- Dated 27th August, 2021
Is RoDTEP Scheme A New MEIS?
This Tax Alert briefs about the recent Notification issued by the Ministry of Commerce and Industry prescribing the guidelines and rates for the Remission of Duties and Taxes on Export Products (RoDTEP) Scheme.
Background
The Union Cabinet of Economic Affairs had given its approval for the introduction of RoDTEP Scheme vide Press Release dated 13th March, 2020. The RoDTEP Scheme, aims at creating a mechanism for reimbursement of taxes, duties and levies at central, state and local level that were earlier not refunded or rebated. Recently, the Government of India has notified the rates under scheme along with certain guidelines.
Key Features of RoDTEP
The key takeaways under RoDTEP Scheme is mentioned here-in-under:-
- The scheme is made part of Chapter 4 (duty exemption/remission schemes) of FTP 2015-20;
- The scheme iseffective for exports made from 01.01.2021;
- Receipt of sale proceeds under exports made should be mandatory realised in foreign exchange within the time prescribed under FEMA Act, 1999, i.e., within 12 months, failing which, such rebate shall be deemed never to have been allowed;
- Rebate would be granted to "Eligible Exporters" at the rate notified as a percentage of Free on Board(FOB) Value with a value cap per unit of the exported product, wherever required;
- Rebate will be given in the form of atransferable duty credit scrip, which will be maintained in an electronic ledger and can be utilised only for payment of Basics Customs Duty.
- Export of products such as steel, chemicals and pharmaceuticals are not covered under the scheme;
Ineligible Exports under RoDTEP
The scheme has also notified exports/exporters not eligible for the benefit under RoDTEP Scheme. Categories of some of such supplies are mentioned here-in-under:-
- Deemed Export
- Export through transhipment
- Export of restricted and prohibited goods
- Export products subject to minimum export duty/price
- Goods manufactured or exported by 100% EOU or in discharge of export obligation against AA, DFIA
- Products manufactured in Technology Park or in Customs warehouse
- Exports from non-EDI Port
- Supplies of products manufactured by DTA Unit to Special Economic Zone/ Free Trade Warehousing Zone
Objective and Operating Principles under the Scheme
The foremost objective of the scheme is to refund the duties/taxes/levies at the central, state or local level, borne on the export product which are not been refunded currently, including prior stage cumulative indirect taxes on goods and services used in the production of the exported product. Some other important objective and operating principles under the scheme is briefed here-in-under:-
- The overall budget of the scheme would be finalized by the Ministry of Finance in consultation with the Department of Commerce;
- The scheme will operate in an annual budgetary framework and any necessary revision shall be made to the scheme benefits, as and when required;
- No rebate shall be granted under the scheme with respect to duties and taxes already exempted or remitted or credited;
- Necessary rules and procedure regarding grant of RoDTEP claim and implementation issues in relation to manner and time period for filing application will be notified by CBIC through IT enabled platform;
- Any other issues related to the scheme which may arise subsequently will be considered by the "RoDTEP Policy Committee" and their decision will be binding.
Comparison between MEIS and RoDTEP Scheme
Few important distinguish features under both the schemes are mentioned here-in-under in a tabular form:-
|
Particulars |
MEIS Scheme |
RoDTEP Scheme |
|
Type of Benefit |
Benefits were disbursed as an Export Incentive on the FOB value of Export with a condition of receiving Forex. |
Benefits given under this scheme is not an incentive instead it is a remission scheme. |
|
Products |
All industry products were eligible for the MEIS Incentive |
The scheme has specifically mentioned exports and exporters ineligible for the benefit including products like Pharmaceuticals, Steel and Chemicals |
|
Range of Benefits |
MEIS was available from 2% to 7% |
Rate under RoDTEP range in between 0.01% to 4.3% |
|
Budgetary Allocations |
For MEIS benefit earlier Govt. had announced Rs. 40,000 Cr. (Approx) budget for 19-20 period only. |
RoDTEP scheme budget allocation is being made up to Rs. 13,000 Cr. for F.Y. 20-21. |
|
Restrictions |
MEIS Scheme was broad based scheme which was available to SEZ,EOU, MOOWR, Advance Authorization holder etc. |
RoDTEP is very restrictive and SEZ, EOUs, advance authorization holders, MOOWR etc. have been covered in the ineligible categories with an option for some of these to confer benefit in future. |
|
Destination Oriented |
MEIS rates were dependent on the country of exports and for some countries it was not available. |
No restriction is being provided for country specific. |
|
Impact of Benefit |
