What is Duty Free Import Authorisation (DFIA) Scheme.

Posted on 22 April 2023 Category : Inco Terms

Duty Free Import Authorisation (DFIA) Scheme means

This post explains about Duty Free Import Authorisation Scheme

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of DFIA.

DFIA Scheme

Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed.
Provisions of paragraphs 4.12, 4.18, 4.20, 4.21 and 4.24 of FTP shall be applicable to DFIA also.

Duties Exempted and Admissibility of Cenvat and Drawback as per Indian Foreign Trade Policy 2015-20 (FTP 2015-20)

i. Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty.

ii. Additional customs duty/excise duty, being not exempt, shall be adjusted as CENVAT credit as per DOR rules.

iii. Drawback as per rate determined and fixed by Central Excise authority shall be available for duty paid inputs, whether imported or indigenous, used in the export product. However, in case such drawback is claimed for inputs not specified in SION, the applicant should have indicated clearly details of such duty paid inputs also in the application for Duty Free Import Authorization, and as per the details mentioned in the application, the Regional Authority should also have clearly endorsed details of such duty paid inputs in the condition sheet of the Duty Free Import Authorization.

Eligibility

i. Duty Free Import Authorisation shall be issued on post export basis for products for which Standard Input Output Norms have been notified.

ii. Merchant Exporter shall be required to mention name and address of supporting manufacturer of the export product on the export document viz. Shipping Bill / Airway Bill / Bill of Export / ARE-1 / ARE-3.

iii. Application is to be filed with concerned Regional Authority before effecting export under Duty Free Import Authorisation.

Minimum Value Addition

Minimum value addition of 20% shall be required to be achieved. For items where higher value addition has been prescribed under Advance Authorisation in Appendix 4C, the same value addition shall be applicable for Duty Free Import Authorisation also.

Validity & Transferability of DFIA under EXIM Policy 2015-20 (FTP 2015-20)

Applicant shall file online application to Regional Authority concerned before starting export under DFIA.
Export shall be completed within 12 months from the date of online filing of application and generation of file number.
While doing export/supply, applicant shall indicate file number on the export documents viz. Shipping Bill / Airway Bill/ Bill of Export / ARE-1 / ARE-3, Central Excise certified Invoice.
After completion of exports and realization of proceeds, request for issuance of transferable Duty Free Import Authorisation may be made to concerned Regional Authority within a period of twelve months from the date of export or six months (or additional time allowed by RBI for realization) from the date of realization of export proceeds, whichever is later.
Applicant shall be allowed to file application beyond 24 months from the date of generation of file number as per paragraph 9.03 of Hand Book of Procedures.
Separate DFIA shall be issued for each SION and each port.
Exports under DFIA shall be made from from a single port as mentioned in paragraph 4.37 of Handbook of Procedures.
No Duty Free Import Authorisation shall be issued for an export product where SION prescribes ‘Actual User’ condition for any input.
Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authority.

Sensitive Items under Duty Free Import Authorisation as per IMPEX Policy 2015-20 (FTP 2015-20)

In respect of resultant products requiring following inputs, exporter shall be required to provide declaration with regard to technical characteristics, quality and specification in Shipping Bill:
“Alloy steel including Stainless Steel, Copper Alloy, Synthetic Rubber, Bearings, Solvent, Perfumes / Essential Oil/ Aromatic Chemicals, Surfactants, Relevant Fabrics, marble, Articles made of polypropylene, Articles made of Paper and Paper Board, Insecticides, Lead Ingots, Zinc Ingots, Citric Acid, Relevant Glass fibre reinforcement (Glass fibre, Chopped / Stranded Mat, Roving Woven Surfacing Mat), Relevant Synthetic Resin (unsaturated polyester resin, Epoxy Resin, Vinyl Ester Resin, Hydroxy Ethyl Cellulose), Lining Material”.
While issuing Duty Free Import Authorisation, Regional Authority shall mention technical characteristics, quality and specification in respect of above inputs in the Authorisation.

The information on Duty Free Import Authorisation Scheme is detailed above. Comment below your thoughts on Duty Free Import Authorisation Scheme.

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