F.NO. S/16-MISC-284/2000 GR. VII Date : 10.07.2000

PUBLIC NOTICE NO. 75/2000 Date : 10.07.2000

Sub : Duty Free Replenishment Certificate (DFRC) Scheme introduced vide Para 7.4 of the Exim Policy announced on 31.03.1999 – reg.

Attention of all Importers, Exporters, CHA’s and all other concerned is invited to Public Notice No. 49/2000 dated 24.04.2000 issued by this Custom House on the above subject. For proper functioning of the Scheme, following detailed guidelines are issued for information of the trade :-

2. SCHEME :

1. Under the Duty Free Replenishment Certificate (DFRC) Scheme, exporters are eligible for import of inputs used in the manufacture of goods without payment of basic Custom Duty, Surcharge and special additional duty, but import goods will be leviable to additional Customs Duty equal to Central Excise Duty and Anti-dumping duty/safeguard duty, where applicable. The exports under this scheme are permissible in respect of only those export products which are covered under Standard Input-Output Norms as notified by DGFT in Volume II of the Hand Book of Procedures. However, goods for which Standard Input Output Norms are fixed with Actual User Condition, benefit under DFRC Scheme, shall not be available. The exporters are therefore requested to ensure that only those goods are exported under DFRC Scheme for which SION has been fixed by DGFT and such norms are not with Actual User Condition.

2. As per General Note 2 of the Customs Notification No. 41/2000-Cus dated 1.6.2000 issued to notify All Industry Rates of Drawback, the exporters exporting goods under DFRC Scheme are eligible for Central Excise portion of All Industry Rate of Drawback subject of the condition that no CENVAT is available on the export goods. All Industry Rate of Drawback are fixed giving two rates, one when CENVAT not availed and other when CENVAT has been availed. In category when CENVAT has not been availed, both Customs & C. Excise portion of All Industry Rate of Drawback are admissible and when CENVAT availed, only Customs portion of All Industry Rate of Drawback is admissible. Thus, if exports are being made by not availing CENVAT facility, the exporter will be eligible to only C. Excise of All Industry Rate of Drawback.

However, if exports are being made by availing CENVAT facility, the exporter will not be eligible for any Drawback because he is eligible for only C. Excise portion which is NIL. It may thus ensured that C. Excise portion of All Industry Rate of Drawback is claimed only if the exporter has not availed CENVAT on the export goods. The exporter taken of fact that CENVAT facility has not been availed would be required to produce ‘a’ copy of AR4 or a certificate from concerned C. Excise to prove their claim.

2.3 The exporters operating under DFRC Scheme shall given declaration on all the copies of the shipping bill indicating the S.No. and SION and Product Group of the export product as per SION of Hand Book of Procedure Vol. II. The said shipping bill(s) shall also contain declaration regarding the quality, technical characteristics of the inputs used in the export product as is being done in respect of DEEC Shipping Bills.

2.4 The DFRC shall be issued for import of inputs as per Standard Input-Output Norms having same quality, technical characteristic as of those inputs used in the export products and as indicated in the shipping bill. In other to avoid any disputes at the time of imports, the exporters are advised to mention SION Number on each shipping bill. The list of all inputs and technical characteristic of each input shall be mentioned on the shipping bill alongwith the quantity used.

5. As an illustrative example, say an exporter intends to export Ready Made Garments and Duty Free Input is Fabrics. The following details in respect of fabrics are necessary :-

i. Composition of fabrics i.e. Percentage of various fibres and in case of synthetic fabrics, whether fabrics is made of spun yarn or filament and whether made of textured filament or not.

ii. Whether the fabrics is dyed, printed or yarn dyed with multi colour yarns.

iii. GSM of the fabrics used and denier of yarn used.

iv. Whether woven fabrics or knitted fabrics and in case of knitted fabrics, whether the same is pile fabrics or looped pile fabrics etc. The composition of knitted fabrics shall be mentioned.

5. Similarly, in respect of exports of plastic items the exporter shall declare type of plastics used in the export product and grade of the polymer. The exporters of Engineering goods shall declare type of steel used and composition of the goods exported so that import of similar goods may be allowed without any dispute. In case the technical characteristics cannot be declared on the body of shipping bill, same may be declared on a separate sheet which shall be attached with each copy of shipping bill.

6. The DFRC Scheme is available only if exports are made in freely convertible currency. If exports are being made in Rupee Currency, the benefit under DFRC Scheme shall not be available.

