Transferee/Importer not responsible upon utilisation of RoDTEP/RoSCTL

Notification No. 76/2021-Customs (N.T.) dated 23.09.2021 and Notification No. 77/2021-Customs (N.T.) dated 24.09.2021 was issued by the Government of India, Ministry of Finance (Department of Revenue) which notifies the manner to issue duty credit for goods exported under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) and Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) respectively, which are also in accordance with paragraph 4.01(e) of the Foreign Trade Policy (hereinafter referred to as “FTP”) and in accordance with Government of India, Ministry of Textiles notification No.12015/11/2020-TTP dated the 13th August, 2021 respectively. 

The said notifications have laid down the guidelines and rules related to issuance, further utilisation and transfer of Duty Credit Scrip issued under the scheme of Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL). The said Notification comprises of clauses which were ambiguous and imprecise relating to Recovery of amount of Duty Credit and where export proceeds are not realised in case of any default and misutilisation of Duty Credit Scrips.

• The above-mentioned notifications imposed the responsibility of recovery of the amount of duty credit scrips on the “transferee” as well along with the “transferor” in the event of transfer of duty credit scrips from exporters to any other third party;
• The effect of this notification was such that the responsibility of the recovery came down on all the intermediaries who dealt in the transfer of the scrips and the final importer/end user of the scrips in the event of default from the side of the exporter;
• Further, till the time of recovery of the amount of duty credit scrip is not done, the departmental officers were empowered to put the Import Export Code(“IEC”) of the exporter and all the intermediary party or transferee of the transfer of Duty Credit Scrip on hold and no further benefit will be allowed to them till the amount is recovered; and
• The above stated was a genuine hardship to the entire industry as the intermediaries or the importers/end users were not aware of the kind of documentation that were being done by the exporters to obtain the benefit of RoDTEP or RoSCTL from the DGFT department;

Consequent to above, a Writ Petition was filed by ASC Consulting Private Limited at Hon’ble High Court of Delhi having Writ Petition reference number W.P.(C) 11178/2022, seeking the remedy to the above hardship and provide a response on the representation which was filed by ASC Consulting Private Limited to the DGFT along with CBIC and Ministry of Finance. It was requested to put some light on the specific clauses and to take out all the ambiguity and misrepresentation. The Hon’ble High Court of Delhi heard us and passed an order dated July 27th 2022 where Hon’ble Justice ordered the Respondents to deliberate on the representation made by the petitioner and thereafter, pass an appropriate speaking order and further disposed of the Writ Petition.

In furtherance to the Order passed by the Hon’ble High Court of Delhi, and by complying to that Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs issued an amendment dated September 14th2022 to the Notification No. 76/2021-Customs (N.T.) dated 23.09.2021 and Notification No. 77/2021-Customs (N.T.) dated 24.09.2021 which is as follows: -     

1. In clause 4, sub-clause (2) shall be omitted.
2. In clause 5, sub-clause (5) shall be omitted.
3. In clause 6, the words “or the transferee” shall be omitted.

The above amendments clear all the dusts and moreover give clarity to the entire industry regarding the recovery of the amount of duty credit scrip in the event of default by the exporter. Following are the conclusions from the said notification: -

• Post the above amendment in the notification, the responsibility of recovery of any excess amount allowed to exporter which they were not entitled to shall be recovered from the exporter only, and no liability of recovery of excess amount will fall onto the transferee;
• Further in the event of default from the side of the exporter and recovery proceedings are initiated against the exporter then it shall not bear any impact on the IEC (Importer Exporter Code) of the intermediary parties or the importer as such. 

For any further clarifications on the above notification, feel free to contact professionals at ASC Group. 

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