The Ministry of Commerce and Industry has relaxed the compliance requirements under Quality Control Orders (‘QCOs’) issued by Ministry of Steel, Department for Promotion of Industry and Internal Trade (DPIIT) and Ministry of Textiles in case of imports by holders of Advance Authorisations (‘AA’), Export Oriented Units (‘EOUs’) and units in Special Economic Zones (‘SEZs’) for utilization/consumption in manufacture of export products.
Key highlights of this recent relaxation as notified by Notification No. 71/2023, dated 11 March 2024 inserting a new paragraph 2.03(A) in the Foreign Trade Policy 2023, and Public Notice No. 50/2023 also of the same date revising new Appendix 2Y of the Handbook of Procedures, are as follows.
Advance Authorisation
- Imported inputs to be utilised in manufacture of export products and exported under same authorization.
- Exemption from QCOs to be endorsed in the Authorisation.
- Exemption is available only for physical exports and not for deemed exports.
- Clubbing facility under para 4.36 of Handbook of Procedures is also not available.
- Normal wastage allowance is to be allowed.
- Unutilised imports or products manufactured from such inputs exempted from QCOs, are not to be transferred to Domestic Tariff Area.
- Unutilised imports are to be destroyed in the presence of GST/Customs Authorities, or reexported.
- Unutilised imports are also liable for Customs duty plus interest to Customs, and composition fees of 10% of CIF value to DGFT.
- Export Obligation period is restricted to 180 days from date of clearance of imports, in case of textile products, when exemption from QCO is availed.
- Exemption is not available for imports under DFIA scheme.
Export Oriented Units
- Mandatory compliance of QCOs issued under BIS Act, 2016 is available on inputs required for export production.
- Such inputs or products manufactured therefrom are not to be transferred to Domestic Tariff Area.
- Exemption is available only for physical exports and not for deemed exports.
Special Economic Zones
- Mandatory compliance of QCOs issued under BIS Act, 2016 is available on inputs required for export production.
- Such inputs or products manufactured therefrom are not to be transferred to Domestic Tariff Area.
- Exemption is available only for physical exports.
It may be noted that additionally, this exemption from mandatory compliance of QCOs is available only in case of QCOs issued by Ministries or Departments as listed in Appendix 2Y of the Handbook of Procedures. The updated Appendix 2Y at present lists Ministry of Steel, Department of Promotion of Industry and Internal Trade, and Ministry of Textiles, for this purpose.
