Amnesty Scheme For Exporters: All You Need To Know

The one-time scheme to waive compound interest charges on unpaid duties will be available till Sept. 30.

<div class="paragraphs"><p>(Source: Pixabay)</p></div>
(Source: Pixabay)

The amnesty scheme unveiled under the Foreign Trade Policy 2023 offers some respite to beleaguered exporters facing compounded interest charges on duties over defaults in obligations.

In a move that aims to reduce litigation, the Commerce and Industry Ministry announced a special one-time amnesty scheme to address non-compliance in export obligations by advance and export promotion capital goods authorisation holders.

Essentially, the government has offered exporters the chance to limit their interest liabilities on unpaid duties upon export default.

According to Abhishek A Rastogi, founder of Rastogi Chambers, the computation of the benefit related to the interest under the amnesty scheme is both "pragmatic and interesting".

What Is The Extent Of The Interest Liability?

On failing to meet an obligation or fulfil an order, an exporter is liable to pay the customs duties proportionate to the unfulfilled value.

In some cases, along with basic customs duty, the exporter would also be liable to pay other taxes like additional customs duty as applicable. And interest would pile up over the years if it is remained unpaid.

The new amnesty scheme proposes to waive the compounded interest payable on some of the unpaid duties, such as additional customs duty and special additional customs duty.

This forms about 75% of the total interest liability, Rastogi said. The balance 25% is the interest on basic customs duty. "There will be no waiver of interest on the BCD component. In other words, about 75% of interest liability will be waived off."

There is a second benefit for cases where the duty has been unpaid over a long time and the interest has compounded multiple times the duty payable, perhaps even over 100% of the original duty. In such cases, the effective interest to be paid on the basic customs duty will be capped at 100%.

Therefore, with an interest cap on BCD and interest on additional duties waived, the scheme significantly reduces the interest liability owed by a defaulting exporter.

"Interest beyond 100% of BCD will also be waived. So, if the licences are more than six years old, then the exporters may get the benefit with respect to interest related to BCD component also,” Rastogi said.

All pending cases of default in export obligation of authorizations mentioned can be regularized by the authorization holders on payment of all custom duties exempted in proportion to unfulfilled export obligation and the maximum interest is capped at 100% of such duties exempted. No interest is payable on the portion of additional customs duty and special additional customs duty.
Official language of the Amnesty scheme

How Will It Come Into Effect?

According to an official with knowledge of the matter, who spoke on the condition of anonymity, the scheme will be open for registration from the first week of April.

An online platform will be created for exporters who intend to avail the scheme. After registration, they will have six months to avail it, the official said.

The amnesty scheme will be available till Sept 30, 2023, according to the official language of the scheme. The registration, too, is expected to be open for a short window once the online platform is functional.

Online systems will be ready in the first week of April and this can be availed by those who took licences between 2009-2014, the official quoted earlier above said.

BQ Prime has also learnt that there will be no specific threshold value for the cases that will be considered.