Question 1

What is an Advance Authorisation and who can apply?

Accepted Answer

An Advance Authorisation (AA) is a duty-free import licence issued under Para 4.05 of the Foreign Trade Policy 2023 to exporters who need to import inputs physically incorporated in the export product. It is available to manufacturer-exporters and merchant-exporters tied to a supporting manufacturer. The licence is issued by the relevant Regional Authority of the DGFT under Notification No. 18/2015-20.

Question 2

How is the duty-free entitlement calculated — what norms apply?

Accepted Answer

Inputs and their quantities are governed by Standard Input Output Norms (SION) notified by the DGFT under Appendix 4B of the Handbook of Procedures. Where SION is not available, a self-declared ad-hoc norm is accepted for licence issuance, but a fixation of norm by the Norms Committee is required before export obligation discharge. The minimum value addition required is 15% (Para 4.08 FTP 2023) unless a lower norm is specifically notified for that SION code.

Question 3

What Customs and GST duty exemptions does the AA provide?

Accepted Answer

Imports against a valid AA are exempt from Basic Customs Duty, Additional Customs Duty, and Anti-Dumping Duty under Customs Notification No. 18/2015-Customs. IGST and Compensation Cess exemptions, previously available, were conditionally extended and depend on the current year's Customs notification status — we confirm the live exemption position before any import is made. Inputs imported must correspond exactly to the description in the licence.

Question 4

What is the export obligation period and how is it discharged?

Accepted Answer

The export obligation (EO) period is 18 months from the date of issue of the licence (Para 4.22 FTP 2023), extendable by a further 6 months on payment of composition fee under Appendix 4J. EO is discharged by filing an EODC application to the Regional Authority with shipping bills, e-BRC, and test reports where applicable. Failure to discharge EO results in recovery of duties with interest under Section 28AA of the Customs Act 1962 and action under the FTDR Act 1992.

Question 5

Is re-export or re-import allowed under an Advance Authorisation?

Accepted Answer

Bonafide re-import of goods exported under AA is permitted for repairs, reconditioning, or replacement under Section 74 and Section 25 of the Customs Act 1962 read with Para 2.46 of the FTP. However, re-exported goods are counted toward EO only if accompanied by a fresh shipping bill and accepted by Customs. Re-export of imported inputs is not permitted — the duty exemption is specifically tied to physical incorporation in the export product.

Advance Authorisation

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