'If export obligation is fulfilled, duty exemption need not be surrendered'

We refer to your article titled ‘DRI summons for no clear reason’ in Business Standard on October 24, 2016. How do we deal with the summons that we have received?
First, make a list of all the shipments for which you have not received payment within the initial nine-month period that RBI allows or any extended period. Next, obtain extension from your bank in the period for realisation for export proceeds for shipments for which you expect to receive payment. If you have any shipments for which you do not expect to receive payment, you can ask for a write-off from your bank, by surrendering proportionate export incentives. Then you can obtain a negative statement as prescribed in CBEC Circular no. 5/2009-Cus dated February 2, 2009, and submit the statement to the Directorate of Revenue Intelligence.

 
In the summons we have received from DRI, we have been asked to reverse export incentives within 14 days. There are some shipments for which we have not received full payment and we want to seek write-off for the unrealised portion. These are shipments made in discharge of export obligation against advance authorisations and EPCG authorisations. We have not taken any duty credit scrips against these shipments under FTP-Chapter-3 reward schemes. Do we have to surrender the duty exemption availed against advance authorisations or EPCG authorisations?
Under advance authorisation scheme, you have to fulfil the export obligation in quantity terms and achieve stipulated value addition -- usually 15 per cent. If you have done that, you need not surrender any duty exemption availed. If you have not done that, you have to regularise in accordance with Para 4.49 of the Handbook of Procedures, Vol. 1 (HBP). Under EPCG scheme, the obligation is to export the products mentioned in the authorisation and earn foreign exchange to the extent of six times the duty saved. So, it is only the actual realisation that is counted for redemption of the authorisation. Shortfall of up to five per cent in specific export obligations can be condoned in accordance with Para 5.21 of HBP. Vol 1. For higher shortfall, you have to regularise in accordance with Para 5.23 of HBP. Such regularisations are on the basis of aggregate performance and not individual shipping bills.

 
We had received an export order on FOB basis but due to a delay, we decided to airfreight the goods at our own cost. Will our drawback be granted after deducting the freight element from the FOB value?
CBEC Circular no. 24/2009-Cus dated September 3, 2009 clarifies that in situations where the buyer and the exporter have contracted the goods on FOB basis and the same is reflected in the contract and the LC, but the exporter is forced to send the goods by air at his own expense due to an exigency such as contractual obligation to deliver the goods within a certain period of time, it would not be justified to rework the drawback amount by deducting the freight element from the contracted FOB value.