RoDTEP scheme is different from MEIS

Last Tuesday, the Commerce Ministry notified the rates and guidelines for the Remission of Duties and Taxes on Export Products (RoDTEP) scheme. The scheme intends to refund currently un-refunded duties/taxes/levies, at the Central, State and local level, borne on the exported product, including prior stage cumulative indirect taxes on goods and services used in production of the exported product and also indirect duties/taxes/levies in respect of distribution of exported products. The scheme now covers 8555 tariff lines leaving out about 2500 lines.

RoDTEP is available to eligible exporters at the notified rate as a percentage of free on board (FOB) value, subject to value cap per unit of the exported product in some cases. The rebate will be in the form of a transferable duty credit/electronic scrip (e-scrip) that will be maintained in an electronic ledger by the Customs, who will notify the mechanisms for grant of duty credits, transfers and utilization of such credits for payment of basic customs duties.

While most exporters are happy that they will get something besides duty drawback, some are unhappy that the RoDTEP rates are lower than what they expected or were getting under the Merchandise Exports from India Scheme (MEIS). They must appreciate that MEIS was a direct export subsidy whereas RoDTEP is a remission of taxes/duties/levied that are currently not refunded through other schemes. So, the parameters for calculation of the rates under the two schemes are different. If they have data to show that the notified rates are less than the actual taxes/duties/levies incidence, they can submit necessary data and seek revision.
 

Exporters of chemicals, pharmaceuticals, steel etc. are unhappy that their products have been left out of the RoDTEP scheme although they also bear the incidence of electricity duty, excise duty and sales tax on transportation of their goods from/to the ports, stamp duty on delivery orders and so on. They have already represented suitably to the government and some of them are contemplating moving the Courts on the grounds of discrimination.

RoDTEP is available for exports made from 1st January 2021 onward but for exports under advance authorisation scheme and by export oriented units and Special Economic Zones units, the scheme may be made available from a date to be notified later. Here again, the exporters feel that once a decision is made to refund the taxes/duties/levies that are not rebated through the present schemes, no discrimination should be made on the basis of the scheme opted for disburdening the duty incidence on the inputs used for export production.

The scheme seeks to rebate sales tax, excise duty, electricity duty, stamp duty etc. through RoDTEP credits that can be utilised only for payment of basic customs duties on imported goods. That encourages imports and so, it is better to give the refund through cash, along with disbursement of duty drawback instead of elaborate mechanism of grant, transfer and utilization of credits for payment of customs duties. 

Finally, the Finance Ministry will decide on the allocations for the RoDTEP scheme and the Commerce Ministry will have to decide how the allocations will be distributed to exporters. The government will monitor whether the additional outlay of funds leads to desired outcome in terms of export growth in each sector/item. So, the rates may change depending on the availability of funds.

email:tncrajagopalan@gmail.com