3. Registration :

Any exporter (merchant exporter or manufacturer exporter) desirous of operating under DFRC Scheme through Mumbai Custom House shall first obtain registration number before presenting his first shipping bill for export under the scheme. This will be a one time unique ten digit registration number for each exporter. The fist 3 digits of Registration number will denote port code number which is 401 for Mumbai and subsequent 5 digits denote serial number of registration and last 2 digits denote financial year e.g. 00 for registration during the year 2000. For obtaining this registration number, the exporter shall furnish his profile (in duplicate) as per Annexure IA of HB of Procedures – Vol. I (1997-2002 ) in Group VII of this Custom House, which will be verified by the designated Examining Officer and thereafter in the profile data in computer, be generated on the computer system. The number so generated shall be endorsed on both the copies of exporter’s profile and thereafter duplicate copy of the profile shall be given back to the exporter whereas the original profile copy shall be retained in the department for record.

4. Documentation and Procedure for Export :

4.1 (i) The exporters exporting goods under DFRC Scheme without claiming Drawback shall file a "shipping bill for export of dutiable goods " (where export duties are leviable or " shipping bill for export duties are leviable ). On the top of the shipping bill they should write "Exports under DFRC Scheme" on each copy. The exporters will file the said shipping bill in quadruplicate, original to be retained in the Custom House, duplicate for recording examination order and to be retained by Custom in docks. The triplicate shall be Export Promotion Copy and on top of it "E.P. Copy" shall be mentioned. Quadruplicate shall be DFRC copy on which the examination report shall be recorded. On quadruplicate it shall be specifically mentioned "DFRC Copy " and shall retained by the exporter.

4.1 (ii) The exporters intending to claim Drawback as well as benefit under DFRC shall file "Green Shipping Bill for export of goods under claim for Duty Drawback " in quintuplicate. On each copy exporter shall write "Shipping Bill for export of goods under claim for Duty Drawback ". The original copy will be retained by the Customs Department, Duplicate shall be retained by Docks staff after recording examination report, Triplicate shall be drawback copy, quadruplicate shall be E.P. copy and quintuplicate shall be DFRC copy, to be retained by the exporter. Examination Report will be recorded on duplicate, triplicate (Drawback claim copy) and on quintuplicate i.e. DFRC Copy. The Drawback shall be claimed on the strength of Drawback Copy.

4.1 (iii) All the columns of the shipping bill shall be properly filled in (either by typewriting or by computer printing) either by the exporter or his authorised Custom House Agent. All the relevant informations like FOB value, Gross Weight, Net Weight, Units being exported shall be written in numbers as well as letters. The exporter shall prominently mention on the shipping bill, DFRC section computer registration number for exports under DFRC Scheme. As stated above, the exporter shall obtain this number from the Computer Cell of the DFRC Section before he presents his first shipping bill for export under the Scheme. Thereafter, this number shall invariably be inscribed on the succeeding shipping bill (s).

4.1 (iv) At the bottom of the shipping bill, there shall be following declarations :

a. I/We am/are exporting these goods under DFRC Scheme in terms of Para 7.4 of EXIM Policy (1997-2002).

b. I/We shall not claim any benefit under Advance Licence or Duty Entitlement Pass Book Scheme in respect of exports made against this shipping bill.

c. The goods are covered by SION S.No........ of Product Group Code No.........of HB of Procedure Vol. II.

d. I/We declare that all particulars given herein are true and correct.

i. The reverse side of the duplicate shipping bill will be the same as shipping bill for export of duty free goods, in case no Drawback is being claimed and in case Drawback is being claimed, reverse side of the duplicate shipping bill will be the same as shipping for exports under claim for Drawback.

ii. The Quadruplicate copy of shipping bill in case of duty free/dutiable goods and quintuplicate copy of shipping bill, in case of claim for drawback will be called as DFRC copy, the reverse side of this copy as well as duplicate copy shall bear the examination order and examination report alongwith Customs Let-Export Order.

iii. The triplicate copy in case of duty free/dutiable and quadruplicate copy in case of exports under claim of drawback shall be used as Export Promotion Copy.

2. The DFRC shipping bill in quadruplicate/quintuplicate, as the case may be, as stated above, after obtaining a one time DFRC Section Registration Number (as mentioned in the previous para), will be assigned to the shipping bill. Thereafter, the shipping bill alongwith relevant GR Forms will be presented for assesment in Group VII. The assesment will be done by the Appraising officer and will be countersigned by the Dy. Commr. / Asstt. Commr. The examination order will be endorsed on both duplicato as well as triplicato copy of the shipping bill.

