Exim Matters: FTP-Customs regulatory mismatch disrupts DFIA-Rodtep claims

Customs' demand for repayment of RoDTEP credits from DFIA exporters creates a regulatory mismatch that needs retrospective clarification to protect exporters

Exporters using the duty free import authorisation (DFIA) scheme are facing an unusual problem. After Rodtep (Remission of Duties and Taxes on Export Products) duty credits were generated and made available to them, the Customs is demanding

repayment of amounts equivalent to the duty credits, along with interest. 

DFIA scheme allows an exporter to claim duty free replenishment of the inputs used in the exported product based on standard input-output norms (SION) notified for the export product, subject to certain conditions. The Rodtep scheme seeks to

refund, unrefunded 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 their production and distribution. Rebates are granted to eligible exporters at notified rates as a percentage of FOB (Free On Board)  value, in the for of transferable duty credits, which are maintained in an electronic ledger at the ICEGATE portal. The duty credits can be used for payment of basic customs duty.   

Para 4.55 of the Foreign Trade Policy (FTP) lists the categories of exports/exporters ineligible for Rodtep. S.No. (x) in the list covered exports made under the DFIA scheme. Para 4.55B of the FTP allows inclusion (i.e. removal of exclusion) of this category based on recommendations of the Rodtep committee.  The commerce ministry deleted the said S.No. (x) through notification no.70/2023 dated March 8, 2024 thus removing the bar on earning Rodtep credits against DFIA exports. The notification also introduced Para 4.59A and Appendix 4RE for Rodtep rates applicable to exports by advance authorisation holders, export-oriented units and Special Economic Zone units. 

Thereafter the exporters under DFIA scheme started claiming duty credits under the Rodtep scheme and ICEGATE portal granted such duty credits and allowed their utilisation.  However, Customs is now demanding payments of amounts equal to such duty credits along with interest from the DFIA exporters on the grounds that consequential amendments were not made in the related Customs notification 76/2021-Cus (NT) dated 23rd September 2021. Some DFIA exporters have been summoned by the Directorate of Revenue intelligence. 

The objective of the Rodtep scheme is to refund central, state and local taxes embedded in exported goods that are not rebated through any other scheme. DFIA does not, by itself, neutralise every central, state or local tax embedded in the manufacture and distribution of an exported product. Denying Rodtep merely beca­u­se the replenished impo­rted inputs receive customs-duty exemption or that the consequ­ential amendment was not made in the related Customs notification is difficult to reconcile with the remission objective. 

An alert issued by the Cochin Customs says that DFIA exporters have claimed Rodtep duty credits to the extent of ₹52 crores. When compared with ₹34,808 crore allocated under Rodtep in the last two financial years (₹16,575 crore in 2024-25 and ₹18,233 crore in 2025-26), the Rodtep claims of DFIA exporters represent about 0.15 per cent. For the government, that is a small amount but for individual exporters, especially the MSME exporters, the amounts can be significant. 

The Government should, therefore, retrospectively align the Customs framework with the FTP, and specifically clarify the validity and utilisation of Rodtep credits generated against DFIA exports from March 11, 2024. Any regulatory inconsistency should be resolved in favour of exporters whose claims were based on the amended FTP and whose credits were generated

through ICEGATE. 

 

Email: tncrajagopalan­@gmail.com