MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS)
MEIS was introduced in the foreign trade policy (FTP) for the period 2015-2020. The MEIS was launched as an incentive scheme for the export of goods. The rewards are given by way of duty credit scrips to exporters. The MEIS is notified by the DGFT (Directorate General of Foreign Trade) and implemented by the ministry of commerce and industry.
Merchandise Exports from India Scheme (MEIS) Scheme
A scheme designed to provide rewards to exporters to offset infrastructural inefficiencies and associated costs. The Duty Credit Scrips and goods imported/ domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for:
(i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.
(ii) Payment of Central excise duties on domestic procurement of inputs or goods,
(iii) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy.
Objective of the Merchandise Exports from India Scheme (MEIS) is to promote the manufacture and export of notified goods/ products.
Pre-Requisites for Applying for MEIS Scheme
To apply for MEIS scheme, an IEC is required. Other pre-requisites as mentioned in the Chapter 3 of Foreign Trade Policy and Hand book of Procedures may be referred.
BACKGROUND TO MEIS
MEIS replaced the various export incentive schemes which gave different types of duty credit scrips namely, Focus Market Scheme (FMS), Focus Product Scheme (FPS), Vishesh Krishi Gramin Udyog Yojana (VKGUY), Market Linked Focus Product Scheme (MLFPS) and Agri Infrastructure incentive scheme. All duty credit scrips issued under the earlier incentive schemes were transferred to the MEIS.
Under the FTP 2015-20, MEIS intends to incentivise exports of goods manufactured in India or produced in India. The incentives are for goods widely exported from India, industries producing or manufacturing such goods with a view to making Indian exports competitive. The MEIS covers goods notified for the purpose of the scheme.
The incentives under the schemes are calculated as a percentage, which is 2%, 3% or 5% of the realised FOB (free-on-board) value exports in free foreign exchange or FOB value of exports as per shipping bills in free foreign exchange. The incentives are allotted through a MEIS duty credit scrip. The ‘free foreign exchange’ will include foreign exchange earned through international credit cards and other instruments allowed by the Reserve Bank of India (RBI).
HOW TO APPLY FOR MEIS INCENTIVE
You should make an online application in form ANF 3A through a digital signature to claim duty credit scrip entitlements under MEIS. The applicant has to furnish hard copies of the application filed with DGFT, EDI (Electronic Data Interchange) shipping bills, Bank Realization Certificate obtained electronically (e-BRC) and RCMC. However, if the application is made through EDI ports, then the applicant is not required to submit hard copies, but only export promotion copies of non-EDI shipping bills and proof of landing.
The applicant shall file separate applications for each port. The applicant is not required to submit any documents in original but should retain the original documents for a period of three years.
The application should be filed within a period of:
12 months from the LEO (Let Export) date or
3 months from the date of – uploading of the EDI shipping bills onto the DGFT server by customs, or printing of shipping bills for non-EDI shipping bills, whichever is later.
HOW TO USE MEIS INCENTIVE
The duty credit scrips can be utilised to pay customs duties on import of inputs or goods, safeguard duty, anti-dumping duty and any other customs duty under FTP 2015-20. The scrips can also be transferred as well as used for importing goods against them.
Exporters can request for a split of the duty credit scrip with a condition of each scrip valuing to at least Rs 5 lakh. The request can also be made after the issue of scrip, with the same port of registration as applicable for the original scrip. However, the procedure is applicable only in respect of EDI (Electronic Data Interchange) enabled ports. In the case of non-EDI ports, a duty credit scrip cannot be split after it is issued.
The scheme provides the flexibility of import and payment to exporters and has removed many structural inefficiencies of the earlier incentive schemes.
GOODS NOTIFIED UNDER MEIS
MEIS incentivises close to 5,000 items classified and notified under various ITC (HS) codes and with corresponding reward rates ranging from 2% to 5%. The items are notified by the DGFT.
INELIGIBILITY OF BENEFITS UNDER MEIS
The sectors or segments mentioned below are not entitled to MEIS incentives:
– SEZ/EOU/EHTP/FTWZ products exported through DTA units.
– Supplies made to SEZ units from DTA units.
– Deemed Exports.
– Export of imported commodities covered under paragraph 2.46 of FTP.
– Export commodities which are subject to a minimum export duty or export price.
– Exports via trans-shipment, meaning thereby exports that are emerging in the third country but trans-shipped through India.
– Exports initiated by units in Free Trade and Warehousing Zones (FTWZ).
DURATION OF MEIS
The MEIS incentives are applicable from 1 April 2015 until the validity of the FTP 2015-20, which is 31 March.
Duty Drawback is one of the most popular and principal method of encouraging export. It is a relief by the way of Refund/Recoupment of Custom and IGST paid on Inputs or raw material and Input services used in manufacture of exported goods.
The duty Drawback is of three types:-
- i) All Industry Rates
- ii) Brand Rates
iii) Special Brand Rates
Duty Drawback under GST
Under GST, the duty drawback would only be available for the customs duty paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation.
Amendments have been made to the drawback provisions (Section 74 or Section 75) under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue in terms of both section 74 and section 75. Option of All Industry Rate (AIR) as well as Brand Rate under Section 75 shall also continue.
Drawback under Section 74 will refund Customs duties as well as Integrated Tax and Compensation Cess paid on imported goods which are re-exported.
Under GST regime, Drawback under Section 75 shall be limited to Customs duties on imported inputs and Central Excise duty on items specified in Fourth Schedule to Central Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power generation.