ALC Circular No. 3 Dated : 5.9.2001

Issue of Advance Licences on self-declaration basis as per Paragraph 7.5 of Handbook of Procedures, Volume 1 (R.E. March 2001)-Clarification reg

Sub:

Issue of Advance Licences on self-declaration basis as per Paragraph 7.5 of Handbook of Procedures, Volume 1 (R.E. March 2001)-Clarification reg.

Sir,

Attention is invited to paragraph 7.5 of Handbook of Procedures, Volume 1, as amended, which provides for issuance of advance licences, where SION are not fixed, based on self-declaration and undertaking by the applicants for final adjustment of items with quantities as per norms fixed by ALC subsequently within a period of 6 months from the date of issue of licence. For smooth functioning of fixation of norms and proper implementation of decisions of ALC, the following procedure/guidelines may be adopted:-

(i) In order to ensure that the norms are fixed by ALC within the period of six months from the date of issue of licences on self-declaration basis and also to enable exporters in getting their cases closed at the earliest, all licensing authorities are requested to adhere to the time schedule as specified in paragraph 7.5 (iv) of Handbook of Procedures as amended and those given in the SALC circular No. 1 and 3 dated 28th June 1999 and 13th August 1999 respectively in forwarding the application and also for further action as per the decision of the ALC conveyed to them.

(ii) To facilitate linking of the cases of paragraph 7.5 of Handbook of Procedures and implementation of decisions of ALC, all licensing authorities are hereby advised to adopt common section code 24 for easy identification both at the regional level and also in the Headuqarters office of the DGFT. In the Headquarters office of DGFT all applications under paragraph 7.5 of HBP shall be given the file category of 50 as per the existing practice being followed at present in this regard.

(iii) Difficulties have been expressed in closure of DEEC Book where Ad hoc norms have been fixed by the ALC on content basis or subject to accountability of imported material in the export product. In this regard it is clarified that Input Output Norms are generally fixed by ALC by giving the absolute quantities of inputs vis-à-vis the quantity of exports. However, it is not always possible to give the absolute quantity of inputs on account of various reasons and in such cases the norms are fixed on content basis or in terms of wastage subject to accountability of imported inputs in the export product. As the norms are fixed by ALC, after issue of advance licences on self-declaration with the description of export product as applied by the firm, and also often exports are made prior to fixation of norms by the ALC, exporters face difficulty in closure of their cases as some times export product descriptions are modified by ALC to ensure accountability of imported inputs in export product. In this regard it is clarified that since the rationale behind modifying the export product description subsequently by the ALC is to ensure accountability of imported inputs in the export product, such cases can also be closed based on the Customs Laboratory Test Report of the products exported, if it gives full details of constituents of the export products so as to ensure accountability of imported inputs in the export product. In other cases where Customs Laboratory Report of the product exported are not available, the cases can be closed based on the declaration given in the Shipping Documents/Shipping Bills of the exempted materials with quantities used for the manufacture of the product exported as the Customs are expected to check/verify the correctness of the declaration given by the exporters in the shipping documents/shipping bills. The shipments having been allowed by Customs after their assessment along with the declaration of exporters in the Shipping documents/shipping bills the same can be accepted for discharge and closure of DEEC Books.

(iv) Further, while considering para 7.5 cases by the ALC, ad hoc norms are also fixed by ALC which are valid only for a particular firm upto a specified period. Subsequent advance licences based on these ad hoc norms can also be issued by the Licensing Authority to the same firm up to the specified period and copy of the application in such cases need not be sent to ALC for fixation of norms. Also, such cases should not be opened under Section Code No. 24. For extending the validity of ad hoc norms, the firm may be advised to approach the ALC well in advance along with application in Appendix 11A with latest set of production and consumption data and other details as per existing procedure. In this regard the instructions contained in SALC circular No. 3/1999-2002 dated 13.8.1999 may be referred to.

(v) It has also been observed that often the firms after obtaining the advance licences on self-declaration basis make the full imports of the inputs given in the licences as per self-declaration without waiting for the final fixation of norms by the ALC. In many cases, in situation like the one described above, many firms have made requests for enhancement of the quantity of exports in proportion to the excess quantity imported as against the norms fixed by ALC. In the light of the general policy available under paragraph 7.21 of the Handbook of Procedures for pro-rata enhancement of the quantity of imports and also the exports in the advance licences already granted to the firm, it is clarified that such requests may be considered by the Licensing Authorities as per the provisions contained under paragraph 7.21 of the Handbook of Procedures without referring the matter to the ALC so long the request for pro-rata enhancement in the quantity of export is as per the norms fixed by the ALC against the corresponding Para 7.5 application of the applicant. In all cases where excess imports have been made as explained above and where the requests for pro-rata enhancement in the export quantity is not made, the cases may be regularised by payment of Customs duty and interest as per the provisions contained under paragraph 7.5 of HBP.

2. This may be brought to the notice of all concerned for strict compliance. The instructions contained in the SALC circular No. 1/1999-2002 dated 28th June, 1999 and SALC circular No. 3/1999-2002 dated 13th August, 1999 are also reiterated for strict compliance.

5. This issues with the approval of the DGFT.

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