RoDTEP (Remission of Duties and Taxes on Exported Products) | Applicable w.e.f. 01.01.2021

RoDTEP (Remission of Duties and Taxes on Exports Products)

The Cabinet Committee on Economic Affairs has given its approval for introducing a new Scheme namely Remission of Duties and Taxes on Exported Products (RoDTEP). Under such a scheme, reimbursement of such taxes/duties/levie, paid at the central/ state/ local level, shall be granted which is not refunded in any other mechanism. 

This scheme would boost the domestic industry and will make the Indian product competitive in the International market in terms of cost as domestic taxes/duties are not being exported.

As per press release by the Ministry of Finance dated 31st December, 2020, the scheme shall be implemented from January 1, 2021 and will replace the existing MEIS scheme. 

In this article we will carry out a detailed discussion on the RoDTEP Scheme. 

1. MEIS (Merchandise Export from India Scheme)/ SEIS (Service export from India Scheme)

MEIS/SEIS are two export benefits introduced in Foreign Trade Policy (“FTP”) 2015-2020. The MEIS Scheme was introduced to promote manufacturing and exporting of notified products from India. 

Under MEIS/SEIS, exporters were provided with “Duty Credit Scripts‘ ‘ as rewards for exporting Goods out of India. Such scripts could be utilised for the payment of Basic Custom Duty on import of goods, Payment of Excise Duty on local procurement of Goods, Payment of Service tax on procurement of service etc. However, if any exporter was not liable to pay any such duty/tax or did not want to use such scripts then he had the option to transfer such scripts to any other person. Duty Credit Scripts were easily transferable.

Under MEIS/SEIS, different percentages are prescribed for different categories of Goods and different countries. Amount of Duty Credit Scripts was computed as a  % of Free on Board (“FOB”) value of Goods/Services exported.

The MEIS Scheme of FTP was set to expire in March 2020. However, it got extended till March 2021 due to the COVID-19 pandemic

2. Objective of removing MEIS/SEIS Scheme

For the purpose of international peace and fair trade practises, the World Trade Organisation (“WTO”) has entered into an agreement on Subsidies and Countervailing Measures. All countries to agreement are required to prepare their export promotion policies in accordance with provisions of such agreement.

However, MEIS/SEIS was challenged by the United States before the World Trade Organization (WTO) on grounds that such incentives were inconsistent with certain provisions of such agreement. 

The Dispute panel of WTO upheld the allegations and therefore directed India to withdraw “subsidies” provided to exporters under  EOU/EHTP/BTP and SEZ scheme as well as EPCG and MEIS Scheme. WTO upheld the view that these subsidies are being treated as non-compliant with the WTO norms. The MEIS Scheme is lacking the coverage of various state and local levies. 

Considering such ruling, the hon’ble Finance Minister announced in September, 2019 that the MEIS scheme shall be replaced with a new scheme known as Remission of duties and Taxes on Export Products (RoDTEP) scheme . RoDTEP scheme was approved by the cabinet in march 2020.

3. Features  of RoDTEP Scheme

Following are the Key  features of RoDTEP Scheme which will benefit the exporters of India:

  1. MEIS scheme was designed to provide rewards to exporters to promote export. 
  2. However, RoDTEP scheme is meant to provide refund to the exports of all the duties and taxes cost incurred with respect to exported goods such as GST, Custom Duty, Mandi Tax, electricity  duties, taxes paid on fuels etc.
  3. The new scheme is framed in accordance with the WTO guidelines.
  4. Through reimbursement of duties and taxes, cost of product shall reduce and Indian product shall become competitive at global level.
  5. The reward would be computed as a percentage of the Freight On Board (FOB) value of exports.
  6. Reward shall be granted in the form of scripts.
  7. Under this scheme the mechanism of introduction across sectors, prioritization of the sectors to be covered, degree of benefit to be given on various items within the rates set by the Committee will be decided and notified by the Department of Commerce (DOC).
  8. This scheme shall create a level playing field for exporters in the International market.
  9. It would boost employment opportunities in export oriented manufacturing industries.

4. Benefits available under RoDTEP Scheme

  • The items to be covered under RoDTEP scheme and rate of reward is to be determined by the inter-ministerial Committee. Reimbursement of taxes and duties under this scheme shall be granted by issuing the transferable duty credit/electronic script issued to the exporters and an electronic credit ledger shall be maintained of such scripts. The scheme will be implemented with end to end digitization in the line with “Digital India”.
  • The refunds under the RoDTEP scheme would be a step towards “zero-rating” along with refunds such as Drawback and IGST. Therefore, similar to MEIS, an exporter can claim both Duty drawback/refund and benefit under RoDTEP Scheme.
  • This benefit leads to cost competitiveness of exported products in international markets and better employment opportunities in export oriented manufacturing industries. Along with this various export oriented industries are being reformed and introduced to better mechanisms so as to increase their productivity, boost exports and contribute to the overall economy.
  • Rebate would be given in a percentage of the Freight on board (FOB) by way of credits to the exporters. The said refund will be notified on the basis of the Revised ITC (RITC) codes, Hence the exporters would not be required to declare any separate code or schedule serial number for RoDTEP.
  • The reward sanctioned under the scheme would be credited in an exporter’s ledger account on the ICEGATE portal of Customs. The credits shall have to be converted into Script so that it reflects on the ICEGATE portal in the exporter’s ledger.
  • A monitoring and audit mechanism, with an Information Technology based Risk Management System (RMS), would be put in to physically verify the records of the exporters. As and when the rates under the RoDTEP Scheme are announced for a tariff line/ item, the Merchandise Exports from India Scheme (MEIS) benefits on such tariff line/item will be discontinued.

