance Authorisation Scheme

The Advance Authorisation Scheme enables the duty-free import of inputs that are integrated into an exported product. Along with other inputs, packaging material, fuel, oil, and catalyst used in manufacturing the exported product will also be permitted.

The number of inputs permitted for a particular product depends on certain standards set for the export product, considering the waste produced during the manufacturing process. DGFT offers a list of Standard Input-Output Norms (SION) categorized by sector for exporters to utilize. In situations where the SION is not suitable, exporters have the option to seek their own ad-hoc norms.

Advance Authorisation applies to manufacturer exporters or merchant exporters linked to supporting manufacturer(s).

 

Eligibility for Advance Authorisation Scheme

Manufacturer exporters or merchant exporters can obtain Advance Authorisation if they are connected to supporting manufacturers for physical exports, intermediate supplies, and supplying goods on foreign vessels/aircraft (terms and conditions apply).

Furthermore, Advance Authorisation is granted to subcontractors listed in the main contract, as well as United Nations Organizations (UNO), UN aid programs, and other multilateral agencies that are paid in foreign exchange.

An advanced permit for importing raw sugar can be granted to a manufacturer exporter or merchant exporter working with supporting manufacturers.

Exemptions of Duty

Imports of commodities under this scheme are exempted from paying essential customs duty, additional customs duty, education, anti-dumping duty, and safeguard duty. However, imports for supplies covered under specific stores are not exempted from the payment of applicable anti-dumping and security obligations.

Grounds for issuing Advance Authorization

Advance Authorization can be issued for inputs used in the product that is to be exported based on the following:

• Standard Input Output Norms (SION) notified: The Director General of Foreign Trade (DGFT), based on the Norms Committee's suggestion, establishes standard norms determining the necessary input quantity for producing a unit of the exported output product. It is accessible for a variety of items.
• Self-declaration: There are instances when the SION is not accessible for a specific product. If this happens, you can request the Regional Authority for an Advance Authorization, which will be granted after evaluation.
• Application prior to fixation of the norm by the Norms Committee: If the SION is not specified, an exporter can also choose to submit a request to the norms committee as an alternative option. Once the necessary data is submitted to the norms committee, the committee will try to establish or offer ad-hoc norms based on the application submitted. These improvised rules apply to just one permission and no additional permission can be granted.
• Self- Ratification Scheme: An exporter must possess the Authorized Economic Operator (AEO) Certificate under the Common Accreditation Programme of CBEC to be eligible for Advance Authorization under this Scheme. This option can be chosen when there are no standard inputs/outputs norms (SION) available for an export item, or when the exporter wants to use extra materials in production despite having SION in place. Under this plan, ratification by the norms committee is not necessary, and the regional authority can grant Advance Authorization once the relevant conditions are met.

Application procedure for Advance Authorization Scheme

Visit the DGFT's official website and complete the registration process. Enter the registration information and choose "Exporter/Importer" as the user type during registration.

• Provide the OTPs from both email and mobile. After confirming the OTP, you will receive a notification with a temporary password to be changed during your first login.
• Go to the DGFT's official website and start the registration procedures. Enter the Registration Information and Choose to Register as an "Exporter/Importer".
• Provide the One-Time Passwords obtained through both email and phone. After verifying the OTP, you will receive a notification with the temporary password that you must change on your first login.
• Once you have successfully signed up, access the DGFT website, go to the Services section, and choose Advance Authorization.
• The user has the option to either begin a new application by clicking on 'Start Fresh Application' or continue with an existing application by clicking on 'Proceed with Existing Application' on the new page.
• Provide all the information required in the application form.
• Once you have entered the information, click on the Attachment Type option to submit the documents.
• Once the application is signed electronically, a receipt for the electronic payment along with payment information will be produced, and the application will be sent to DGFT.

Pre-conditions for applying for Closure of Advance Authorisation:

• The IEC Entity has already imported only Items as mentioned in the Advance Authorisation License.
• The applicant has an ‘Active’ IEC and is signed in to the DGFT Customer Portal. (Submission allows for the use of both E-Sign and DSC.)
• The applicant has authorised to prepare and present applications for an IEC.
• All exports have been concluded (Surrendering the license should not involve any export activities).

Documents Required for Surrender of Advance Authorisation

• The concerned applicant exporter can access the related documents on the DGFT Website for review.
• The EDI (electronic data interchange) Shipping Bills or Bills of Entries are electronically and automatically fetched from the DGFT-Customs Electronic interface.
• e-BRCs (Electronic Bank Realization Certificate), as uploaded by the banks, are also automatically available under the Bills Repositories.

The specified documents will need to be uploaded by the authorization holder to their designated online repositories before they can submit the online closure application.

• Non-EDI (electronic data interchange) Shipping Bills
• Non-EDI (electronic data interchange) Bill of Entries
• GST invoices
• CA/CE/CS Certificates
• Treasury Challan
• Bank Guarantee /Letter of Undertaking

These documents must be physically submitted to the Receipts counter at the regional authorities:

• Treasury Challan
• Bank Guarantee / Letter of Undertaking /Corporate Guarantee

What is the process for the Surrender of the Advance License?

Following steps to be followed for the Surrender of the Advance Authorisation License:


Online Procedure for Surrender of Advance Authorizations:

• The person authorized must visit the DGFT's official website and choose the services menu at the top of the page.
• When the Advance Authorization/DFIA is clicked, a new page will open.
• Choose the Advance Authorization Closure option to prompt the login window for the user.
• Give the user authentication details and select the login button to continue with the application.
• The person authorized can submit a license closure request by attaching the already uploaded documents to the Repositories.
• The closure application will be automatically connected to the Shipping Bills/Bill of Entries, while any additional necessary information must be included to finalize the application prior to submission.
• Fill out the application form completely, pay the fee, and then submit the application for review.

 
DGFT (Deficiency Letter):

The first step for surrendering the Advance Authorisation License is that the DGFT will verify all the documents and check whether the export obligation has been done properly or not. If there is any deficiency letter found in the documents then they first clear that deficiency letter.

 
Custom (Challan)

The second step is to clear all the chalan related to custom and there is no pendency of the duty related to it.

 
Custom NOC:

The third step Is to take the NOC from the Custom department that there is no custom duty, or any export obligation is pending.

 
DGFT (Surrender of License):

Once the importer finishes the imports and meets the export requirement, they must then provide all necessary paperwork to the Directorate General of Foreign Trade (DGFT). All these papers will serve as evidence that the export duty has been fulfilled through legitimate methods.

The initial step is for the exporter to submit the ANF 4F Application form to the regional licensing authority of DGFT. Every document must be signed by the applicant themselves for verification, with the license holder's signature present on each document in the file.

All details concerning the authorization and applicant are required on the ANF 4F form, including Authorization Number, Cost, Insurance and Freight (CIF) value of the license, date of issuance, norms details, and export obligation. Ensure that you accurately complete all sections of the application form and review it carefully before sending it to the licensing body.

The export information in the application form must include the shipping bill number, Free on Board (FOB) value, and quantity of the exports accurately. Additional information regarding imported items such as CIF value, Bill of Entry details, and quantity can be found. Upon determining that the exporter's application is complete, authorities will issue the Export Obligation Discharge Certificate. This document is alternatively called the redemption letter.


Bond Release

Bond cancellation from customs is not possible without first obtaining the letter of closure from DGFT RA. To achieve closure, the applicant needs to have the original redemption letter, duplicates of the documents submitted to DGFT RA, and a Bond copy. If the officials are satisfied with your documents, you will receive a letter about the cancellation of the Bond and Bank Guarantee.