Regularisation Of Bonafide Default.

4.28

The cases of a bonafide default in fulfillment of export obligation may be regularised by the Regional Authority in the manner indicated below:

(i) If the export obligation is fulfilled in terms of value, but there is a shortfall in terms of quantity, the Authorisation holder shall, for the regularisation, pay:-

a) To the Customs Authority, customs duty on the unutilised value of the imported material alongwith interest at the rate of 15% per annum thereon; and

b) An amount equivalent to 3% of the CIF value of unutilised imported material through a TR in the authorised branch of Central Bank of India indicating the “Head of Account: 1453, Foreign Trade and Export Promotion and Minor Head 102”. The Authorisation holder shall also be required to obtain a separate import licence for regularisation of the excess imported input. However, the provisions of this sub paragraph shall not be applicable if the unutilised imported material was freely importable on the date of import.

(ii) If the export obligation is fulfilled in terms of quantity but there is shortfall in terms of value, no penalty shall be imposed if the Authorisation holder has achieved the minimum value addition prescribed in the policy and the procedure laid thereunder. However, if the value addition falls below the minimum value addition prescribed in the policy and the procedure laid thereunder, the Authorisation holder shall be required to deposit an equivalent amount through TR in the authorised branch of Central Bank of India indicating the “Head of Account-1453 Foreign Trade and Export Promotion- Minor Head –102” so that the 100 times the deposited amount and the FOB value realised in Indian rupees together account for prescribed minimum value addition over the CIF value.

This shall be calculated with reference to actual quantity of exports and FOB value of realisation with reference to prorata quantity of imports and CIF value. For example, if the export performance is only 50% quantitywise but import has been for the complete CIF value permitted, then the value addition would be calculated on a prorata basis, i.e with reference to 50% of the CIF value of imports. This would accordingly imply that where the Authorisation holder is unable to export, no penalty on valuewise shortfall shall be imposed.

(iii) If the export obligation is not fulfilled both in terms of quantity and value, the Authorisation holder shall, for the regularisation, pay as per (i) and (ii) above.

(iv) In case an exporter is unable to complete the export obligation undertaken in full and he has not made any import under the Authorisation, the Authorisation holder will also have an option to get the Authorisation canceled and apply for drawback after obtaining permission from the Customs Authorities for conversion of shipping bills to Drawback Shipping Bills.

(v) The Regional Authority shall compare the relevant portion of Appendix-23 duly verified and certified by Chartered Accountant with that of norms allowed in the Authorisation(s) and the actual quantity imported against the Authorisation(s) in the beginning of the financial year for all such Authorisations redeemed in the preceeding licensing year. In this verification process, in case if it is found that the Authorisation holder has consumed lesser quantity of inputs than imported, the authorisation holder shall be liable to pay customs duty on the unutilized value of imported material alongwith interest @ 15% per annum thereon or effect additional export within the export obligation period.