A Duty Free Import Authorization (DFIA) is issued to allow duty free import of inputs which are used in the manufacture of an export product, making normal allowance for wastage, and energy, fuel, catalyst etc. Many are utilized in the course of their use to obtain the export product.
The Director General of Foreign Trade (DGFT), by means of Public Notice and also public interest, can exclude any product(s) from the scheme. This scheme was in force from 1st May 2006.
The Authorization shall be issued on the norms of inputs and export items given under the Standard Input and Output Norms (SION). Thus the import entitlement must be limited to the quantity mentioned in SION
Previously, Duty Free import of mandatory spares to 10% of the CIF value of Authorization which is required to be exported/ supplied as the resultant product may also be allowed under the scheme. Such Authorization may be issued either to a merchant exporter or manufacturer exporter tied to supporting manufacturer.
The details of Duty Free Import Authorization and its modifications to previous Foreign Trade Policy (FTP) 2014-2019 is explained under new Foreign Trade Policy of India 2015-2020. The new policy of Duty Free Import Authorization Scheme is described below:
DFIA Scheme under FTP 2015-2020
1) Duty Free Import Authorization is distributed to allow duty free import of inputs. Thus, import of oil and catalyst which is utilized in the process of production of an export product may also be allowed.
Duties Exempted and Admissibility of Central Value added tax, and Drawback as per Foreign Trade Policy of India 2015-20
(i) Duty Free Import Authorization has been exempted only from the payment of Basic Customs Duty.
(ii) Additional customs duty is not exempted and shall be adjusted as CENVAT credit as per Department of Revenue rules.
(iii) Drawback as per rate is determined and fixed by the Central Excise authority and it is 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 about the details of such a duty paid inputs and also in the application for Duty Free Import Authorization, and as per the details mentioned in the application, thus the Regional Authority should also have clearly endorsed details of all such duty paid inputs in the condition sheet of the DFIA.
As per the new policy minimum value addition
According to the new IMPEX Policy 2015-20, minimum value addition of 20% shall be required to be achieved. For few items where the higher value addition has been prescribed under the Advance Authorization, the same value addition shall be applicable for Duty Free Import Authorization also.
Eligibility for obtaining the Duty Free Import Authorization
(i) Duty Free Import Authorization shall be issued on post export basis for products for which Standard Input Output Norms have been notified.
(ii) Any Merchant Exporter shall be required to mention name and address of supporting manufacturer of the export product on the export document viz. Shipping Bill / Bill of Export / Airway Bill / / ARE-3 / ARE-1.
(iii) An application is to be filed with concerned Regional Authority before effecting export under Duty Free Import Authorization.
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.
Duty Free Import Authorisation Scheme shall not be available for import of raw sugar.
Duties Exempted
- Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty (BCD).
- Drawback as per rate determined and fixed by Customs 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 Authorisation, 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
Eligibility
- Duty Free Import Authorisation shall be issued on post export basis for products for which Standard Input Output Norms have been notified.
- Merchant Exporter shall be required to mention name and address of supporting manufacturer of the export product on the export document viz. Shipping Bill/ Bill of Export / Tax Invoice for export prescribed under the GST rules.
- Application is to be filed with concerned Regional Authority before effecting export under Duty Free Import
- No Duty Free Import Authorisation shall be issued for an input which is subjected to pre-import condition or where SION prescribes ‘Actual User’ condition or Appendix-4J prescribes pre import condition for such an
Minimum Value Addition
Minimum value addition of 20% shall be required to be achieved.
Validity &Transferability of DFIA
- Applicant shall file online application to Regional Authority concerned before starting export under
- Export shall be completed within 12 months from the date of online filing of application and generation of file
- While doing export/supply, applicant shall indicate file number on the export/supply documents Shipping Bill/Bill of Export/Tax invoice for supply prescribed under GST rules.
- In terms of Para 12 of FTP, Wherever SION permits use of either(a) a generic input or (b) alternative input, the specific input together with quantity [which has been used in manufacturing the export product] should be indicated / endorsed in the relevant Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules. Only such inputs may be permitted for import in the authorisation in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such generic input/alternative input.
- In addition, if in any SION, a single quantity has been indicated against a number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantity of these inputs actually used/consumed in production and declared in Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules.
- Separate DFIA shall be issued for each SION and each
- Exports under DFIA shall be made from a single port as mentioned in paragraph 37 of Handbook of Procedures.
- 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
Sensitive Items under Duty Free Import Authorisation
In respect of 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.
Policy
Policy relating to the Duty Free Import Authorisation (DFIA) Scheme is prescribed in Chapter 4 of FTP.
Application
- Application in ANF 4G along with documents therein, shall be filed online to concerned Regional Authority.
- Provisions of paragraphs 4.26, 4.27, 4.28, 4.48, 4.49(e) & 4.49 (f) and 4.52 of this Handbook of Procedures shall also be applicable for DFIA Scheme.
- 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
- Applicant shall be allowed to file application beyond 24 months from the date of generation of file number as per paragraph 9.02 of Hand Book of
Facility for Split DFIA
Split Authorisations of DFIA subject to a minimum of CIF value of Rs. 10 lakh each and multiples thereof may also be issued, on request at the time of seeking transferability. A fee of Rs. 1000/- each shall be paid for each split authorization. Split-up DFIAs shall be permitted with the same port of registration as appearing on the original DFIA.
Re-export of goods imported under DFIA Scheme
- Goods imported against transferable DFIA, which are found defective or unfit for use, may be re-exported, as per Department of Revenue guidelines. In such cases, if the goods were not put to use after import, a certificate shall be generated by concerned Commissioner of Customs to the extent of 95% of CIF value debited against DFIA containing amount and description of exported goods and the details of original
- Based on the certificate, a fresh DFIA shall be issued by Regional Authority Fresh DFIA, so issued, shall have same port of registration and shall be valid for a period equivalent to balance period available on date of import of such defective/unfit goods.
Maintenance of proper accounts of import and its utilisation
Original DFIA holder shall maintain a true and proper account of consumption and utilisation of duty free imported / domestically procured goods against each authorisation as prescribed in Appendix 4H. These records are required to be sent to Regional Authority concerned along with request for bond waiver / redemption / discharge of export obligation / transferability. Such records should be preserved for a period of at least three years from date of redemption.