RoDTEP Scheme
Consulting, Financial, RoDTEP Scheme

An Overview of the RoDTEP Scheme

Explaining the purpose, objectives, and key features of the Remission of Duties or Taxes on Export Products Scheme

 

Introduction

RoDTEP, or the Remission of Duties or Taxes on Export Products scheme, is a new initiative introduced by the Government of India to offer relief to exporters by neutralizing the taxes and duties suffered on exported goods. Under this scheme, exporters can claim a rebate on all hidden Central, State, and Local duties, taxes, and levies on goods that have not been refunded under any other scheme. The RoDTEP scheme aims to make Indian goods competitive in the global market by exempting or remitting the taxes and duties that would otherwise be embedded in the export goods. This scheme is WTO compliant and has been effective for exports since January 1, 2021.

Taxes covered under RodTEP: Taxes, duties, and levies that can be compensated to exporters under the RoDTEP scheme

The RoDTEP scheme compensates exporters for various taxes and duties at the Central, State, and Local levels. These include Value Added Tax (VAT) and Excise duty on fuel used in self-incurred transportation costs, energy used in electricity generation, and power used in running machinery or plants. Additionally, electricity duty on purchasing electricity, Mandi Tax, Municipal Taxes, Property Taxes, and stamp duty on export documents are also covered.

How to Access RoDTEP Rates: Determine the rebate applicable to exported goods.

To access the RoDTEP rates, exporters can refer to the Appendix 4R of the Handbook of Procedures as notified by the Department of Commerce under DGFT notification No. 19/2015-20 dated 17.08.2021. This document provides the rebate rates for different goods at the 8-digit HS code level. Exporters can refer to this appendix to determine the percentage of FOB value. It is significant to consider that there is a value cap per unit of exported product specified under the 8-digit HSN code level in Appendix 4R. The amount of rebate will have a cap at the value provided on a per-unit basis.

Procedure for claiming RoDTEP benefits

To claim the benefits under the RoDTEP scheme, exporters need to follow a step-by-step process:

  1. Make declarations in the shipping bill: Exporters must indicate whether or not they intend to claim RoDTEP on the export items in their shipping bills. This declaration is mandatory from January 1, 2021. If RoDTEP is not explicitly declared, no benefits will accrue to the exporter.
  2. Processed by Customs: The shipping bills with RoDTEP claims will be routed for officer intervention based on risk-based targeting by RMS (Risk Management System). Officers will either process or facilitate shipping bills to the scroll queue without intervention.
  3. Generation of RoDTEP Scrolls: After the processing of shipping bills, RoDTEP Scrolls with individual shipping bills and the allowable amount will be generated. These scrolls will be available in the exporter’s account at ICEGATE (Indian Customs Electronic Commerce/Electronic Data Interchange Gateway).
  4. Create a RoDTEP credit ledger account: The exporter, who has a valid Importer-Exporter Code (IEC) and has registered on ICEGATE with a Digital Signature Certificate (DSC), can create a RoDTEP credit ledger account under the Credit Ledger tab.
  5. Generate Scrip: Exporters can log into their ICEGATE account and generate scrips by selecting the relevant shipping bills. These generated scrips will reflect in the exporter’s ledger. They can be utilized for paying eligible duties during imports or transferred to another entity with a valid IEC and ICEGATE registration.

Utilization of RoDTEP Benefits: Know which duties and taxes the benefits can be used to set-off

The benefits under the RoDTEP scheme are provided as transferable duty credit scrip or electronic scrip, maintained in an electronic ledger. These scrips can be utilized for payment of Customs duty leviable under the First Schedule to the Customs Tariff Act, 1975, specifically the Basic Customs Duty, by providing the details of the scrips in the License Table in the Bills of Entry. It is important to note that the RoDTEP benefits cannot be used to pay other taxes such as Integrated Goods and Services Tax (IGST) and Compensation Cess on imported goods.

These scrips can also be transferred to other entities with a valid IEC (Import Export Code) and ICEGATE registration. Businesses can leverage trusted digital platforms like Duty Exchange to simplify their Duty Scrip / License buying/selling process. These platforms provide a user-friendly interface, transparent and efficient pricing, access to a large pool of buyers & sellers, seamless transfer of scrips & security of funds using e-escrow accounts, and a near paper-less transaction experience that is faster, safer and smarter.

Eligibility Criteria for RoDTEP: Who is eligible to take benefit under the RoDTEP scheme ?

It is essential to know who can take benefits under this scheme before understanding the eligibility criteria for the RoDTEP scheme. All exporters of goods, including merchant and manufacturer exporters, are eligible to take advantage of the scheme, and there is no turnover limit criterion for claiming the benefits. The scheme applies to all sectors except the Apparel and Made-ups sectors covered under the RoSCTL scheme. However, the exporter claiming the benefit must directly export the goods.

There are specific categories of exports and exporters that are not eligible for the benefits under the RoDTEP scheme. These categories have been specified in Para 4.55 of the Foreign Trade Policy, as inserted vide DGFT Notification No. 19/2015-20 dated 17.08.2021.

Let’s take a closer look at these ineligible categories:

  1. As per Para 2.46 of the FTP, exports of imported goods refer to import for export.
  2. Exports through trans-shipments, meaning exports originating in a third country but trans-shipped through India.
  3. Export products are subject to minimum export price or export duty.
  4. Products restricted for exports under Schedule-2 of Export Policy in ITC (HS).
  5. Products not allowed for export purposes under Schedule-2 of Export Policy in ITC (HS).
  6. Exports that are deemed.
  7. Supplies of products manufactured by DTA units to SEZ/FTWZ units.
  8. Products manufactured in BTP and EHTP.
  9. Products manufactured in a warehouse under section 65 of the Customs Act, 1962.
  10. Products exported or manufactured in discharge of export obligation against advance authorization or Duty-Free Import Authorization (DFIA) or Special Advance Authorisation issued under a duty exemption scheme.
  11. Products exported or manufactured by a unit licensed as a 100% Export Oriented Unit (EOU).
  12. Products manufactured or exported by any unit situated in Free Trade Zone (FTZ), Export Processing Zones (EPZ), or Special Economic Zone (SEZ).
  13. Products manufactured or exported availing the benefit of Notification No 32/1997-Customs dated 01.04.2017 (jobbing transactions).
  14. Exports for which electronic documentation in ICEGATE EDI has not been generated or exports from non-EDI ports.
  15. Goods that have been taken into use after manufacture (second-hand goods).

Limitations

  1. It is important to note that RoDTEP cannot be claimed simultaneously with the Merchandise Exports from India Scheme (MEIS) or Scheme for Rebate of State and Central. Taxes and Levies on Export of Garments and Made-ups (RoSCTL).
  2. The scheme allows the utilization of the e-scrips only for the payment of BCD and not for other taxes like IGST or Compensation Cess.
  3. The scheme does not allow the remission of arrears or contingent liabilities to be carried over to the next financial year. It operates within a budgetary framework for each financial year.
  4. RoDTEP benefit is not dependent on the realization of export proceeds when claiming the rebate. However, the rebate is subject to the receipt of sale proceeds within the timeframe allowed under the Foreign Exchange Management Act 1999.
  5. Specific categories of exports and exporters not eligible for the benefits under the RoDTEP scheme have been specified in Para 4.55 of the Foreign Trade Policy.

Conclusion

The RoDTEP scheme aims to boost India’s exports by relieving various taxes and duties on exported goods. By making exports more competitive in the global market, the scheme encourages economic growth and supports the development of Indian industries. Exporters can use this scheme to enhance their competitiveness and expand their reach in international markets.