advance authorisation scheme / Advance License
Apply for Advance Authorisation with us and import inputs duty free
advance authorisation scheme / advance license
Apply for Advance Authorisation with us and import inputs duty free
What is Advance Authorisation Scheme (Advance License)?
Advance Authorisation Scheme (Advance License) is a scheme for the exporters allowing them to import raw materials and other inputs duty free (after making normal allowance of wastage). The raw material and inputs imported under Advanced Authorisation Scheme are exempted from Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping duty, Safeguard Duty and Transition Product-Specific Safeguard duty, Integrated tax, and Compensation Cess, wherever applicable, subject to certain conditions.
Who IS eligible for obtaining Advance License under Advance Authorisation Scheme?
What is the Validity of Advance License obtained under Advance Authorisation Scheme?
How is Advance License obtained under Advance Authorisation Scheme beneficial to you?
The raw materials imported under Advance Authorisation Scheme are exempted from Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping duty, Safeguard Duty and Transition Product-Specific Safeguard duty, Integrated tax, and Compensation Cess.
How will we help you get Advance License under Advance Authorisation Scheme?
Frequently Asked Questions
All you need to know before applying for Advance Authorisation Scheme:
To increase export from the country, our Government has introduced various schemes. And one of them is the Advance Authorisation Scheme or also
known as the Advance License., in which we can import raw materials/inputs required for the production of the export product at Zero Custom Duty, i.e., duty- free. Oil, and catalyst, utilized in the process of production of export products, may also be allowed for duty-free import. An Export Obligation is set as a condition for issuing the Advance License.
The Advance Authorisation Scheme is in place for the last 20-30 years. However, after the GST law has passed, there are many modifications done under the scheme. Earlier, the duties exempted include Basic Customs Duty, CVD, SAD, etc. However, for the Advance Authorisations Scheme under the GST, the import duties exempted include the Basic Customs duty, Integrated GST (IGST), Compensation Cess, etc. Exemption from payment of IGST and Compensation Cess is granted with following conditions:
- Only when AA is taken for physical exports.
- Imports that are exempted will be subject to pre-import conditions.
- The exemptions are valid only till 31.03.2021 (the date may change. Please
refer to the latest notification).
One can apply for the Advance License from Directorate General of Foreign Trade (DGFT) on the following basis- SION, Self-Declaration, Prior Fixation of Norms by Norms Committee, and By Self-Ratification Basis. While applying online, we will require a digital signature of the applicant. The applicant can be a manufacturer exporter or Merchant Exporter. He should have IEC and RCMC with the factory address mentioned. In the case of Merchant Exporter, supporting manufacturer details should be mentioned. We need to fill the online form ANF 4A and upload the required documents.
Please find the below steps that show the entire working of Advance License Scheme –
- First, we need to apply for an Advance Authorisation at the Jurisdictional DGFT office.
- The Advance License issued from the DGFT will have all the details like Export/Import Item description, HS Code, Quantity, FOB/CIF Value on it.
- Then the said License should be registered at Customs – Port of Registration.
- Along with the registration, Exporters need to executive Bond/LUT with the Customs Authority.
- Then the raw materials can be imported duty-free and should be taken to factory premises for the production of the export item.
- Once Export Obligation under the Advance Authorisation scheme is completed, the License can be closed, and Bond can be cancelled.
Duty Exemption Entitlement Certificate Scheme (DEEC Scheme) is an export promotion scheme, which enables duty-free import of inputs required for the manufacture of export products. DGFT issue Advance License to manufacturer/merchant exporter under DEEC Scheme for import of inputs at zero customs duty.
For importing duty-free raw materials, the exporter has to take Advance License. To import Capital goods duty-free, the exporter has to take EPCG License.
In Advance Authorisation, the exporter can import raw materials duty-free, i.e. zero custom duty. In Duty Drawback, the exporter has to pay all the customs duty while importing and then after exporting he can request for refund of customs duty.
