Export Obligation under Advance Authorisation Scheme – All You Need To Know

What is Export Obligation under Advance Authorisation?

• Export Obligation under Advance Authorisation is a requirement imposed by the government of India on companies that import certain goods into the country under the Advance Authorisation scheme. 
• The Advance Authorisation scheme allows companies to import goods duty-free if they plan to use those goods to manufacture products that will be exported. As a condition of receiving the duty-free benefit, companies must agree to export a certain value of goods within a specified time frame, known as the Export Obligation period. 
• This ensures that the duty-free benefit is being used to promote exports and not simply to import goods for domestic consumption.

What is the period for completion of Export Obligation?

The time frame within which the export obligation under an Advance Authorisation must be fulfilled is 18 months from the date the Authorisation was issued, or as specified by the DGFT (Directorate General of Foreign Trade). This time frame is also called Export Obligation Period (EOP).

Export Obligation Period (EOP) is a period entitled to the Advance Authorisation holder until which he can export the finished products manufactured using the raw materials imported under the same Advance Authorisation.

This EOP can be extended by 6 months for the first times and another 6 months for the second time provided that the Authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro-rata basis.

What is EOP Extension Fees?

• The fee for applying for the first extension of authorization is INR 500 plus a composition fee.
• The fee for applying for the second extension of authorization is INR 1000 plus a composition fee.

What is a Composition Fee to be paid for EOP Extension?

• A composition fee is a type of fee that is charged in addition to the base application fee for an extension of authorization (EOA) under the Advance Authorization (AA) program. The composition fee is intended to offset the administrative costs associated with processing the application. 
• The exact amount of the composition fee will vary depending on the specific circumstances of the application and the regulations that apply to it.

How can we help?

A V International is one of the leading and oldest DGFT/Customs Consulting firm operating pan India. Established in 1991, our company is headquartered in Mumbai. Our company specializes in Advance Authorization cases; we can help in obtaining Advance License and also obtaining redemption/closure of the same with bond/bank guarantee cancellation. Additionally, we help in obtaining EOP Extension, Revalidation, Invalidation, Amendment, Clubbing of Advance Authorisation for our clients.