An Overview of the RoSCTL Scheme
Explaining the Purpose and Benefits of the Scheme for Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (RoSCTL)
RoSCTL or the Rebate of State and Central Taxes and Levies on the Export of Garments and Made-ups is a government initiative to enhance the competitiveness of the apparel and made-up sectors. The Ministry of Textiles introduced the RoSCTL Scheme, enacted on 7th March 2019. Introduced as a replacement for the previous Rebate of State Levies (RoSL) Scheme, RoSCTL aims to provide a rebate on all embedded state and central taxes and levies on garments and made-ups.
Eligibility Criteria for RoSCTL Scheme: Who is Eligible to Participate in the Scheme?
- All exporters of garments/apparels and made-ups manufactured in India are eligible to reap benefit under the RoSCTL scheme.
- The exporter may be a merchant or manufacturer exporter, and such a person should have directly exported the goods.
- The exporter should have claimed benefits under something other than the RoDTEP scheme.
- Entities/IECs under the Denied Entity List of the DGFT are not eligible to participate in the scheme.
- Goods restricted or prohibited for export under Schedule-2 of the Export Policy in ITC-HS are not eligible for duty credit under the RoSCTL Scheme.
- The export of imported goods covered under paragraph 2.46 of the Foreign Trade Policy is excluded.
- Goods subject to Minimum export price or export duty are not eligible.
- Deemed exports under the Foreign Trade Policy are not eligible.
- Goods manufactured or exported by units situated in Special Economic Zones/Free Trade Warehousing Zone/Export Processing Zone are excluded.
- Goods manufactured or exported by a unit which licensed as a hundred per cent Export Oriented Unit are not eligible.
- Goods exported or manufactured in discharge of export obligation against an Advance Authorization or Duty-Free Import Authorization issued under the Duty Exemption Scheme of the relevant Foreign Trade Policy are excluded, except for exports made against Special Advance Authorization issued under Paragraph 4.04A of FTP or the Foreign Trade Policy.
- Goods manufactured and supplied by units in the Domestic Tariff Area to units in Special Economic Zones/Free Trade Warehousing Zone are not eligible.
- Goods manufactured in Special Economic Zones/Free Trade Warehousing Zone/Export Oriented Unit/Export Processing Zone and exported through DTA units are excluded.
- Goods that are manufactured in a warehouse under section 65 of the Customs Act, 1962, are not eligible.
- Goods availing the benefit of notification No. 32/1997-Customs, dated 1st April 1997, are excluded.
- Goods for which a bill of export in the customs automated system or claim of any duty credit is not filed are not eligible.
- Goods that have been taken into account after manufacture or upgraded/reconditioned/worn/used clothes are excluded
Tax Reimbursement under RoSCTL Scheme
The scheme aims to compensate various State and Central Taxes and Levies through duty credit scrips. Examples of State Taxes and Levies include VAT on fuel used in transportation, farm sector taxes, stamp duty on export documents, and embedded SGST paid on inputs like pesticides and fertilizers used in producing raw cotton. Central Taxes and Levies include central excise duty on fuel used in transportation, embedded CGST paid on inputs for natural cotton production and inputs for the transport sector.
Rates for Rebate under RoSCTL
To determine the quantum of rebate under the RoSCTL scheme, rates for different categories of garments and made-ups are specified by the Ministry of Textiles. The rebate amount is calculated on the basis of the declared export Free on Board (FOB) value of the goods or up to 1.5 times the market price, whichever is less
Procedure for claiming RoSCTL benefits
Claiming the RoSCTL benefit in the shipping bill is also critical. Exporters must use specific scheme codes and declare in the EDI shipping bill to avail of the RoSCTL benefit. Failure to provide accurate scheme codes and declarations may result in the denial of benefits.
Here is a step-by-step procedure to claim the RoSCTL benefits:
- Apply for RoSCTL in the shipping bill: To claim RoSCTL benefits, you must make a specific declaration in the shipping bill using the appropriate scheme codes provided by the Ministry of Textiles. This declaration should be made at the item level in the EDI shipping bill.
- Generate the RoSCTL Scroll: After filing the Gateway EGM (Export General Manifest) for the processed shipping bills, the location of the customs in ICES (Indian Customs Electronic System) can generate the RoSCTL Scroll. The scroll contains the details of the eligible RoSCTL benefits for each shipping bill.
- Claim and convert the benefits: Once the RoSCTL Scroll is generated, the duty credit amount allowed will be available in the exporter’s RoSCTL Credit Ledger Account on the ICEGATE portal. The exporter can claim and convert this amount into duty credit scrips electronically.
- Utilize the duty credit scrips: The duty credit issued under the RoSCTL scheme can be used to pay customs duties on imported goods. It cannot be utilized for other taxes like IGST or Compensation Cess. The e-credit scrips will be valid for two years from the creation date, and any unutilized credit after this period will lapse.
These scrips can also be transferred to other entities with a valid IEC (Import Export Code) and ICEGATE registration within the validity period. Businesses can leverage trusted digital platforms like Duty Exchange to simplify their Duty Scrip / License buying/selling process. These platforms provide 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 fast, safe and smart.
Limitations and Exclusions
- Exclusion of Certain Sectors: The RoSCTL Scheme excludes several sectors from its benefits, including goods restricted or prohibited for export, exports through trans-shipment, goods subject to minimum export duty or export price, and more.
- Ineligibility for Certain Exporters: While the RoSCTL Scheme is available to most exporters of garments and made-ups in India, it excludes entities or IEC (Import-Export Codes) listed under the Denied Entity List of DGFT or the Directorate General of Foreign Trade.
- Non-simultaneous Claim with RoDTEP Scheme: Exporters cannot claim benefits under the RoSCTL Scheme and RoDTEP Scheme.
- The rebate amount under RoSCTL cannot exceed the specified value provided per unit basis. It can restrict the total benefit that exporters can claim, particularly for high-value products.
- Limited Utilization of Duty Credit: Under the RoSCTL Scheme, duty credit issued as part of the rebate can only be utilized to pay customs duties levied on imported goods. It cannot be used for taxes such as IGST (Integrated Goods and Services Tax) or Compensation Cess.
- Validity and Revalidation Constraints: The e-scrips issued under the RoSCTL Scheme have a validity period of two years from their creation. After the expiry of this period, the duty credit in the e-scrip lapses, and revalidation is not permitted. Exporters must ensure timely utilization of the duty credit to avoid any loss.
- Realization of Export Proceeds: While the RoSCTL Scheme does not depend on the completion of export proceeds when claiming the rebate, it is subject to the receipt of sale proceedings within the period authenticated under the Foreign Exchange Management Act, 1999. You should meet this requirement to ensure the duty credit scrip is eligible.
The RoSCTL Scheme provides exporters in the garment and made-up sectors with reimbursement of State and Central Taxes and Levies, thereby enhancing their competitiveness. By understanding the specific taxes and levies covered under the scheme and following the necessary procedures for claiming benefits, exporters can use the RoSCTL Scheme to boost their exports and remain competitive in the international market.