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January 6, 2021

Government extends the benefit of tax refund scheme RoDTEP to all export goods

by CA Shivam Jaiswal in Circular and Notifications, Income Tax

Government extends the benefit of tax refund scheme RoDTEP to all export goods

Taking a major step to boost exports, Government recently decided to extend the benefit of the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to all export goods with effect from 1st January, 2021. The RoDTEP is a combination of MEIS & RoSCTL scheme. Last year, the Finance Ministry announced the new RoDTEP scheme to replace the popular Merchandise Export from India Scheme (MEIS) from January 1, 2021, as the MEIS was ruled by a World Trade Organisation panel to be against multilateral trade norms.

What is the RoDTEP scheme?

The RoDTEP scheme would refund to exporters the embedded Central, State and local duties/taxes that were so far not being rebated/refunded under any other schemes such as local taxes, coal cess, mandi tax, electricity duties and fuel used for transportation and were, therefore, placing our exports at a disadvantage. 

The three-member RoDTEP Committee was set up in July 2020 to work out the modalities for calculation of duties/ taxes/ levies, at the Central, State and local level, borne on the exported product, including embedded taxes.

However, it is a cause of concern as in the absence of rates, exporters will not know how to fix cost of their exports.

How is the claim made for the RoDTEP scheme?

  • It is mandatory for the exporters to indicate in their Shipping Bill whether or not they intended to claim RoDTEP on the export items.
  • This claim is mandatory for the items (RITC codes) notified under the new scheme.
  • Unlike Drawback, there is no separate serial numbers based on a schedule 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 RODTEPY is not specifically claimed in the Shipping Bill, no RoDTEP would accrue to the exporter.
  • Even though the items and rates are not notified the Government for RoDTEP yet, the exporters must indicate their intent for claim at the time of Shipping Bill filing itself.
  • Once the rates are notified, System would automatically calculate the RoDTEP amounts for all the items where RODTEPY was claimed.
  • No changes in the claim will be allowed after the filing of the EGM.
  • 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.
  • While some checks have been built in within the System at the time of filing the Shipping Bill, it is assumed that if the exporter (or the authorized Customs Broker) has submitted the statement as mentioned in para 2(b) with the Shipping Bill, the claim to RoDTEP has been made with the undertaking that no undue benefit would be availed.

How is the claim processed under this Scheme?

  • Based on the declarations, the System will process the eligible RoDTEP.
  • The Shipping Bills with RoDTEP and/or Drawback claim will be routed for officer intervention based on Risk based targeting by RMS.
  • All the Shipping Bills will be sent to RMS after the EGM is filed.
  • Based on the input by RMS, Shipping Bills will either come to officer for processing of RoDTEP/DBK benefits or will directly be facilitated to the 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.

How can the exporters claim credits under this Scheme?

  • 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 are disabled in the System.
  • Once the scroll is generated, the respective amounts would be available with the exporter as credits on the ICEGATE portal.
  • Once the RoDTEP scroll is generated, the credits allowed will be available within their ICEGATE login of the exporter to claim and covert into a credit scrip.
  • In case the exporters have not registered on ICEGATE already with their digital signatures, they may refer to this advisory (v1.2_Advisory_Registration_APPROVED.pdf (icegate.gov.in)) and complete registration in order to avail the benefits of RoDTEP.

How can the exporters utilise the scrips?

  • 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.
  • Scrips once generated 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.
  • These scrips can be used for the payment of import duties as would be notified by CBIC.
  • The owner of the scrip (either the original exporter beneficiary or any other IEC to whom the scrip was 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.
  •  The scheme code to be used for these scrips would be “RD” along with the applicable Notification Number.
  • 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 System.

RoDTEP Scheme was introduced to ensure compatibility with WTO trade norms and to make Indian products cost-competitive and create a level playing field for them in the global market. The RoDTEP rates would be notified shortly by the Department of Commerce, based on the recommendation of a Committee chaired by Dr. G.K. Pillai, former Commerce and Home Secretary. The final Report of the Committee is also expected shortly. The notified rates, irrespective of the date of notification, shall apply with effect from 1st January, 2021 to all eligible exports of goods.

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