DFIA explained

CHATROOM

ocured against the said authorisation has not been availed. In short, the notification applied restriction only in respect of inputs imported/procured under DFIA and used for manufacturing goods exported under DFIA scheme. That remains the position till today.  The trouble is that the DFIA scheme gave double benefit as pointed out in the columns of Business Standard (8th and 15th May 2006). The officialdom knew about it but kept quite, at that time. In April 2007, it woke up and the FTP was amended to make CVD payable upon transferability endorsement denying the double benefit. It was worded wrongly but later suitable amendments were made in FTP on 14th November 2007. The customs notification has blissfully maintained the same position since May 1, 2006.  However, at the ground level many exporters are being harassed for taking Cenvat credit on inputs (not procured under DFIA) that they used in the manufacture of goods exported under DFIA scheme. Even show-cause notices have been issued in many cases. You may inform your authorities the correct position and be guarded that if you happen to procure/import any items under DFIA by paying CVD/excise duty, you should not use them to manufacture goods that will be exported under DFIA scheme because then, you will run foul of the condition no. (v) referred above.  We want to fully write off proceeds of an export bill because the buyer has gone bankrupt and it is not worthwhile pursuing a court case. Is it allowed?  RBI Master Circular no. 9/2007-08 dated 2nd September 2007,which allows write off up to 10 per cent of the outstanding dues during the financial year, subject to certain conditions. For export houses, the limit is 5 per cent of the average annual realisation during the preceding three financial years or 10 per cent of the export proceeds due during the financial year, whichever is higher.  

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