MEIS benefit was given more than the RoDTEP rates and helped Indian Export to become competitive and given boost to the industries for export. |
As Compared to the MEIS incentive earlier given RoDTEP is very low and restrictive in nature. |
Comparison of MEIS with RoDTEP Rates as Announced – Sector wise
|
Sectors |
Chapters(Tariff) |
Meis Incentive |
RoDTEP |
|
Live Animals, Animal Products Industries |
1-5 |
2% to 5% (Depending on Export Destinations) |
0.5% to 2.6% (With Quantitative Cap) |
|
Vegetable Products Industries |
6-14 |
2% to 5% (Depending on Export Destinations) |
0.5% to 4% |
|
Animal Or Vegetable Fats and Oils and Their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes |
15 |
5% |
0.5% to 1% |
|
Prepared Foodstuffs, Beverages, Spirits and Vinegar, Tobacco and Manufactured Tobacco Substitutes |
16-24 |
2% to 5% (Depending on Export Destinations) |
0.5% to 4% |
|
Mineral Products |
25-27 |
0% |
0% |
|
Products Of the Chemical or Allied Industries |
28-38 |
2% to 3% (Depending on Export Destination) |
0.5% to 0.9% (Chapter 28,29 and 30 is being ignored) |
|
Plastics And Articles Thereof, Rubber and Articles Thereof |
39-40 |
2% to 3% (Depending on Export Destination) |
0.5% to 1.4% |
|
Raw Hides and Skins, Leather, Furskins & Articles Thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of Animal Gut (Other Than Silk-Worm Gut) |
41-43 |
2% to 3% (Depending on Export Destination) |
0.5% to 1.2% |
|
Wood And Articles of Wood; Wood Charcoal; Cork and Articles of Cork; Manufactures of Straw, Of Esparto or Of Other Plaiting Materials; Basketware and Wickerwork. |
44-46 |
2% to 5% (Depending on Export Destination) |
0.5% to 1.4% (Rs.400/MT for Heading 4402 and Rs. 280/m3 for Heading 4403) |
|
Pulp Of Wood or Of Other Fibrous Cellulosic Material; Recovered (Waste and Scrap) Paper or Paperboard; Paper and Paperboard & Articles Thereof |
47-49 |
2% to 3% (Depending on Export Destination) |
1.1% to 2.4% |
|
Textile & Textile Articles |
50-63 |
2% to 5% (Depending on Export Destination) |
0.5% to 4.3% (Cap limit also provided for quantitative export) |
|
Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-Sticks, Seat-Sticks, Whips, Riding-Crops and Parts Thereof, Prepared Feathers and Articles Made Therewith; Artificial Flowers; Articles of Human Hair |
64-67 |
2% to 5% (Depending on Export Destination) |
0.5% to 1% |
|
Articles Of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials; Ceramic Products; Glass and Glassware |
68-70 |
2% to 5% (Depending on Export Destination) |
0.5% to 1.3% |
|
Natural Or Cultured Pearls, Precious or Semi-Precious Stones, Precious Metals Clad with Precious Metal and Articles Thereof; Imitation Jewellery; Coin |
71 |
5% |
0.01% |
|
Base Metal & Articles of Base Metal |
72-83 |
2% to 5% (Depending on Export Destination) |
0.3% to 2.4% (Chapter 72 and 73 is ignored and rates are with quantitative cap limit) |
|
Machinery And Mechanical Appliances; Electrical Equipment and Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, And Parts and Accessories of Such Articles |
84-85 |
2% to 3% (Depending on Export Destination) |
0.6% to 1.4% |
|
Vehicles; Aircraft; Vessels & Associated Transport Equipment |
86-89 |
2% to 3% (Depending on Export Destination) |
0.5% to 1.5% (Rs. 8100/unit for Heading 8702 and Rs. 8200 and Rs.12500for heading 8706002 & 8706004 respectively) |
|
Optical, Photographic, Cinematographic, Measuring, Checking, Precision, Medical or Surgical Instruments and Apparatus; Clocks and Watches; Musical Instruments; Parts and Accessories Thereof |
90-92 |
2% to 3% (Depending on Export Destination) |
0.5% |
|
Arms And Ammunition; Parts and Accessories Thereof |
93 |
2% (Depending on Export Destination) |
0.5% |
|
Miscellaneous Manufactured Articles |
94-96 |
2% to 5% (Depending on Export Destination) |
0.5% to 1.9% |
|
Works Of Art, Collectors' Pieces and Antiques |
97-98 |
2% to 5% (Depending on Export Destination) |
0.01% to 0.5% |
BTA Comment
- The much awaited scheme guidelines and rates have been finally notified. Major core sector items have been kept out of the rate schedule.
- The rates notified under RoDTEP seems to be much lower as compared to earlier MEIS Scheme.
- No rates has been notified for few sectors like Pharmaceuticals, metal and Chemicals.
- Linkage of RodTEP to Annual Budgetory framework, categorically makes it like duty drawback and hence objective of this scheme to re-imburse embedded taxes at pre-production, manufacturing and distribution stage gets defeted.
- A strong representation to be made to the RoDTEP Committee headed by Director General highlighting all the key points.
- For sectors which have been kept out of the rate schedule may explore positbity of challeging the scheme by way of writ under Article 14 of the Constitution after obtaining proper legal advice.
- The exact procedure with regard to manner and time period for application, record keeping and other matters are still to be specified.
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