Introduction:

“Deemed Exports” refers to supplies of goods manufactured in India (and not services) which are notified as deemed exports under Section 147 of the CGST/SGST Act, 2017. The supplies do not leave India. The payment for such supplies is received either in Indian rupees or in convertible foreign exchange.

Deemed exports are not zero rated supplies by default, unlike the regular exports. Hence all supplies notified as supply for deemed export will be subject to levy of taxes i.e. such supplies can be made on payment of tax and cannot be supplied under a Bond/LUT. However, the refund of tax paid on the supply regarded as Deemed export is admissible to either the supplier or the recipient. The application for refund has to be filed by the supplier or recipient (subject to certain conditions) of deemed export supplies, as the case may be.

Supply By Manufacturer:

• Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement/DFIA.
• Supply of goods to EOU/STP/EHTP/BTP.
• Supply of capital goods against EPCG Authorisation.
• Supply of marine freight containers by 100%EOU.Provided said containers are exported out of India with in 6 months or such further period as permitted by customs.

Supply By Main /Sub Contractor (S):-

• Supply of goods to project financed by multilateral or bilateral Agencies/funds notified by DEA,MOF
• Supply of goods to projects financed by multilateral or bilateral agencies/funds as notified by Department of Economic Affairs, Ministry of Finance, where legal agreements provide for tender evaluation without including customs duty;
• Supply and installation of goods and equipment to projects financed by multilateral or bilateral agreements/funds as notified by Department of Economic Affairs for which bids have been invited and evaluated on the basis of Delivered Duty Paid prices for goods manufactured abroad;
• Supply of goods to any project or for any purpose in respect of which the Ministry of Finance, by Notification No. 12/2012-Customs, dated 17.3.2012 as amended from time to time, permits import of such goods at zero customs duty subject to conditions specified in the said Notification;
• Supply of goods required for setting up of any mega power of project subject to the condition that such mega power project conforms to the threshold generation capacity specified in the above said Notification;
• Supply of goods to UN or International Organizations for their official use or supplied to the Projects financed by the said organizations approved by Government of India;
• Supply of goods to nuclear power projects provided-Such goods are required as specified in the list 33 at Sl. No. 511 of Notification No. 12/2012-Customs, dated 17.03.2012 as amended from time to time;
• The project should have a capacity of 440 MW or more;A certificate to the effect is required to be issued by an officer not below the rank of Joint Secretary to Government of India, in Department of Atomic Energy;

Benefits for Deemed Exports

The following are the benefits available to deemed exporters:
• Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement/DFIA.
• Advance Authorization/Advance Authorization for annual requirement/DFIA;
• Deemed export drawback;
• Refund of terminal excise duty (TED), if exemption is not available.

Procedure For Claim Benefits

The supplier/recipient of goods shall submit application for claiming deemed export benefits, in ANF-7A, along with the documents prescribed therein, to the concerned to the Regional Authority. In case of supply of goods to an EOU, claim shall be filed with the concern Development Commissioner. A DTA unit shall claim benefits from the concerned Regional Authority. Incomplete/deficient application is liable to be rejected.

Conditions For Refund Of TED

The following are the conditions for the refund of TED:
• Supply of goods will be eligible for refund of TED provided recipient of goods does not avail CENVAT credit/rebate on such goods;
• Supply of goods which are exempted ab initio from payment of terminal excise duty would be ineligible to get refund of TED.

Exemption From TED Is Available To The Following:

• Supplies under ICB;
• Supplies of intermediate goods, against invalidation letter, made by an Advance Authorization holder to another Advance Authorization holder;
• Goods procured by EOU/EHTP/STP/BTP unit from a unit in DTA; and
• Supply of goods to UN/International Organization or project funded by it.

Conditions For Refund Of Deemed Export Drawback

The following are the conditions for refund of deemed export drawback:
• In case CENVAT credit/rebate has not been availed on the inputs/input services, by the supplier of goods, then, benefit as per Column ‘A” of All Industry Rate of Duty Drawback Schedule shall be admissible;
• If CENVAT credit/rebate has been availed by the supplier of goods, on inputs/input services, then, no drawback shall be admissible as per column ‘B’ of All Industry Drawback Schedule. However in such cases, Basic customs duty paid can be claimed as brand rate of Duty Drawback based upon submission of documents evidencing actual payment of duties.

Procedures

Claims should be filed within a period 12 months from date of receipt of supplies by project authority or from the date of receipt of the payment by supplier as per the option of the applicant either against a particular project or all the projects. The claims may also be filed where part payments have been received. Deemed export benefits may be allowed after 100% supplies have been made. The benefit, however, will be limited to the extent of payment received.

In case claim is filed after the prescribed time period, the late cut will be done as detailed below:
• Application received after the expiry of last date but within six months from the last date – 2% cut;
• Application received after six months from the prescribed date of submission but not later than one year from the prescribed date – 5% cut;
• Application received after 12 months from the prescribed date of submission but not later than 2 years from the prescribed date – 10% cut.