Policy Circular. 24/97- Dated the 3rd November 1997

Advance Licences -Guidelines/Relaxations on Revalidation Extension Export Obligation

Sub: Revalidation and Extension in Export Obligation Period of Advance Licences issued under Duty Exemption Scheme.

Sir,

Attention is invited to Public Notice No. 38 (PN) 1997 -2002 dated 1 st September 1997 And 40 (PN) 1997-2002 dt. 9th September, 1997 and Policy Circular No. 19/97-98 dated 1st September 1997 on the subject mentioned above.

2. After issuance of aforesaid Public Notices, references have been received from Regional Licensing Authorities seeking clarification/guidelines for the proper implementation. The matter has been examined and necessary guidelines/clarification are given as under:

(i) In accordance with provisions contained in Paragraph 123 (ii) of Handbook of Procedures1992-97 (Vol.1) (RE: March, 1996), in respect of Quantity Based Advance Licence and
Paragraph 128 B (ii) of Handbook of procedures 1992-97 (Vol.1) (RE: March, 1996) in respect of Value Based Advance Licence where short fall in export obligation in terms of quantity and/or value is not more than 15% of the total export obligation imposed and no import/part import is made, the request for pro-rata reduction may be considered and then revalidation of licences Allowed in terms of Para 2(I) of Public Notice No.38 DT. 1.9.97 because once export obligation is allowed to be reduced as per Exim Policy/procedures. 100% export obligation fulfilment means 100% of the reduced export obligation.

(ii) Para 7.22 of current Handbook of procedures (Vol.1) 1997 -2002 provides for "payment of penalty of 1% on the unfulfilled fob value of export obligation" for allowing further extension in the export obligation period. Similarly, Public Notice No.38 stipulates that "Payment of an amount equivalent to a penalty of 5% on the unfulfilled value of export obligation" for allowing further extension. Hence the penalty of 5% leviable for grant of extension in export obligation period is on unfulfilled value of export obligation imposed on the licences. No penalty is leviab le in the cases where export obligation has been fulfilled in terms of value but there is shortfall in terms of quantity while considering further extension for completion of balance quantity of export obligation.

(iii) It is clearly mentioned in the Para 2 of the Public Notice No.38 DT. 1.9.97 that "in respect of advance licences issued 30 months prior to issuance of this Public Notice (i.e. prior to 28.2.1995) as per EXIM policy 1992-97" later vide public notice No.40 dt. 9.9.97, the words prior to 28.2.1995 substituted by "on or before 28.2.1995'). Hence, the Public Notice No.38 dt.1.9.97 is applicable only to advance Licences issued as per chapter-7 during the period of EXIM Policy 1992-97 and is not applicable for Licences issued prior to 1.4.1992.

(iv) The Public Notice No.38 DT. 1.9.97 is applicable to Special Imprest Licence (issued under Chapter 7 of EXIM Policy 1992-97) also. In so far as the request for extension in export obligation period under Special Imprest Licence is concerned, it is upto the contractualduration of the project and also covered by Exim Policy/Procedures/guidelines.

3. This issues with the approval of Commerce Secretary/Director General of Foreign Trade.

Sd/-
(L.B: Singhal)
Dy. Director General of Foreign Trade
For Director General of Foreign Trade

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