Export obligation period [EOP Extension] of early authorization: new rules explained

Introduction to early authorization:

Anticipated authorization is a commercial facilitation scheme that encourages and supports exports by allowing companies to import raw materials and components without paying customs tariffs. This scheme is a government initiative to promote and promote country exports while helping industries to obtain the necessary supplies.

According to the early authorization scheme, eligible exporters receive permission to import necessary materials to manufacture or process goods that will eventually be exported. This exemption from customs tariffs of imports helps reduce production costs and improves the competitiveness of goods produced by the country in the international market.

In this blog, we will discuss the extension of the export obligation period (EO) and the import validity period under early authorization.

As everyone knows, the initial export obligation period under early authorization is 18 months, and the period of initial import validity is 12 months. This means that from the date of issuance of the license, it has 12 months to complete the import and 18 months to complete the export.

If your import or export is not completed within the validity period, you can seek an extension in accordance with the provisions of the policy.

So how many times and how long can you get an extension? How and where does an extension request? What documents are required? We will discuss all these issues in this blog. Then, let’s start.

Revalidation of the early authorization license

We often discuss the extension of the time in which we can bring imports. But in official terms, this is called “revalidation of the early license” according to the rules.

The initial validity is 12 months from the date of issuance of the license, and can request a unique extension for 12 additional months. This means a total of 24 months.

To request the revalidation, you must send an online application to the DGFT regional authority. The government/government application for revalidation are RS.500. The required documents include an application letter, a letter of justification and application form and 4D.

If even after 24 months have passed, it still has a remaining portion of imports to complete, it cannot obtain a greater extension of the RA DGFT. For this, you must approach the RPC committee in Delhi. The RPC committee approves a greater extension of 6 months only in cases of genuine difficulties.

We have created a detailed blog about the Policy Relaxation Committee (PRC). Know more about what PRC is? What types of cases are accepted there? See the following link to see that page – https://ofle.com/policy-relaxation-commitee-prc-dgft-delhi/

Export obligation [EO] Extension of the early authorization licenses issued for restricted/prohibited items

The early licenses can come in various types. For example, some licenses are intended for general/normal products, while others are issued according to Appendix 4J. There are also licenses specifically for restricted or prohibited articles.

In each of these cases, the period of export obligation (EO) and the terms for extensions differ. We will pass through each type with examples.

For example, the government recently announced that it would allow the export of wheat flour [Atta] under early authorization. If an early license for wheat flour is obtained, the initial export obligation period is 180 days from the authorization date of each import shipment. In this case, no more extension of the EO period will be granted.

This means that normal import validity will continue to be 12 months. However, as its imports are being cleaned, the proportional amount must be exported within 180 days. Extensions will not be provided beyond this 180 -day period. If your exports are not completed within this period, you must pay taxes and interest on excess imports.

Have you ever thought about the specific period to import and export goods? Do not worry, we are here to help. Watch this video on the complete export obligation guide [EO] Extension of the early authorization licenses period:
https://www.youtube.com/watch?v=p8u5Ofxeplg

Export obligation [EO] Extension of the early authorization licenses – general type

The early licenses that do not enter the categories of Appendix 4J/Restricted/considered project supplies will be called general licenses.

For these licenses, the initial export obligation period (EO) is 18 months, and you have the option of requesting two additional extensions of 6 months each through the DGFT regional office.

The first extension will be for 6 months, and the second extension will also be for 6 months.

You can see composition rates for the first extension EO in the proportionate image.

Composition rates for the first extension of early authorization

Then, initially, the rates that were calculated as a percentage have now become flat rates by DGFT under the ease of making a commercial initiative, depending on the CIF value of the early license.

For the second extension, the previous requirement was that a minimum of 50% of the export obligation should be completed for eligibility. However, according to the new procedure manual (HBP) 2023, this condition has also been eliminated. The composition rate for the second extension EO is separated, as shown in the proportionate image.

Composition rates for the 2nd Eo Extension of early authorization

You can see that composition rates for the second extension EO are twice that of the first EO extension.

After these two extensions, it will not be able to obtain more extensions from the DGFT regional office. If you still need an extension, you must address the Policy Relaxation Committee (PRC) in New Delhi.

Export obligation [EO] Extension of the period of early authorization licenses: issued under the condition of Appendix 4J

Appendix 4J is a complete list of import elements for which, if it obtains an early license, the export obligation period is significantly reduced.

You can see the list of Appendix 4J in the image provided

4J Appendix of the export obligation period for specified entries with conditions prior to importation under early authorizations

You can see that mainly this category covers articles such as medications imported from unregistered sources and precious metals such as gold, silver and platinum.

For medications imported from unregistered sources, the export obligation period (EO) is 12 months from the authorization date of each import consignment, while for gold, silver and platinum, it is 120 days From the authorization date of each import consignment

The early licenses issued in the conditions of Appendix 4J are eligible for a single EO extension, which is limited to half the duration of the initial period.

For drugs, you can receive an eo extension of 6 months, and in the case of gold, silver and platinum, you can obtain a single 60 -day EO extension beyond the initial 120 days.

Composition rates for the EO extension can be seen in the image provided

Composition rates in case of gold, silver and platinum

Once again, if you need an additional EO beyond the aforementioned limits, you must reach the Policy Relaxation Committee (PRC) in New Delhi.

Documents required for the EO extension of early authorization

In the image, you can see the list of documents necessary to extend the period of export obligation (EO) of early authorization:

The documents required to extend the period of export obligation (EO) of early authorization are the following:

1. LETTER OF PRESENTATION OR APPLICATION: This is a letter that explains the purpose of the extension application.
2. ANF-4D application form: This form must be filled and send correctly.
3. Declaration according to paragraph 4.42: In this statement, you will self -do that the tax -free raw materials that imported under early authorization are still available.
4. Justification Letter: This letter explains the reason for requesting extension.
5. Document of importation and export duly certified: A statement detailing imports and exports must be certified and submitted.

These documents are necessary for the process of extending the export obligation period for early authorization.

Who are we and why choose us?

We in Afoo Group, we are a DGFT team and customs experts who have a rich experience of more than 10 years in exim consultancy & International Logistics [Freight Forwarding] And I also deal in Buy/Sell/Rodtep/ROSCTL/DFIA License With our vast knowledge and experience in this field, we can represent your case for all activities related to services and obtain it in a problem. We are well equipped to handle global trade logistics with efficiency and experience. Let us manage logistics while focusing on growing your business. Contact us today to get more information about how we can help you rationalize your supply chain and increase your final result. We are dedicated to providing efficient and profitable logistics services to help our customers.

Therefore, contact us for any of your requirements and our team will be happy to help you.

We ask you to share this information with your other friends in the industry, commercial associations, since this information could also help them.