Advance Authorisation Scheme:
- Exporter will receive a license, and then he will import and export
- License received is not
Duty-Free Import Authorisation Scheme (DFIA):
- Exporter will export against file number, and then import license will be issued as per export. It is a post-export benefit.
- License received is transferable
The Exporter has to fill online application form ANF 4A with the above relevant documents. We have experts who can help you to fill online application and to prepare documents as per DGFT guidelines and follow-up to get Advance License from DGFT.
For applying Advance Authorisation, the application fee depends on the CIF value of the Import product.
Duty-Free import benefit under Advance Authorisation comes with the commitment to Export certain pre-defined quantity and value of goods after using the imported raw material. This commitment to export is known as Export Obligation.
The Export Obligation under Advance Authorisation Scheme is of two types:
- Quantity-wise Export Obligation – Quantity of export made should be proportionate to the number of imports made, as per Norms.
- Value-wise Export Obligation – 15% Value addition has to be compulsorily maintained in the Advance Authorization Scheme.
- Note: Different value addition method can be prescribed for the Gems and Jewelry sector, Tea, etc.
Standard input-output norms, in other words, we can say the standard norms which define the quantity of inputs/raw materials required to manufacture one unit of the export product. Under the SION, Norms for thousands of products falling under the different segments like chemical and allied products, electronics, Engineering, food products, handicrafts, leather, plastics, sports, textile, etc. are pre-defined by the DGFT.
As the name suggest, Annual Advance authorisation is taken by an exporter for his/her annual requirements. This provision of an annual license is given to avoid issuance of a large number of the Advance Authorisation by an exporter for a particular year. Thereby reducing compliance and saving time. However, there are specific criteria to be eligible for the application under the Advance Authorisation for the annual requirement. They are:
- Applicant should have made exports in at least preceding two Financial Years.
- The maximum entitlement of CIF would be 300% of the FOB value of previous FY or 1 Cr whichever is higher.
- It can only be applied for the products which are in SION or Adhoc Norms fixed category.
In Special Advance Authorisation Scheme, we can import duty-free fabric for the export of articles of apparel and clothing accessories. The exporter can apply as per SION. The Authorisation holder can import relevant fabrics and no other inputs like
packing material, fuel, oil, and catalyst will be allowed to import under this Special Advance Authorisation. The fabric imported against the authorisation is as per actual user condition and it is non-transferable also after fulfillment of Export Obligation. But it is transferable for job work if any. Duty Drawback would also be available on the other domestically procured inputs.
No, benefit under both schemes cannot be taken simultaneously. You can choose only one scheme. Carefully calculate the benefit under each scheme and then make a decision.
In such cases, you can claim the brand rate of Duty drawback on domestically procured/or duty paid imported raw material. At the time of making an application for Advance Authorisation Scheme, you have to indicate details of such duty paid inputs. The process is called brand rate fixation of duty drawback.
Yes, raw materials can be procured domestically. In such cases, DGFT will issue an Invalidation letter to invalidate the license for direct import. In some cases, DGFT may also issue an Advance Release Order (ARO).
It typically takes 15-20 working days to get Advance License from DGFT. We have experts who can accurately prepare documents as per DGFT’s requirements and get Advance License within 5-10 working days.
The Exporter has to fill the ANF 4F with relevant export documents to close Advance License.
Yes, We do have a team who will help you in the redemption of Advance License.
Yes, the Authorisation holder can surrender the license if not used to import duty-free.
On receiving the Advance License from DGFT, the next step would be to register the license at Customs. It is not possible to clear the raw materials duty-free unless you register the license at the port where the consignment will arrive. License is registered to the port of customs as mentioned in the license.
Yes, it is mandatory to register the Advance License at customs to import duty-free raw materials.
No, the Advance License is not transferable even after the holder has fulfilled the Export Obligation. This means that raw materials cannot be transferred even after the Export Obligation is completed. However, finished products made from excess raw materials may be disposed of/sold.
No, Advance License is not possible to sell. Also, not after fulfilling an export obligation.
More questions? Seek help of our experts