Advance Authorization Scheme

An Advance Authorization is issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage). It can also include the fuel, oil, energy, catalysts which are consumed / utilized to obtain export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorization. Duty free import of mandatory spares up to 10% of CIF value of Authorization which are required to be exported / supplied with resultant product are allowed under Advance Authorization. Advance Authorizations are issued for inputs and export items given under SION. These can also be issued on the basis of adhoc norms or self declared norms as per para 4.7 of HBP v1.

Advance Authorization can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for:

• Physical exports (including exports to SEZ); and / or
• Intermediate supplies; and /or
• supply of ‘stores’ on board of foreign going vessel / aircraft subject to condition that there is specific SION in respect of item(s) supplied.

In addition, in respect of supply of goods to specified projects mentioned below in FTP, an Advance Authorization can also be availed by sub-contractor to such project provided name of sub contractor(s) appears in main contract. Such Authorization can also be issued for supplies made to United Nations Organizations or under Aid Programme of the United Nations or other multilateral agencies and which are paid for in free foreign exchange.

Advance Authorizations are exempted from payment of basic customs duty, additional customs duty, education, anti dumping duty and safeguard duty, if any. However, imports for supplies covered under paragraph 8.2 (h) & (i) will not be exempted from payment of applicable anti-dumping and safeguard duty, if any.

Advance Authorization and / or materials imported there under will be with actual user condition. It will not be transferable even after completion of export obligation.

However, Authorization holder will have option to dispose off product manufactured out of duty free inputs once export obligation is completed.

Advance Authorizations necessitate exports with a positive value addition. Exports to SEZ Units / supplies to Developers / Co developers, irrespective of currency of realization, would also be covered.