RoDTEP Scheme Everything you Need to Know

RoDTEP stands for the Remission of Duties or Taxes on Export Products Scheme. In this article we going to discuss some important questions that usually arises in respect of RoDTEP scheme, so let’s discuss one by one;

Question: 1. Whether realisation of foreign currency is mandatory for the RoDTEP benefit? Whether benefit is available even if the consideration is received in INR instead of convertible foreign exchange?

Answer:  Para 4.54(viii) of FTP 2023 states that the rebate allowed is subject to the receipt of sale proceeds within time allowed under the FEMA Act, 1999 failing which such rebate shall be deemed never to have been allowed. The rebate would not be dependent on the realization of export proceeds at the time of issue of rebate.

Accordingly, at the time of availing the benefit of RoDTEP the realization of export proceeds are not mandatory. However, it should be received within nine months from the date of export i.e., the time allowed under the FEMA Act, 1999. Also it is important to note that the benefit of RoDTEP can be claimed even if the consideration is received in INR.

Question: 2. As there are many duties and taxes which are levied at the time of import of goods whether the scrips of RoDTEP can be utilised against all such duties and taxes?

Answer:  As per Para 4.56 of FTP 2023 the e-scrips would be used only for payment of duty of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 viz. Basic Customs Duty.
Also as per Regulation 6 of Electronic Duty Credit Ledger Regulations, 2021 the duty credit available in the e-scrip in the ledger shall be used for payment of duties of customs specified in the First Schedule to the Customs Tariff Act, 1975. Hence such e-scrips cannot be utilized towards payment of any other taxes like IGST, Compensation Cess etc. upon the import of goods.

Question: 3. Is there is any other use of the RoDTEP scrips. Suppose an exporter wants to claim the RoDTEP benefit but he procures all the goods/raw material  from India i.e., he has not imported any goods. In such situation how will he utilise said scrips?

Answer: The scrips of RoDTEP can be utilised in the following ways;
(i) For the payment of basic custom duty leviable at the time of import of goods or
(ii) The scrips can be transferred to any other person having a valid IEC and valid ICEGATE Registration.

Accordingly, if there is no import of goods, the sricps of RoDTEP can be sold to another person having valid import export code.

Question: 4. What is the time limit in which the RoDTEP scrips can be utilised against the payment of BCD or within which such scrips can be transferred?

Answer: RoDTEP is effective from 01.01.2021 and the time period to utilize the scrip was one year as per Regulation 6(2) of Electronic Duty Credit Ledger Regulations, 2021, however vide Notification No. 79/2022-Customs (N.T.) dated 15.09.2022 an amendment was made in said Regulation 6(2) and the time period to utilize the scrips was extended from one year to two years.

Accordingly, the e-scrip shall be valid for a period of two years from the date of its creation in the ledger and any duty credit in the said e-scrip remaining unutilized at the end of this period shall lapse.

Question:5. As the RoDTEP scrips are transferable, whether a fresh period of two years to utilize the scrips would be allowed to the transferee on procurement of srcips from the transferor?

Answer: The time limit to transfer the RoDTEP scrips shall be two years from the date of its creation. The Regulation 7(3) of Electronic Duty Credit Ledger Regulations, 2021 clearly states that the period of validity of the e-scrip, of two years from its creation, shall not change on account of transfer of the e-scrip.

Hence a fresh period of two years to utilize the scrips would not be allowed to the transferee on procurement of srcips from the transferor.

Question: 6. What would be the GST implications and other necessary requirements on transfer of RoDTEP scrips? 

Answer: There would no GST liability on transfer of RoDTEP Scrips, i.e., the transfer of duty credit scrips are exempted as per serial number 122A vide Notification No.02/2017-Central Tax (Rate). Hence the supply of said scrips should be shown as exempt supply in GSTR-1 & GSTR-3B. Also the Bill of supply is required to be issued in case of transfer of such scrips.

Question: 7. Whether ITC in respect of common input/input services are required to be reversed in case of transfer of RoDTEP scrips since it is an exempt supply.

