Page 149 - COMBINED QUESTIONS AND ANSWERS - EDITION 2019 - PART II_Neat

Any person intending to function under this scheme has to make an application in
the prescribed format to the Director General of Foreign Trade, New Delhi, functioning
under the Ministry Of Commerce, Government of India or to the Regional Offices for issue
of Advance Authorsation. The Advance Authorisation contains the details of the goods
permitted to be imported, their value, description, quantity and description and value of the
goods to be exported which are manufactured by using the imported materials. The value
of the export goods in FOB terms should be more than the CIF value of the imported
materials or components at a percentage fixed in the Foreign Trade Policy.
Advance Authorisation is issued under the Foreign Trade Policy. This Authorisation
enables the holder of the authorization to import the specify the goods without payment of
duty. However, the actual exemption from duty on the imported goods under the
Advance Authorisation is given as per the Customs notifications issued by the Central
Government.
At the time of clearance of the goods imported under Advance Authorisation from
the Customs, the importer has to execute a bond supported by a bank guarantee for certain
amount of the duty leviable on the imported goods undertaking to utilize the imported
goods only for the purpose of manufacturing the specified goods and export. The
manufactured goods must be exported and the value of such exported goods must be
realized from the foreign buyers within the specified period. The goods imported cannot be
sold or otherwise disposed off. In the event of not fulfilling the export obligation within the
specified period, the person who imported the goods under the Advance Authorisation has
to pay the duty with interest from the date of clearance of the goods till the payment of
duty.
There is a provision under the scheme to apply for Advance Authorisation and
obtain receipt from the Advance Authorisation issuing authority and export the goods
specified in his application made to the licensing authority. At the time of export, the
exporter must declare in the shipping bill that the export is under Advance Authorisation
Scheme.
When the exports are made under the scheme it must be declared in the Shipping
Bill the Advance Authorisation Number or the receipt number in the Shipping Bill. This
declaration is required to correlate the exports made to the Advance Authorisation.
After the export obligation is completed, the proof of export and realization of
foreign exchange must be furnished to the license issuing authority. The licensing authority
shall issue a certificate of discharge of export obligation. Based on this certificate, the
Customs authorities shall cancel the bond executed with them by the importer at the time
clearance of the imported goods under the Advance Authorisation.
Q-571: Explain the legal provisions governing restrictions and prohibitions
A-571: Prohibited Goods are defined in Section 2(33) of the Customs Act, 1962 as meaning
“any goods the import or export of which is subject to any prohibition under the Customs
Act, 1962 or any other law for the time being in force”. Thus, a prohibition under any other
law can be enforced under the Customs Act, 1962. For instance, under Sections 3 and 5 of
the Foreign Trade (Development and Regulation) Act, 1992, the Central Government can
make provisions for prohibiting, restricting or otherwise regulating the import of export of
the goods, which finds reflected in the Foreign Trade Policy, laid down by the DGFT,
Department of Commerce. Some of the goods are absolutely prohibited for import and
export whereas some goods can be imported or exported against a licence and/or subject to
certain restrictions. One example is provided by Notification
No.44(RE-2000)1997-2002, dated 24.11.2000 in terms of which all packaged
products which are subject to provisions of the Standards of Weights and Measures

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