3. Samples under DFRC Scheme will bo drawn for tost only where testing is necessary with reference to a specification/content of inputs or technical characteristic etc. In such cases, the samples of the first consignment shall necessarily be sent for test. The subsequent samples shall be sent for test on the basis of the one out of ten consignments to be drawn at random and with an element of surprise. However, in case of manufacturer exporters who have Inhouse testing facilities, samples may not be drawn and the Inhouse test results shall be reliesd upon, provided the Inhouse testing facility of the manufacturer exporter has been recongnised as follows :-

a. The manufacturer exporter has been awarded GMP (Good Manufacturing Practices) certificate by the concerned Drug Controller, or

b. The Inhouse testing facilities are approved by ISI/CSIR/Ministry of Science and Technology or the nodal Ministry ,or

c. The manufacturer exporter has been awarded ISO Certification.

In such cases, the exporter would have to enclose a copy of the Inhouse Test Certificate with the Shipping Bill. The above facilities are for expeditious clearance. The Customs, however, will have the right to draw samples by surprise and go for a detailed verification/testing etc.

4.4 On account of declared FOB or Classification of goods under a particular SION, drawal of sample or for other reasons, where it is not possible to assess the shipping bill finally, the shipping bill shall be assessed provisionalyy and all copies of such shipping bills shall be prominently stamped with the endorsement "Assessed Provisionally pending NOT ENTITLED FOR DFRC BEFORE ASSESSMENT IS FINALISED".

5. After asses,emt by the Appraising officers and coutner signature by the Asstt./ Deputy Commr., All the details of the shipping bill(s) particularly, shipping bill no. and date, CHA, description of goods, quantity, not weight/gross weight, fob value, product group, SION S.No. etc. shall be entered into ‘credit modulo’ of computer system. The entries in the credit module shall be made with reference to DFRC Section Registration number of the exporter. A separate site shall be allocated for each registration number. The running Sr. No. of the corresponding entry against which particulars of the shipping bills have been entered in the computer shall be termed as credit account Sr.No. and be prominently stamped on all the copies of the shipping bill. The said credit module will also have columns for DFRC Licence No. and date and place of issue which will be entered in at the time of verification. After entering details in credit module, 10 digit security No. shall be generated in the Computer System and the same shall be endorsed on all copies of shipping bill as well as G.R. Forms. Thereafter, the original shipping bill and original G.R. copies will be rotained in the Computer Cell and the remaining copies of the shipping bills and G.R. will be handed over to the exporters. Original copies of finally assessed shipping bill shall be forwarded to MCD on daily basis as per the practice. Original copies of provisionallly assessed shipping bils however, will be retained in a separate lot bill their final assessment.

6. DFRC will be issued by the Licensing authority on submission of the finally assessed EP Copy of the shipping bill and other documents within a period of 90 days from the last date of realisation in respect of shipments for which DFRC is being claimed or 180 days from date of exports against irrevocable letter of Credit as provided in the Export-Import policy and Hand Book of Procedure Vol. I. In case of provisional assessment, exporter(s) will have to get their shipping bills finally assessed on the basis of Test Reports or other required documents before applying for DFRC to the DGFT. In such cases, application for DFRC shall be filed within 180 days from the date of final assesment (or release) of shipping bill. In case of short shipment, exporters will have to furnish EP copy alongwith short shipment certificate while applying for DFRC to the Licencing Authority. The extent of short shipment shall be prominently stamped on all copies of the shipping bills by the officer giving out of charge in the Docks indicating the extent of short shipment in Quantity and value terms.

7. All shipping bills assessed provisionally as per P.N.No. 49/2000 dtd 24.4.2000 shall be finalised in view of instructions contained in this Standing Order.

8. In addition to what is stated above, all other existing instructions for assessment and examination of export goods shall apply mutatis mutandis.

3. Examination of Exports :

1. The export goods shall be examined with reference to the description nd technicl specifications of the export goods as well as inputs. As the exporter will be eligible for import of inputs declared in the shipping bills, due care shall be taken to ensure that the declared inputs have been used in the export goods so that exporter(s) do not face any difficulty at the time of import. Wherever the description of inputs cannot be ascertained by visual inspection, samples may be drawn with clear instructions of test requirements.

