'Advance authorisation scheme applies irrespective of currency of realisation'

We have supplied to a SEZ unit under ARE1, wherein we have mentioned the Advance Authorisation No. and date, but the SEZ unit has not generated the bill of export and simply cleared under ARE1. The SEZ customs endorsed on the reverse side of the ARE1 duly signed and stamped. Please inform whether the above will suffice for closing of the licence. We have received 100 per cent payment from them. If you know of any case law, please inform us of the same.

Such matters are being regularised by the Policy Relaxation Committee (PRC) at the DGFT Headquarters. In Case No.17 of PRC Meeting No. 40/AM14 dated 11.03.2014, in the matter of M/s Elins Switch Boards Pvt. Ltd, Bangalore [F.No. 01/60/162/911/AM14/EFGC (PRC)], the request was for condonation of non-filing of bill of export for the supplies made against Advance Authorisation No. 0710060131 dated 25.09.2008 for regularisation purpose.

The Minutes of the meeting say that 'the committee noted the request and it was decided that RA may accept documents towards discharge of export obligation provided there is a corroborative evidence i.e. ARE-1/Excise attested invoice bearing the details of advance authorisation/file number under which goods were removed for discharge of export obligation. RA may check that ARE-1 bears the details of authorisation on it and no drawback has been claimed on duty free inputs by the recipient, i.e. the SEZ unit'. The same decision was conveyed for cases no. 18 and 19 in the same meeting. There have been similar decisions earlier also. So, you may approach the PRC to get the matter regularised.

We are supplying certain products to a party in SEZ, Kandla against fulfilment of export obligations of advance authorisation taken from DGFT. We normally receive the payment in INR and issue the BRC in Appendix 22B. But DGFT says the BRC is supposed to be issued in appendix 22A (which is supposed to be issued in case of receipt of payment in freely convertible currency, i.e., USD or Euro, out of the EEFC account of the SEZ), even if you receive the payment in INR. Is he correct or is the bank correct in issuing the BRC in appendix 22B for rupee receipts?

Para 4.1.6 of the Foreign Trade Policy extends the coverage of advance authorisation scheme to exports to SEZ units/supplies to developers/co-developers, irrespective of currency of realisation. So, many offices of DGFT treat such payments in rupees as fully in accordance with FTP and accept discharge of export obligation and redeem the authorisations. However, some offices have now (several years after introduction of the provision at the said Para 4.1.6) started raising objections that payments must be received in foreign exchange or in rupees from a foreign currency account of the unit/developer/co-developer. They also claim that they have sought clarification from the DGFT long back, without getting any response. In this connection, you may refer to my article titled 'Confusion within DGFT offices' (Business Standard, December 9, 2013). In my opinion, FTP provisions prevail over provisions in the Handbook.

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