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October 12, 2020

CBIC extends RoSCTL scheme validity till 31st March, 2021

by CA Shivam Jaiswal in GST

CBIC extends RoSCTL scheme validity till 31st March, 2021

The Central Board of Indirect Taxes and Customs (CBIC), vide Notification No. 36/2020 – Customs dated 5th October, 2020, amends notification No.13/2020-Customs dated 14.02.2020 for extending the RoSCTL scheme validity from 31.03.2020 to 31.03.2021 or until such date the RoSCTL scheme is merged with RoDTEP scheme, whichever is earlier.

What is the RoSCTL Scheme?

The Rebate of State & Central Taxes and Levies (RoSCTL) Scheme is an export incentive in the form of transferable and sellable duty credit scrips offered on the basis of the FOB value of the export. It replaced the Rebate of State Levies (RoSL) scheme, a monetary incentive scheme under which Customs would deposit the rebate directly into the exporter’s bank account.

What do you mean by duty credit scrips?

  • Duty Credit Scrips (DCS) is an export promotion benefit offered by the Government of India under the Foreign Trade Policy.
  • A DCS provides tax incentives on exports, which can be used by exporters to set off their import duties. 
  • It can be used against tax liabilities arising out of basic customs duty, additional customs duty, safeguard duty, transitional specific safeguard duty, and anti-dumping duty. DCS can be transferred to others.
  • However, it cannot be used to set off GST, compensation cess, and education cess.

What do you mean by the FOB value of exports?

FOB means Freight on Board or Free on Board. FOB Value = Ex-Factory Price + Other Costs

Other Costs in the calculation of the FOB value shall refer to the costs incurred in placing the goods in the ship for export, including but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees, service charges, etc.

Why was RoSCTL Scheme introduced?

Government had notified the scheme for Rebate of State Levies (RoSL) to mitigate the incidence of State VAT and other State taxes on export of garments and made-ups (falling under Chapters 61, 62 and 63 of AIR schedule of duty drawback).

In wake of complaints filed by USA against India to discontinue export incentive scheme (like MEIS), which was not in compliance with WTO guidelines, Commerce ministry had proposed new scheme- Rebate of State & Central Taxes and Levies Scheme (RoSCTL).

As certain State and Central levies remained unrebated in the export of garments and made-ups, Ministry of Textiles (MoT) vide notification No. 14/26/2016-IT dated 07.03.2019 notified the RoSCTL scheme to rebate the incidence of various State as well as Central taxes suffered on export of garments and made-ups.

Who is eligible to avail the RoSCTL scheme?

The RoSCTL scheme is available on garment exports to exports of made-up articles

How should one apply for the RoSCTL scheme?

  • An application for claiming rebate under RoSCTL on exports, shall be filed online, using digital signature, on DGFT website at http://dgft.gov.in with Regional Authority (RA) concerned in ANF 4R.
  • The relevant shipping bills shall be linked with the on-line application by the exporter/ applicant online.
  • There would be no requirement of linking e BRCs for applying for RoSCTL.
  • A maximum of 50 shipping bills would be allowed to be attached in one single application by the exporter in the online module.
  • In the case of exports made from non-EDI (electronic data exchange) ports, a separate application has to be filed for each export. It cannot be clubbed with exports from EDI ports either.
  • In the case of EDI exports from enabled ports, the port of registration will be the EDI port itself.
  • The applications are processed through an online system of the Directorate-General of Foreign Trade (DGFT) and approved on the basis of an online approval/check mechanism. Depending on the option selected in the application, the scrips are either handed over physically or by post.

What benefit is available under the RoSCTL scheme?

The benefit to exporters shall be given by DGFT in the form of duty credit scrips. The RoSCTL scrips are freely transferable in nature. RoSCTL licenses can be used for payment of Import duties or can be sold in the open market at a premium rate.

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What is the validity of Duty Credit Scrips?

Duty Credit Scrip shall be valid for a period of 24 months from the date of issue and must be valid on the date on which actual debit of duty is made. 

What rebates are available under the RoSCTL scheme?

The RoSCTL Scheme gives rebate of the state and central taxes. 

The list of State taxes and levies refunded are:

  • VAT on transportation fuel
  • Captive Power
  • Mandi Tax
  • Electricity Duty
  • Stamp Duty on all the Export Documents
  • SGST levied on inputs of production of cotton (raw) like fertilizers, pesticides
  • Any other kind of product purchases made from unregistered dealers
  • The material used for the transport sector and
  • The Coal used for production

The list of Central taxes and levies refunded are:

  • Central excise duty on fuel used in transportation
  • Embedded CGST paid on inputs like pesticides, fertilizers.
  • Any other material purchases from unregistered dealers.
  • Inputs for the transport sector and
  • CGST and compensation Cess on Coal used in the production of electricity.

The rates of RoSCTL scheme are notified in the following 4 schedules of No.14/26/2016-IT (Vol.II) of the Ministry of Textiles:

  • Schedule 1 pertains to Rates of State taxes and levies are the rates of State levies, for apparel and made-ups.
  • Schedule-2 pertains to Rates of embedded Central levies are the rates of Central levies, for apparel and made-ups.
  • Schedule 3 pertains Rates of AA (Advance Authorisation)- State taxes and levies are the rates of State and Central taxes, applicable for apparel exports when the fabric (including interlining) only has been imported duty free under Special Advance Authorization Scheme
  • Schedule 4 pertains to Rates of AA (Advance Authorisation)-embedded Central levies are the rates of embedded Central levies, applicable for apparel exports when the fabric (including interlining) only has been imported duty free under Special Advance Authorization Scheme

What is the recovery mechanism under the RoSCTL scheme?

The following are the conditions laid down under the Recovery Mechanism:

  • For Post Issue Scrutiny and Recovery purpose, every exporter has to maintain a record of shipping bills and all export-related documents for 3 years, from the date the Scrip was issued. Licensing Authority may call such documents in original at any time within 3 years. In case the applicant fails to submit the original documents on demand by Licensing Authority, the applicant shall be liable to refund the rebate granted along with interest at the rate prescribed under the Customs Act 1962, from the date of issuance of scrip.
  • In cases where more than the eligible amount has been issued and is noted by the RA, the exporter will have to refund the excess claim with interest as per para 3.19 of FTP (Foreign Trade Policy). If the exporter fails to refund or does not respond to the message from the RA even after 1 month (30 days), then action can be initiated by the RA as per FT (D&R Act), 1992 and Rules.

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