2. If exporter is claiming Central Excise Portion of All Industry Rate of Drawback on the export goods, the require3d certificates for non availment of CENVAT shall be verified at the time of export. The same instructions shall be applicable in this regard as in case of normal Drawback exports.

3. If an exporter also claims Drawback in respect of thos duty paid inputs which are not covered under SION and whose import is not permitted against DFRC Licence, officers examining the export consignments shall ensure that such inputs are contained in the export goods, correct quantity of such inputs has been declared and no CENVAT has been availed on such inputs.

4. In addition to above, all other existin instructions for examination of export goods shall apply mutatis-mutandis.

6. Port of Registration :

As per the revised HB of Procedures, Vol.I, the applicant may file one or more applicant may file one or more applications for DFRC subject to the condition that each application shall contain not more than 25 shipping bills. All the shipping bills in any one application must relate to exports made from one Custom House only. The application for DFRC against exports made through Mumbai Custom House should therefore, be made separately and should not be mixed up with export effected through other ports. The DFRC shall be issued with single port of registration, which will be the port from where the exports have been effected.

7. Verification :

DFRC issued by Licencing Authority against exports made through Mumbai Custom House, will be verified by the DFRC Section of Group VII with respect to DFRC copies of the shipping bills presented by the party and the computer records maintained for this purpose. The Dy. Commr. / Asstt. Commr. Will nominate Appraising Officer and other staff for verification of DFRC Licence. Separate DFRC Licence files containing copy of DFRC Licence, DFRC copies of shipping bill, Bank Certificate of export and realisation, calculation Chart and other required documents will be maintained in serial order. After due verification of the particulars mentioned in DFRC Licence with those in the records maintained in the computer system and with DFRC copy of the shipping bill and other documents presented by the exporter, the DFRC Licence shall be endorsed with a stamp "Verified by Customs" and signed in full with dated signature of the Dy. Commr. / Asstt. Commr. Of Customs Group 7, bearing a stamp of his name and designation in Block letters. At the time of verification, DFRC copies of shipping bills will also be endorsed/stamped with corresponding DFRC Licence number and date. The details of DFRC Licence No. and date, its value and place of issue shall also be entered in the credit module respective shipping bills

1. Registration of DFRC :

1. Imports and exports under DFRC scheme have to be from any one of the specified ports/airports/ICDs etc. In other words, DFRC issued for a particular port of registration is not valid for import or export through any other port, airport or ICD. However, Mumbai seaport, CFS – Mulund, Nhava Sheva and Mumbai Airport in Mumbai shall be considered as a single port for the purpose of DFRC. Therefore, DFRC holder(s) having DFRC (s) with port of registration "Mumbai", (for export through any of said four shipping points) will be allowed to utilise DFRC for import of payment of duty on eligible items imported at any one of the three ports i.e. Mumbai Seaport, Nhava Sheva and Mumbai Airport. However, the registration and subsequent utilisation at any of the said three ports shall be allowed only after verification of DFRC by Customs at the point of exports. In case DFRC is issued having shipping bill from Air Cargo Complex, Mumbai, JNPT and/or Mumbai Custom House, verification shall be got done from respective ports of export (s) before registration at any of the ports. DFRC holder desirous of utilising DFRC at Mumbai Custom House shall get respective DFRC registered in the Computer Section after DFRC is verified. The registration no. shall be endorsed on the left side top corner of reverse side of DFRC. No debits against DFRC shall be permitted unless it is registered in computer section. Registration of DFRC shall be made in debit module of the system. After registration of DFRC at any one of the ports, utilisation at other ports shall be permitted through issue of Telegraphic Release Advice (TRA).

2. DFRC holders registered at any of the following seaports/airports/ICDs are also allowed to import goods at any of the following seaports/airports/ICDs:

i. Sea-ports at Mumbai, Calcutta, Cochin, Kandla, Mangalore, Chennai, Nhava-Sheva & Vishakhapatnam.

ii. Airports at Ahmedabad, Bangalore, Mumbai, Calcutta, Delhi, Hyderabad and Chennai.

iii. ICDs at Bangalore & Delhi.

1. The aforesaid facility will be operated by issue of Telegraphic Release Advice (TRA) from the port of registration to the Custom House at which the goods are being imported. The format of TRA will be as per annexures ‘B’ and ‘C’ to this Standing Order.

