DGFT should consider re-credit of advance authorisations in some cases

Where irrefutable evidence is available to show that 'certificate of supplies' or 'invalidation letter' has not been utilized, fully or partly, there ought to be no hesitation in granting re-credit

For procurement of our raw material duty free from a Special Economic Zone (SEZ) unit, we had obtained ‘certificate of supplies’ for an item after invalidating our advance authorisation for import of that item, in accordance with Para 4.35(d) of the Handbook of Procedures (HBP). After supplying part quantity, the SEZ unit is unable to supply the item and so, the ‘certificate of supplies’ remains partly unutilised. We have obtained certificate of non-utilization from the SEZ Customs and submitted to the JDGFT for re-credit of the advance authorisation. However, the JDGFT says that there is no provision to give re-credit in such cases. Is this correct? 

A similar situation prevails in getting re-credit in the advance authorisation after it has been invalidated in favour of an intermediate supplier in accordance with Para 4.30 of HBP and the intermediate supplier is unable to supply the goods for any reason. In my view, where irrefutable evidence is available to show that the ‘certificate of supplies’ or the ‘invalidation letter’ has not been utilized, fully or partly, there ought to be no hesitation in granting re-credit. I understand that even if the JDGFT is willing to grant re-credit, the software is not programmed for such re-credit.  The DGFT should look into the matter. 

In its monthly bulletin for July, the Federation of Indian Export Organisations says that on Domestic Tariff Area (DTA) sales, the SEZ unit must pay Basic Duty of Customs (BCD) and Integrated Goods and Services Tax (IGST) but as per recent clarifications,  DTA buyers may not claim full credit for such IGST, causing tax cascading. We could not find any clarification to that effect. Can you please help us? 

Sorry. I also could not find any such clarification. 

I refer to Para 2.12 of the FTP and the DGFT Policy Circular no. 02/2025-26 dated 22nd July 2025 clarifying that goods already imported/shipped/arrived, in advance, but not cleared from Customs, may also be cleared for home consumption against an authorisation issued subsequent to the date of shipment (date of bill of lading) but before their clearance from Customs, without any mandatory requirement for warehousing. It also says that this facility will however be not available to ‘restricted’ items or items traded through STEs, unless specifically allowed by DGFT. Does it mean that the authorisation for restricted items must be obtained before the date of bill of lading? What about items, which are freely importable subject to fulfillment of specified conditions? 

Reading Para 2.18(a), 2.17(a) and Para 11.11 of the HBP together, the conclusion is inescapable that the authorisation for import of restricted items should be dated on or before the date of bill of lading. In my view, restricted items are only those items that are mentioned as ‘restricted’ under the Indian Trade Classification based on Harmonised System  Import and Export Policy notified by the Commerce Ministry and freely importable items that require no authorisation to import cannot be treated as ‘restricted’. In such cases, the specified conditions should be fulfilled before customs clearance and not at the time of shipment. DGFT should, however, clarify the matter.     (Business Standard invites readers' SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in)