Accepting exporters’ request, the Union Central Government has made amendments to the customs rules and allowed exporters to use RoDTEP and RoSCTL scrips to pay customs duty or transfer or sell them to other importers.
The amendment will safeguard the transferee who purchased the scrip in good faith. The industry has appreciated the Government for this step.
Under the RoSCTL scheme, the maximum rate of rebate for apparel is 6.05 per cent, while for the made-ups it is 8.2 per cent.
However, with the exporters who were selling these scrips in open market at discounts up to 20 per cent, the primary implication is that the actual rebate allowed to the exporters varies between 4.8 per cent and 6.4 per cent.
This also means that the taxes up to 1.2 per cent to 1.6 per cent of export value were not actually rebated and remained embedded.
Apparel Resources has also raised this issue prominently.
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Naren Goenka, AEPC, Chairman, said “We are thankful to the Government for considering our request positively. The amendment will provide much needed relief to the garment sector and ensure that maximum refund of RoSCTL amount will help exporters meet their working capital requirements. Further, it will give impetus to the garment sector to perform better at a much faster pace.”
Notably, even though the RoSCTL aimed to reimburse the taxes paid by the exporters to the Central or State Governments, under RoSCTL the rebate was not directly transferred to the exporters in cash, but this was granted to exporters of garments and made-ups in the form of freely transferable duty credit scrips.
Exporters can either use these scrips to pay Basic Custom Duty (BCD) on their own imports or they can sell the duty credit scrips to other importers. RoSCTL scrip has limited usage as it could be used only for payment of BCD.
In September 2021, an additional condition was notified for the RoSCTL scheme that allowed the customs authorities to recover from the subsequent buyers of the scrip (transferees) amounts due for the non-realisation of the sales proceeds by the exporters to whom the scrip was originally issued. This resulted in the exporters selling these scrips in open market at discounts, extending up to 20 per cent.
