AdvanceAuthorisation (AA)

Advance Authorisation (AA)

Import of Raw Materials / components for Export purpose can be made under Zero Duty under Advance Authorisation Scheme. Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed.

Imports under Advance Authorisation are exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable. Import against supplies covered under paragraph 7.02 (c), (d) and (g) of FTP will not be exempted from payment of applicable Anti-dumping Duty, Countervailing Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, if any.

Advance Authorisation shall be issued for:

(i) Physical export (including export to SEZ);

(ii) Intermediate supply; and/or

(iii) Supply of goods to the categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of this FTP.

(iv) Supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.

Minimum Value Addition:
Minimum value addition required to be achieved under Advance Authorisation is 15%. Export Products where value addition could be less than 15% are given in Appendix 4D. In case of Tea, minimum value addition shall be 50%.

Import of Mandatory Spares
Import of mandatory spares which are required to be exported / supplied with the resultant product shall be permitted duty free to the extent of 10% of CIF value of Authorisation.

Advance Authorisations (AA) are issued on the following basis:
(i) Wherever Standard Input Output Norms (SION) are notified, AA are applied on SION basis. OR

(ii) Where SION for the Export Items are not available, then AA can be applied on Self declaration basis as per paragraph 4.07 of HBP. OR

(iii) Applicant specific prior fixation of norm by the Norms Committee. OR

(iv) On the basis of Self Ratification Scheme in terms of Para 4.07A of Foreign Trade Policy.

Pre-import condition in certain cases:
DGFT may, by Notification, impose pre-import condition for inputs under AA. Import items subject to pre-import condition are listed in Appendix 4-J or will be as indicated in Standard Input Output Norms (SION). Import of drugs from unregistered sources shall have pre-import condition.

Actual User Condition for Advance Authorisation:
Advance Authorisation and / or material imported under Advance Authorisation shall be subject to ‘Actual User’ condition. The same shall not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed.

Free of Cost Supply by Foreign Buyer:
Advance Authorisation shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer. In such cases, notional value of free of cost input shall be added in the CIF value of import and FOB value of export for the purpose of computation of value addition. However, realization of export proceeds will be equivalent to an amount excluding notional value of such input.

Cases requiring Sanitary Import Permit.
Where import of meat and meat products of any kind including fresh, chilled and frozen meat, tissue or organs of poultry, pig, sheep, goat; egg & egg powder; milk & milk products; bovine, ovine and caprine embryos, ova or semen; and pet food products of animal origin has been sought as an input under Advance Authorisation, the Regional Authority, while issuing Advance Authorisation shall endorse a condition that before effecting imports of any of these inputs, Sanitary Import Permit shall be obtained from the Department of Animal Husbandry, Dairying and Fisheries (DAHDF).

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