Exporters from sugar industry have received notices for recovery of RoDTEP duty credits received along with interest and penalty. The Value of export which is in question is around more than $3 billion.
RoDTEP Scheme provide remission of duty or taxes which are paid by exporter on any material used in the manufacture or processing of goods or for carrying out any operation on such goods that are exported out of India.
RoDTEP Duty credits are provided in form of freely transferable duty credit scrips which can be used for payment of Basic Customs duty on imports.
RoDTEP which is a tax neutralization scheme, is applicable on exports made with effect from 01-01-2021.
The essence of RoDTEP scheme is that any duties or taxes borne by the exporter during the processing of goods are refunded back to the exporter so that the goods are exported and not the taxes. Therefore, merely by placing a product under restrictive category doesn’t change the status of the taxes borne for that product. This defeats the whole idea of RoDTEP and therefore the government should review the same and consider such products for RoDTEP.
Industry have approached commerce and industry ministry for relief in this regard.
In the wake of Russian Ukraine war, restrictions were imposed on the export of sugar with effect from 01st June 2022 to ensure adequate supply of sugar in domestic market. Any export of sugar made thereafter was allowed only after getting permission from the Directorate of Sugar.
As per Customs authorities, since post 01st June 2022 sugar was a restrictive commodity for export and RoDTEP benefits are not eligible for restrictive product therefore any RoDTEP benefit claimed during that period stands recoverable.
Here, stand of Customs is technically correct because as per DOR Notification 76/2021 Customs (N.T.) dated 23-09-2021 RoDTEP Benefits are disallowed for goods which are restricted for exports. But at the same time these provisions require revisiting as export under restricted categories are eligible for other duty credits such as Duty Drawback and GST refunds. These benefits along with RoDTEP duty credit scheme are basic tools towards zero rating of exports. Therefore, depriving such exports from RoDTEP benefits doesn’t make much sense while GST refund and Duty Drawback is allowed on such exports.
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