The Cotton Textiles Export Promotion Council (Texprocil) has urged the Centre to reduce the level of value-addition and simplify the process to get duty concessions under the Advance Licensing Scheme.
Urging the Centre to cut the value-addition to 5 per cent from 15 per cent, the Council said the need for high-level value-addition is discouraging exporters from using the scheme.
Introduced in 1976 with the objective of providing basic inputs at a competitive price, the scheme allows exporters to reclaim duty if they manage to add value of 15 per cent to the imported raw material.
Exporters usually provide a bank guarantee worth the value of import duty and get to reclaim it once they export the finished product.
Time frame
RK Dalmia, Chairman, Texprocil, said the Central Board of Direct Taxes should issue a circular to ensure that the Customs Department strictly adheres to the time frame of 30 days stipulated in the Foreign Trade Policy to cancel the bank guarantee and legal undertaking after the export is completed. The Council has suggested that the Department should release the bank guarantee or legal undertaking based on the Export Obligation Discharge Certificate issued by the Regional offices of the DGFT.
The Customs verification procedure, if required, should be restricted only to confirm whether shipping bills are genuine instead of re-opening all details of the shipment, it said.
Raw material use
Currently, said Dalmia, exporters operating under the scheme face problems claiming concessions as it is becoming increasingly difficult to make authorities understand that imported raw material is used in the exported item and to show the quantum of value-addition.