Answer: The Explanation 1 (d) of Rule 43 of CGST Rules 2017 clearly states that for the purpose of rule 42 and 43, the aggregate value of exempt supplies shall exclude the value of supply of Duty Credit Scrips. Accordingly, there is no need to reverse the input tax credit as the same is not counted as an exempt supply for the purpose of Rule 42 & 43 of CGST Rules 2017.

Question: 8. Whether Merchant exporter who is procuring goods at concessional rate can claim the benefit of RoDTEP scheme?

Answer: All exporters whether being a merchant exporter or manufacturer exporter both are eligible to take benefit under this scheme.  Accordingly, even if the goods are procured at concessional rate by the Merchant Exporter, yet the benefit of RoDTEP can be claimed.

Question: 9. As the benefit of RoDTEP can be claimed on exports, whether it is can be claimed on export of services also?

Answer: The benefit under the scheme of RoDTEP can be claimed only in respect of export of goods. Therefore, the present scheme does not allow the benefit in case of service exports outside India. In case of works contract which covers supply of goods along with supply of services. The RoDTEP would be available for supply of goods only.

Question: 10. Suppose Mr.A has sent some goods as free samples to the foreign customer, whether the benefit of RoDTEP would be available to Mr. A in this case?

Answer: As we know that the benefit of RoDTEP scheme is allowed subject to the receipt of sale proceeds within the time allowed under the FEMA Act, 1999 which is 9 months.

In this case of issuance of free samples by Mr.A, no export proceeds would be realized in the convertible foreign exchange, therefore Mr.A  would not eligible for the RoDTEP benefit in respect of goods issued as free samples.

Question:11. In case of duty drawback under the Customs Act 1962 there are the provisions of special brand rates, All Industry rates & brand rates. Whether there is concept of special rate fixation under RoDTEP similar to the special brand rate of drawback?

Answer:  There is no mechanism to fix a brand rate under the RoDTEP Scheme, only a standard percentage is prescribed either as a rate to be derived on the FOB value along with a value cap in some cases or as a fixed quantum of rebate amount per unit. Further, the claim processing is automated based on the details submitted in the shipping bill.

Question: 12. Mr.X has imported raw material under the advance authorisation scheme and has exported the finished goods which were manufactured through the imported raw material under advance authorisation. Whether Mr. X can claim the benefit of RoDTEP Scheme?

Answer:  The benefit of RoDTEP scheme and advance authorisation can be claimed simultaneously. Para 4.59A of FTP 2023 states that for exports of products manufactured by Advance Authorisation holder (except Deemed Exports), EOU and SEZ units, the eligible RoDTEP export items, rates and per unit value caps, wherever applicable, are contained in Appendix 4RE.

Accordingly, Mr.X being an advance authorisation holder who has exported the goods can also availed the benefit of RoDTEP scheme. For the purpose of rates and value cap per unit the Appendix 4RE should be referred.

Question: 13. Whether the benefit of RoDTEP can be claimed if the goods are used after manufacturing and thereafter such used goods are being exported?

Answer:  The para 4.55 (xv) of FTP 2023 imposes a restriction that goods which have been taken into use after manufacture shall not be eligible for RoDTEP scheme. In other words, the RoDTEP can not be claimed in respect of second hand goods.

Question: 14. Whether RoDTEP benefit can be claimed if goods are manufactured in warehouse under MOOWR scheme and exported thereafter?
Answer: As per Para 4.55(ix) of FTP 2023 the benefit of RoDTEP would not available if the Products are manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 i.e., manufacture and other operations in relation to goods in a warehouse.

Question: 15. Whether the RoDTEP scheme can be availed on the export of goods which are exempted from levy of GST?
 
Answer:  Under FTP 2023 there is no restriction provided in this regard, accordingly even if the goods exported outside India are exempted from GST, still the benefit of RoDTEP can be claimed as long as the said goods are physically exported outside India and all other conditions provided in the scheme are satisfied.

Question: 16.  Whether RoDTEP benefit can be claimed on the goods exported through e-commerce operator?

