RoDTEP Scheme – Remission of Duties and Taxes On Exported Products

To boost exports, Government has decided to extend the benefit of  the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to all export goods with effect from 1^st January, 2021.

Need for introduction of RoDTEP Scheme :

The RoDTEP Scheme came into existence because USA filed a complaint against India at the WTO stating that export subsidies like the MEIS scheme given by the Government of India (GOI) gave undue benefits (as payments under the scheme were not strictly calculated on the basis of input taxes) to Indian exporters and was against the WTO rules. India lost the case at WTO and had to come up with a new WTO-compliant scheme to help Indian exporters. Hence, the RoDTEP Scheme was approved by the Union Cabinet on 13th March 2020 and it will be effective from January 2021.

Scope of the Scheme :

RoDTEP will replace MEIS(Merchandise Export from India Scheme) and Under the scheme, the central, state and local duties or taxes will get refunded and credited in an exporter’s ledger account with customs. This can be used to pay basic customs duty on imported goods. The credits can also be transferred to other importers.

The RoDTEP scheme is expected to be more acceptable at the WTO as the reimbursement rates are based on actuals and is minutely linked to all input taxes and duties paid by exporters. These include embedded taxes, such as local levies, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not exempted or refunded under any other existing scheme.

Objectives of RoDTEP Scheme :

• To boost export
• To make Indian products cost-competitive and create a level playing field for Indian exporters in the global market.

Eligibility :

• The Scheme will enclose all sectors (including textiles), with priority given to labour-intensive sectors.
• Both merchant exporters (traders) and manufacturer exporters are eligible.
• SEZ Units and EOU Units are also eligible to claim benefits.
• There is no minimum turnover criteria to claim RoDTEP.
• Goods exported through e-commerce platforms via courier are also eligible.
• Country of origin of the exported products should be India, re-exported products are not eligible.

Features of RoDTEP Scheme :

• RoDTEP Scheme aims to refund all those hidden taxes and levies which are allowed to be refunded under WTO rules, For example:
  1. • Central & state taxes on the fuel (Petrol, Diesel, CNG, PNG, and coal cess, etc.) used for
       transportation of export products.
     • The duty levied by the state on electricity used for manufacturing.
     • Mandi tax levied by APMCs.
     • Toll tax & stamp duty on the import-export documentation. Etc.

  The Scheme will ensure that the Exporter only export goods and services not any kind of
  taxes and the RoDTEP Scheme would cover all indirect Central & State taxes which are not
  reimbursed in any existing scheme.

• Earlier incentives are provided in the form of transferable Scrips, but this new scheme aims at creating an Electronic credit ledger in the customs system which enables digital refund to exporters, duties and taxes levied at the centre, state and local levels.
• MoF has announced that the ITC will create a fully automated refund module to the manufacturing and service sector through Form GST RST-01. The automation shall reduce double taxation, claims for deemed exports, claiming GST tax refunds and acts as an authentic source to UN, WTO and other foreign embassies.

Procedure flow of RoDTEP Scheme :

• Claim in the Shipping Bill :
  • w.e.f. 01.01.2021, it is mandatory for the exporters to indicate in their Shipping Bill whether or not they intend to claim RoDTEP on the export items.
  • Even though the items and rates are not notified by the Government for RoDTEP yet, the exporters must indicate their intent for claim at the time of Shipping Bill filing itself.
  • Once the rates are notified, system would automatically calculate the RoDTEP amounts for all the items where RODTEP was claimed.
  • No changes in the claim will be allowed after the filing of the EGM.
• Processing of the Claim : 
  • Based on the declarations , System will process the eligible RoDTEP.
  • All the Shipping Bills will be sent to RMS(Risk Management System) after the EGM(Export General Manifest) is filed.
  • Based on the input by RMS, Shipping Bills will either come to officer for processing of RoDTEP/DBK(Drawback) benefits or will directly be facilitated to the scroll queue without any officer intervention.
  • Once the Shipping Bill is processed for DBK and/or RoDTEP either by the officer or as per facilitation by RMS, it will move to the respective scroll queues.
  • In case a suspension is placed on any exporter/Shipping Bill for Drawback, the same will also be applicable for the purpose of scrolling out of RoDTEP benefits.
• Generation Of Scroll :
  • Options have been made available in System for officers to generate RoDTEP scrolls.
  • However, till the final rates are notified by the Government, these options will remain disabled in System.
  • Once the scroll is generated, the respective amounts would be available with the exporter as credits on the ICEGATE(Indian Customs Electronic Gateway) portal.
• Claiming of Credit and Generation of Credit Scrips :
  • Once the RoDTEP scroll is generated, the credits allowed will be available within their ICEGATE login of the exporter to claim and covert into a credit scrips.
  • In case the exporters have not registered on ICEGATE already with their digital signatures, should complete registration in order to avail the benefits of RoDTEP.
  • The exporter will be able to club the credits allowed for any number of Shipping Bills at a port and generate a credit scrip for the same on ICEGATE portal.
  • Scrips once generated will reflect in the exporter’s ledger and will be available for utilization in paying eligible duties during imports or for transfer to any other entity having IEC and a valid ICEGATE registration.
• Utilization of Scrips in Imports :
  • These scrips can be used for the payment of import duties as would be notified by CBIC.
  • The owner of the scrip (either the original exporter beneficiary or any other IEC to whom the scrip was transferred on ICEGATE portal) will be able to use the scrip in the Bills of Entry the same way as any other duty credit scrips issued by DGFT, by giving the details
    in the license table of the Bill of Entry.
  • The scheme code to be used for these scrips would be “RD” along with the applicable Notification Number.
  • An option to suspend any RoDTEP scrip will also be made available with the Customs officer once the scroll generation is enabled. If a scrip is under suspension, its utilization or transfer will not be allowed by System.

Rate of Rebate Under RoDTEP Scheme :

• The rates are yet to be decided under the RoDTEP Scheme.
• It will be calculated as a percentage on Free on Board (FOB Value).
• The committee had decided that Items will be shifted from existing Scheme MEIS to RoDTEP in a phased manner with the help of proper monitoring and audit system, i.e. when the rate under RoDTEP Scheme is announced for any item at the same time MEIS benefit will discontinue for that particular item.

Key Difference between MEIS and RoDTEP Scheme :

As the benefit rates are not fixed it is not possible to comment on the benefit under RoDTEP Scheme. Implementation of the scheme would make India a WTO-compliant exporter in the international market. Also the process that is promised by GOI seems to be a simpler and more transparent one for exporters. However, Government has to ensure that the new scheme should not reduce the benefits of present scheme at a shot. The question of applicable rates remains open as of now.