4.49

Regularisation of Bona fide Default

Cases o f bona fide default in fulfilment of EO may be regularised by Regional Authority as under:

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

(i) To customs authorities, customs duty on unutilized value of imported / indigenously procured material along with interest as notified by DoR. Exporter will have the option to pay customs duty through valid duty credit scrips issued under FTP. However, interest / penalty shall be required to be paid in cash.

(ii) An amount equivalent to 3% of the CIF value of unutilised imported material, if the item of import is restricted, into "Head Account: 1453, Foreign Trade and Export Promotion and Minor Head102". Provisions of this sub paragraph will not be applicable if unutilized material was freely importable on date of import/domestic procurement.

(b) If the EO is fulfilled in quantity but there is shortfall in value, no penalty shall be imposed if Authorisation holder has achieved minimum VA prescribed. However, if VA falls below the minimum VA prescribed, Authorisation holder shall be required to deposit an amount equal to 1% of shortfall in FOB value in Indian Rupee through TR in authorised branch of Central Bank of India as above or through EFT mode or through credit card.

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

(d) If EO is not fulfilled both in terms of quantity and value, the Authorisation holder shall, for the regularisation, pay as per a), b) and c) above.

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

(f) Regional Authority shall compare relevant portion of Appendix 4H duly verified and certified by Chartered Accountant / Cost Accountants with that of norms allowed in Authorisation(s) and actual quantity imported against Authorisation(s) in the beginning of licensing year for all such Authorisations redeemed in preceding licensing year. In this verification process, in case it is found that Authorisation holder has consumed lesser quantity of inputs than imported, Authorisation holder shall be liable to pay customs duty on unutilized value of imported material, along with interest thereon as notified, or affect additional export within the EO period.

(g) Regularization of Bona fide default in the cases where Authorisation was issued for import of drugs from unregistered sources with pre import condition.

Import of drugs from unregistered sources issued with pre import condition shall be regularised in the following manner:

(i) The Authorisation holder shall submit documents showing consumption of full imported quantity as per norms. In case, there is shortfall in fulfilment of EO and unutilised imported quantity remains with the authorisation holder, the Authorisation holder shall submit a self declaration along with Chartered Accountant’s certificate regarding destruction of the unutilised duty free imported material accompanied by an affidavit–cum–indemnity bond indemnifying the Government for any harm or loss occurring due to diversion of such imported material from unregistered sources into the domestic market that may be detected in future by any authority, or proof of re-export of the same to the same supplier in-terms of para 4.43A of HBP 2015-2020.

(Above (i) has been amended vide PUBLIC NOTICE NO. 11/2019, DT. 14/06/2019)

[OLD- (i) The Authorisation holder shall submit documents showing consumption of full imported quantity as per norms. In case, there is shortfall in fulfilment of EO and unutilised imported quantity remains with the authorisation holder, the Authorisation holder shall either submit a certificate from the jurisdictional Central Excise / Customs Authority certifying destruction of the unutilised imported quantity in their presence or proof of re-export of the same to the same supplier in-terms of para 4.43A of HBP 2015-2020. ]

(ii) Exports made under free shipping bills/under same authorisation after expiry of EO period using unutilised quantity of drugs shall also be accepted in-lieu of submission of destruction certificate as stated in para (i) above, provided the exact description and technical characteristics of the drug exported matches with that of export item described in the dvance Authorisation. However, the Authorisation holder shall pay customs duty with applicable interest to the Customs Authority on unutilized quantity imported under Advance Authorisation. The exports made outside EO period shall only be considered for waiver of destruction certificate and not for waiver of liability of applicable duties and interest.