Unnecessary confusion on continuation of Rodtep scheme for exporters

Since the beginning of this year, exporters are being confused by the government regarding availability of duty credits under the Rodtep (Remission of Duties and Taxes on Export Products) scheme for physical exports of goods in discharge of export obligation against advance authorisations and exports by export oriented units (EOU) and units in Special Economic Zones (SEZ). 

The Rodtep scheme seeks to refund the 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 the production of the exported product and such indirect duties/taxes/levies in respect of distribution of exported product that are not rebated through other schemes like the duty drawback or duty exemption scheme. Under the scheme, a rebate is granted against export of notified products at notified rates as a percentage of FOB value.  

The Rodtep rates are notified by the commerce ministry but the scheme is implemented through grant of rebate by way of duty credit in an electronic ledger maintained by ICEGATE (Indian Customs and Excise Gateway) portal that can be used for payment of basic customs duties on imported goods. The Rodtep scheme was announced in August 2019 by the finance minister, who said that the financial outlay for the scheme is ~50,000 crore. When the scheme was implemented in 2021, the outlay for the scheme was cut to about a quarter of that estimate.  The overall budget/outlay for the scheme is finalised by the ministry of finance in consultation with commerce ministry and operates within a budgetary framework for each financial year. Rates of rebate/value cap per unit under Rodtep were notified in Appendix 4-RE of Handbook of Procedures (HBP) for items exported under advance authorisation scheme and by EOUs and SEZ units and were valid till December 31, 2024.  For products exported by other eligible exporters, the rates are notified under Appendix-4R of HBP and continue to be available till 30.09.2025. As the last year ended, the advance authorisation holders, EOUs and SEZ units were hoping for an extension of the Rodtep scheme, as it only seeks to give back the duties/taxes/levies already paid i.e. borne on the export product. However, no notification for extension came through from the commerce ministry.  

The Jawaharlal Nehru Customs House at Nhava Sheva issued a trade notice clarifying that the scheme is not available for such exporters and asking them not to opt for the Rodtep scheme in the shipping bill.  Surprisingly, the JNCH withdrew that trade notice, the next day reviving unnecessary speculations. On Wednesday, unexpectedly, the ICEGATE put out a message that the Rodtep scheme for SEZ/EOU/AA exports has been extended until 14.01.2025 as an interim measure to facilitate trade. The basis for this message is unclear as there is no other notification/communication from either the commerce ministry or the finance ministry. The net result is utter confusion among the exporters as well as the Customs officers. Some Customs field formations do not allow the exporters to opt for the Rodtep scheme in the shipping bill, some are allowing that and some have even generated a scroll for grant of the duty credit. All the confusion could have been avoided had the commerce ministry or the finance ministry come out with a clear communication on continuation or otherwise of the scheme.  

Email: tncrajagopalan@gmail.com