Answer: As we know that the RoDTEP benefit can be claimed on physical export of goods. Accordingly, if any goods are sold based on the orders placed by the customers outside India through an online platform, then the benefit of the scheme should be eligible provided there is a physical export of the goods.

Question: 17. Whether RoDTEP benefit can be claimed on the goods supplied by DTA unit to a unit located in SEZ?

Answer: The Para 4.55(vii) clearly imposes a restriction for availing the benefit of RoDTEP if goods are manufactured by DTA units and supplied to SEZ/FTWZ units. Accordingly, the benefit of RoDTEP can’t be claimed on supplies made to SEZ units.

Question: 18. In case of export of goods, if the freight is also recovered from the foreign customers, whether RoDTEP benefit would also be available for freight portion?

Answer: In this regard it is to be noted that benefit of RoDTEP would be available on FOB value of goods. Even as per Appendix 4R the rates of RoDTEP are given as a percentage of FOB value and similarly in Appendix 4RE the rates of RoDTEP for SEZ/EOU/AA are also given as a percentage of FOB value. Thus, it is clear that the benefit of RoDTEP would not be available on freight portion recovered from the foreign customers.

Question: 19. Which sectors/industries which are excluded form availing the benefit of RoDTEP?

Answer: RoDTEP scheme will be applicable to all the sectors apart from the following -

(i) Apparel and made-ups  (Chapter 61, 62 & 63) for which the RoSCTL scheme has been extended for the benefits.

(ii) Steel, pharmaceuticals, organic and inorganic chemicals.

Question: 20. Mr.X has imported machinery against the EPCG license and has exported the finished goods which were manufactured from said machine. Whether Mr. X can claim the benefit of RoDTEP Scheme?

Answer: There is no restriction given for claiming the benefit of EPCG license and RoDTEP simultaneously.  Accordingly, Mr.X who has imported machine against EPCG license, can also avail the benefit of RoDTEP while fulfilment of export obligation of EPCG scheme.

Question: 21. Whether the benefit of RoDTEP and RoSCTL can be claimed simultaneously?

Answer: As we know that RoDTEP benefit would be available on export of goods, however for the articles of apparels, clothing accessories and other made up textile articles (Chapter 61, 62 & 63) there is a separates scheme given under FTP 2023 which is RoSCTL.

Accordingly, if the benefit of RoSCTL is already availed on export of apparels, clothing accessories and other made up textile articles, than the benefit of RoDTEP can not be claimed on the same products. Hence the RoDTEP & RoSCTL can not be claimed simultaneously.

Question:22. How the value of exported goods for calculation of RoDTEP benefit shall be calculated?

Answer: Notification No. 24/2023-Customs (NT) notifies the manner of issue of duty credit for goods exported under RoDTEP Scheme.  As per the proviso to clause (b) of conditions contained in the said notification the value of the said goods for calculation of duty credit to be allowed under the Scheme shall be the lower of following;
(a) declared export FOB value of said goods OR

(b) up to 1.5 times the market price of the said goods.

Question: 23 Whether the benefit of RoDTEP can be claimed in respect of export of the products on which export duty is leviable?

Answer: The para 4.55(iii) of FTP 2023 imposes a restriction for claiming the benefit of RoDTEP scheme in respect of the exported products which are subject to minimum export price or export duty. Accordingly, the benefit of RoDTEP would not be available on export of the products which are leviable to export duty.

Question: 24.Whether the benefit of RoDTEP can be claimed in respect of Deemed Export?

Answer: The para 4.55 (vi) of FTP 2023 clearly imposes a restrictions in respect of deemed exports. Hence the benefit of RoDTEP can’t be claimed in respect of deemed export transactions.

Question: 25. Can the RoDTEP benefit be claimed on export of goods for which electronic documentation in ICEGATE/ Electronic Data Interchange (EDI) has not been generated?
Answer:  The benefit of RoDTEP scheme may be eligible provided there is a physical export of the goods from an EDI port. Also, as per para 4.55 (xiv) the exports for which electronic documentation in ICEGATE has not been generated are no eligible for the benefit of such scheme.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.