UPDATE ON RoDTEP SCHEME EFFECTIVE FROM 01.01.2021

Recently, Ministry of Finance issued a Press Release dated31.12.2020 wherein it was stated that in order to boost exports, government has decided to extend the benefit of scheme RoDTEP (Remission of Duties and Taxes on Exported Products) to all the export goods w.e.f. 01.01.2021. RoDTEP scheme which is applicable on all export goods is introduced to replace MEIS Scheme which is applicable for export of certain products to specified Countries. The government has resorted to withdrawal of MEIS due to petition filed by US before Dispute Resolution Panel of WTO on the grounds that some of the export benefit schemes designed by India is giving undue advantage to Indian exporters and violate WTO’s Subsidies and Countervailing Measures Agreement. Hence, it is decided by the Indian government to replace the existing schemes with new schemes which are more transparent and compliant to WTO norms.

The RoDTEP scheme would refund to exporters the embedded Central, State and local duties/taxes that were so far not being rebated/refunded and were, therefore, placing exports made from India at a disadvantageous position. The scheme is in conformity with WTO trade norms and best global practises. There are certain taxes/duties/levies that are outside Goods and Services Tax (GST) and are not currently refunded on exports, such as, VAT on fuel used in transportation, Mandi tax, Duty on electricity used during manufacturing, Stamp duty, etc. These taxes would be considered for the benefit under RoDTEP. The rebate shall be claimed as certain percentage of FOB value of exports which is yet to be notified by the government. The rebate would be credited in an exporter’s ledger account with Customs and can be used to pay Basic Customs Duty on imported goods or could be transferred to other importers just like MEIS. An exporter desirous of availing the benefit of the RoDTEP scheme shall be required to declare his intention for each export item in the shipping bill or bill of export.

It is also pertinent to mention that government has also released the Advisory and Procedure to claim the benefit of RoDTEP scheme in the shipping bill wherein in Part I regarding claim in the shipping bill, point no. (e) clearly prohibits the benefit of RoDTEP where benefit of Advance Authorisation, EOU, jobbing etc. has been claimed by the exporter. The relevant paragraph from the Advisory is produced for the sake of convenient reference as follows:-

e. 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.

It is worth mentioning that in case of one of our clients, benefit of RoDTEP was not granted even when shipping bill had mentioned of EPCG license on the grounds that both benefits are not admissible. As of now, the detailed scheme with rate structure is not released but placing such restrictions is not at all understandable. It was mentioned in the Press Release that the RoDTEP scheme is to compensate for taxes such as VAT levied on fuel, electricity duty, mandi tax, stamp duty on documents etc. which are out of GST and are not being refunded to the exporters at present. However, inspite of the fact that the benefit of RoDTEP is to be extended for all export goods, placing such prohibitions that benefit of Advance Authorisation should not have been availed is totally absurd. It is to be mentioned here that RoDTEP scheme seeks to replace MEIS wherein there was no such restriction. The exporters in the past have claimed benefit of MEIS along with Advance Authorisation or MEIS along with EPCG. However, placing this restriction in the upcoming new scheme is not at all understandable. It is hoped that the anomaly is rectified by the government soon otherwise it will tantamount to snatching existing benefits from the exporters in the guise of new scheme.
This is solely for educational purpose.

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UPDATE ON RoDTEP SCHEME EFFECTIVE FROM 01.01.2021

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