5. Applicability of RoDTEP Scheme and Rate of rewards

As per press release issued by Ministry of Finance dated 31st December, 2020, RoDTEP scheme shall be implemented with effect from 1st January, 2020.  

Further, as per press release dated 1st January, 2020, following issues shall be notified/made public shortly based on the recommendations of appointed committee:

  1. The details of export goods (tariff lines) eligible for RoDTEP scheme.
  2. Applicable RoDTEP rate, value caps (wherever applicable) on such eligible goods/tariff lines.
  3. The excluded category of exports
  4. Other conditions and restrictions
  5. The procedural details for grant of RoDTEP duty credit, and utilisation thereof.

The benefit of RoDTEP would be available subject to the conditions, restriction, exclusions, ineligibility and fulfilment of the procedural requirements as notified. The benefits of RoDTEP shall be available from 1st January, 2021, even if the rates and other details are prescribed later, within next few days.

6. Procedure of submission of claim and processing of the claim

6.1 Declaration in Shipping Bill 

  • As per press release and the document issued by the CBIC, an exporter who intends to avail the benefit of the RoDET scheme shall be required to declare his intention in the shipping Bill itself. With effect from 01.01.2021, it has been made mandatory for all the exporters whether they want to avail the benefit of RoDTEP.
  • As the final rate list is yet to be notified, still declaration should be made with effect from 01.01.2021. Upon finalisation of the RITC Codes list, the system will automatically process the reward under RoDTEP Scheme. It is important to note that no changes in the claim will be allowed after the filing of the EGM. 
  • Unlike Drawback, there are no separate serial numbers given for claiming RoDTEP. RoDTEP rates will be notified as per the RITC Code and therefore, there will be no need to declare any separate code or schedule serial number for RoDTEP.
  • If exporters do not claim benefit of RoDTEP scheme in Shipping bill, then he shall not be provided with the benefit even though he is exporting eligible goods.
  • There are some checks built in the System to disallow RoDTEP benefit where the benefit of certain other schemes like Advance Authorization, EOU, Jobbing etc. has been availed.

6.2 Manner of declaration in Shipping bill

Declaration in Shipping Bill shall be made in the following manner:

  1. The exporters have to make following declarations in the SW-INFO-TYPE Table of the Shipping Bill for each item as under:
INFO TYPEDTY
INFO QFRRDT
INFO CODERODTEPY -If RoDTEP is availed.RODETEPN -If RoDTEP not availed
INFO MSRQuantity of the items in Statistical UQC as per Customs Tariff Act for that item RITC
INFO UQCUQC for the Quantity indicated above
  1. For every item where RoDTEPY Is claimed, a declaration has to be submitted in the statement. Table of the Shipping Bill as below:
STATEMENT TYPEDEC
STATEMENT CODERD001

Submission of the relevant statement code means that exporter has made necessary declaration from his part that undertakes that the following:-

  1. He will abide by the provisions, conditions, restrictions and time limits prescribed under the scheme.
  2. He does not make claim in respect of duties or taxes which are remitted/exempted/credited under any scheme other than RoDTEP
  3. He shall make available relevant documents for the purpose of audit in the manner prescribed under the Customs Audit regulations, 2018

6.3 Processing of Claim under RoDTEPY

  • Upon filing declaration in the Shipping bill, system will automatically compute the reward under the RoDTEP Scheme.
  • Once the EGM is filed, all shipping bills shall be sent to Risk Management System (“RMS”) and on the basis of Risk based targeting by RMS, all shipping bills with RoDTEP and/or Drawback claim will either go to the officer for processing or will directly be facilitated to scroll queue without any officer intervention. 
  • Once the shipping bill is processed for DBK and/or RoDTEP either by the officer or as per facilitation by RMS,it will move to the respective scroll queues.
  • In case a suspension is placed on any exporter/Shipping Bill for Drawback, the same will also be applicable for the purpose of scrolling out of RoDTEP benefits.

6.4 Generation of Scrolls under RoDTEPY

  • The Options have been made available in System for officers to generate RoDTEP scrolls. However, till the final rates are notified by the Government, these options will remain disabled in System.
  • Once the scroll is generated, the respective amounts would be available with the exporter

6.5 Claiming of Credits and Generation of Credit Scrips

  • Once the RoDTEP scroll is generated, the exporter can login his account at ICEGATE and convert such scrolls to the credit scrips.
  • In case the exporters have not registered on ICEGATE already with their digital signatures, they need to complete the registration in order to avail the benefits of RoDTEP. 
  • The exporter will be able to club the credits allowed for any number of Shipping Bills at a port and generate a credit scrip for the same on ICEGATE portal. 
  • Once the Scrips are generated, the same will reflect in the exporter’s ledger and will be available for utilization in paying eligible duties during imports or for transfer to any other entity having IEC and a valid ICEGATE registration. 
  • This facility and a detailed advisory will be made available soon on ICEGATE once the final RoDTEP rates are notified and scroll generation is enabled.

6.6 Utilisation of Scrips in Imports

  1. These scrips can be used for the payment of import duties as would be notified by CBIC.
  1. The owner of the scrip (either the original exporter beneficiary or any other person to whom such scrips are transferred on ICEGATE portal) will be able to use the scrip in the Bills of Entry the same way as any other duty credit scrips issued by DGFT, by giving the details in the license table of the Bill of Entry. 
  1. An option to suspend any RoDTEP scrip will also be made available with the Customs officer once the scroll generation is enabled. If a scrip is under suspension, its utilization or transfer will not be allowed by the System..

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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