2. Where the imports at Mumbai are against TRA issued by any of the above seaports/airports/ICDs, the TRA, before its utilisation for payment of duty, will have to be registered in debit module of the computer system in the same manner as that for DFRC. In case of TRA, additional information related to name of the ustoms station from where the TRA is issued with their reference file number shall also be maintained in the system. At the time of registration and assessment, original DFRC shall also be required to be presented alongwith TRA. The other procedure for clearance against TRA shall be the same a given hereinunder for DFRC except that debits will be made on the reverse of TRA instead of DFRC.

9. Impots :

1. Any item as per DFRC shall be allowed for import without payment of basic Customs duty, special duty of Customs and special additional duty. However, additional duty of Customs is leviable on goods imported against DFRC. Anti-Dumping duty and Safeguard duty wherever chargeable shall also be leviable on imports against DFRC Licence.

2. Imports effected against DFRC Licence shall not be cleared under Fast Track/Green Channel Scheme and would be subjected to normal/check examination scheme.

3. Sourcing of inputs from Private Bonded Warehouses :

The facility of sourcing inputs from private bonded warehouses under para 5.15 of the EXIM Policy shall be available and for this purpose the provisions of Section 68 of the Customs Act, 1962 shall be applicable except that the clearance of inputs from bond shall be allowed against DFRC Licence subject to fulfilment of the terms & conditions mentioned in Noftn. No. 48/2000 Cus dated 25.04.2000.

4. Debiting of DFRC Licence :

No clearance shall be allowed under Customs Notification No. 48/2000 Cus dated 25.04.2000 unless a debit entry has been made in the DFRC Licence for each items allowed to be imported.

5. The normal validity period of DFRC Licence shall be 12 months.

6. DGFT would not be issuing DFRC Licences in respect of SION which are subject to Actul User Condition in the Hand Book of Procedure Vol.II. The Customs Duty exemption shall not be available to DFRC licence issued for inputs of such SION.

9.7 The DFRC Licence and/or the items imported against it are freely transferable. After noting in computer system, Bill of Entry alongwith DFRC(s) (registered with computer system) shall be presented before concerned Appraising officer in Group VII. The DFRC Nos. And date with each item, corresponding quantity and value of goods to be debited and duty rate corresponding to debit amount shall clearly be mentioned on all copies of Bill of Entry. DFRC wise value of goods will be debited (below endorsement regarding DFRC registration no.) on reverse side of DFRC from the Opening Balance and after debit, left balance if any, shall also be endorsed as closing balance by the Appraising officer putting his dated signature. There will be also be a debit sheet to be attached to DFRC in which debit wise (in serial order) details of Bill of Entry Thoka No. and date, IGM/Item and date, importer’s name and address, description of goods, quantity, CIF value, CHA, duty rate of debit and amount debited will be certified by the Appraising officer. The number of every fresh debit sheet attached (N/S-1, N/S-II, N/S-III, etc.) shall be indicated on the reverse of the original DFRC.

8. After assessment by Appraising Officer, the Bill of Entry will be audited by the concurrent Audit Department of Custom House (Debits made in DFRC (s) shall also be audited by the Audit Department) and thereafter countersigned by the concerned Asstt. Commissioner of Group VII. After the Bill of Entry is signed by Asstt. Commissioner, it will be forwarded to to comptist for calculation check and pin-pointing for duty duty (adn cell, if any) to be paid in cash. Comptist shall also check correctness of duty foregone from details on the debit sheet attached to DFRC and total of duty foregone stated on the Bill of Entry. Thereafter, Bill of Entry Module and the details of DFRC debit will be entered in ‘debit module’. The debit module will be with reference to DFRC registration no. (and also original DFRC holder’s ) name and address, DFRC No and date, authority of issuing DFRC and the period of validity of the DFRC) . After the entry in Bill of Entry module and debit module (for all relevant DFRCs), both the bill of entry and DFRC(s) will be endorsed with stamp ‘ entered in system’ (with dated signature of person entering the details). Bill of Entry will also be endorsed for total amount debited against DFRC (s).

9. After Computer entry, Bill of Entry will be sent back to Gr. VII, where, after noting the details of duty foregone, ADF number will be endorsed on Bill of Entry by the ADF clerk.

10. In addition to what is stated above, all other existing instructions for assessment and examination of import goods shall apply mutatis-mutandis.

Sd/-
(S.P.S. PUNDIR)
COMMISSIONER OF CUSTOMS(EP)

ATTESTED BY

Sd/-
(R.R. TIWARI)
ASSTT. COMMISSIONER OF CUSTOMS(GR.7)

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