How to Procure Raw Materials Domestically Through 'Advance Authorisation License' Invalidation

If you hold an Advance Authorisation License and want to source raw materials domestically instead of importing, there’s a provision for you. You can procure raw materials from domestic suppliers without losing the duty-free benefit of your Advance Authorisation License through a process called Invalidation of Advance Authorisation License.

In this blog, we’ll explain what Invalidation of Advance Authorisation License is, how it works, required documents, and how A V International can assist you.

What is Invalidation of ‘Advance Authorisation License’?

Invalidation of Advance Authorisation License allows exporters to procure raw materials from domestic suppliers instead of importing them. The DGFT issues an Invalidation Letter against your Advance Authorisation License, enabling the domestic supplier to supply raw materials without charging customs duties or IGST.

The domestic supplier can then apply for an Advance Intermediate Authorisation based on the Invalidation Letter. This ensures duty-free procurement of inputs, which are supplied to the Advance Authorisation License holder to fulfil export obligations.

How Does It Work?

·      Here’s how the Invalidation of Advance Authorisation License works:

·      Advance Authorisation License holder decides to procure raw materials domestically.

·      Application is made to DGFT to invalidate the license in favour of a domestic supplier.

·      DGFT issues an Invalidation Letter mentioning the domestic supplier.

·      The domestic supplier applies for Advance Intermediate Authorisation.

·      Supplier procures duty-free inputs and supplies finished goods to the Advance Authorisation License holder.

·      Exporter uses the goods to manufacture export products and fulfil export obligation under the Advance Authorisation License.

Note: The validity of the Invalidation Letter is the same as your Advance Authorisation License.

Benefits of Invalidation

·      Faster and cost-effective procurement

·      No loss of duty-free benefits under Advance Authorisation License

·      Supports local suppliers

·      Simplifies compliance

Documents Required

You will need the following:

·      Purchase Invoice of domestic supplier

·      Industrial License (MSME/Udyam/IEM)

·      IEC Copy of domestic supplier

·      Valid Advance Authorisation License

·      BG/LUT Bond

·      Export House Certificate (if available)

·      List of domestically procured items & quantity

Procedure to Apply

Step 1: Prepare all documents related to your Advance Authorisation License and supplier details.

Step 2: Submit application to DGFT Regional Authority.

Step 3: Address any deficiencies raised.

Step 4: On approval, DGFT issues the Invalidation Letter linked to your Advance Authorisation License.

How A V International Can Help

At A V International, we offer end-to-end services for your Advance Authorisation License needs:

·      Invalidation and Revalidation

·      EO Extension

·      License Amendment & Surrender

·      Bond Cancellation

·      License Redemption

With over 700 exporters served, we ensure your Advance Authorisation License process is smooth and hassle-free.

Visit us at: www.avigroup.in

Conclusion

The Advance Authorisation License scheme helps exporters reduce input costs and encourages exports. The invalidation facility makes it even more flexible by allowing domestic sourcing without losing duty exemptions.

If you want to simplify your procurement and benefit from the Advance Authorisation License, connect with us for professional support.