Attention is invited to DGFT Policy Circular No.41 (RE-2005)/2004-09 dated 12th December, 2005 related to import of drugs from un-registered sources under Advance Authorisation scheme. As per Paragraph 2 of the said Circular, in the event of failure to export the resultant product, such material shall be re-exported or can be used to manufacture and export any other finished product utilizing such inputs irrespective of the foreign buyers. It also stated that unregistered raw material under any circumstances shall not be allowed to be diverted for domestic consumption within India and the advance licence cannot be regularized even on payment of applicable customs duty.

2. Representations have now been received on the difficulties in operation of this provision and accordingly the trade bodies /Associations have requested to provide more flexibility to the exporters so as to enable them to destroy such imported material after payment of applicable customs duty and interest in the event of non-fulfilment of export obligation.

3. The matter has been considered and it has been decided that the clause ‘3’ given in Paragraph 2 of the Policy Circular No.41 dt.12th December, 2005 may be substituted as under:

“3) It is reiterated that unregistered raw material under any circumstances shall not allowed to be diverted for domestic consumption within India. However, the authorisation holder has the option either to use the imported raw material for production of other export products for export or to re-export the imported raw material and the export obligation against advance authorisation shall be deemed to have been discharged to that extent. The Customs Authorities shall ensure that the raw material so exported should be the same raw material, which was imported earlier against the particular licence / authorisation. In addition, the aforesaid facility would be available irrespective of the foreign buyer and can be exported to any other foreign buyer. If the export obligation period is not valid at the time of export of other finished product/re-export of raw material, then the authorisation holder shall be required to pay necessary composition fee for extension in export obligation period as per provisions of Policy and the Procedure laid there under. The authorisation holder shall also have the option to destroy such inputs or the finished product made out of it, in the presence of Jurisdictional Excise Authority subject to payment of applicable customs duty with interest. Documentary evidence to that effect would be required to be submitted to the concerned Regional Authority.”

4. This issues with the approval of Competent Authority.

Sd/-
(Tapan Mazumder)
Joint Director General of Foreign Trade

(Issued from F. No. 01/94/180/PC- POM/AM 08/PC I )

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