Textiles Ministry Revises Additional Incentive for Garments and Made-up Sectors to Compensate for Unrebated Central Taxes and Levies

         New Scheme named RoSCTL (Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups) along with State Taxes Covered under RoSL

         Old Scheme RoSL Discontinued from 7 March 2019

         Reimbursement to be Streamlined by Transferable Scrip on the Lines of MEIS

         Garments under Chapter 61 and 62 in the Drawback Schedule and Made-ups in Chapter 63 Covered

         Rates of Rebate and Value Caps Recommended by Drawback Committee to be Notified with the Value Cap

         Textile Commissioner Out of the Picture, DGFT to issue RoSCTL Scrip with Budget from Textiles Ministry

         Annual Rs. 6300 crores Revenue Implication

[Ministry of Textile Notification No. 14/26/2016-IT (Vol II) dated 7th March 2019]

Sub: Scheme to Rebate State and Central Embedded Taxes to Support the Textile Sector.

Apparel and made-ups sectors are currently supported under the Scheme for Rebate of State Levies (RoSL). However, certain State as well as Central taxes continued to be present in the cost of exports. In pursuance of the decision of the Government of India to rebate all embedded State and Central Taxes and Levies on garments and made-ups to enhance competitiveness of these sectors, the following scheme is notified:

1. Short Title and Commencement

1.1. The new scheme shall be called Scheme for Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (hereinafter referred to as RoSCTL). The New Scheme will come into effect from the date of this Notification and shall remain in force up to 31.03.2020. The existing RoSL Scheme for apparel notified vide notification no. 12020/03/2016-IT dated 12.08.2016 and for made-ups notified vide notification no. 12015/47/2016-IT dated 03.01.2017, will be discontinued w.e.f. the date of this Notification.

2. Objective

2.1. In accordance with the recognized international economic principle of zero rating of export products, it has been decided that the Central Government shall provide for rebate of State and Central Taxes and Levies in addition to the Duty Drawback Scheme, through the Scheme for RoSCTL on export of Garments and Made-ups at notified rates and value caps.

3. Definitions

3.1. Export with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

3.2. Shipping Bill or Bill of Export shall be the entry made before proper officer of Customs by an exporter of garments and made-ups

3.3. Value in relation to exported garments and made-ups shall be the Free on Board (FOB) value.

3.4. Garments shall mean goods falling under Chapters 61 or 62 of the Schedule of All Industry Rates (AIR) of Drawback.

3.5. Made-ups shall mean goods falling under chapter 63 of the Schedule of All Industry Rates (AIR) of drawback excluding tariff items 6308, 6309, 6310 and goods in tariff items 9404 that are excluded from drawback tariff item 6304.

3.6. Rebate of State Taxes and Levies shall be understood to comprise VAT on fuel used in transportation, captive power, farm sector, mandi tax, duty of electricity, stamp duty on export documents, embedded SGST paid on inputs such as pesticides, fertilizers etc. used in production of raw cotton, purchases from unregistered dealers, coal used in production of electricity and inputs for transport sector.

3.7. Rebate of Central Taxes and Levies shall be understood to comprise central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilizer etc. used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and Compensation Cess on coal used in production of electricity.

4. Rates of Rebate

4.1. The rates (including applicable value caps) of RoSCTL on export of garments and made-ups manufactured in India have been recommended by the Drawback Committee constituted by the Central Government notified by the Ministry of Textiles.

4.2. Government reserves the right to suitably adjust the rate and caps in the light of change in relevant underlying conditions. Periodic calibration of rebate rates and value caps shall be undertaken by the Norms Committee of DGFT, within the rates and value caps recommended by the Drawback Committee.

5. Claim for Rebate

5.1. An exporter opting for this scheme shall make claim for rebate on exports at item-level.

6. Mechanism of Rebate

6.1. The ROSCTL shall be implemented through a Merchandise Exports from India Scheme (MEIS) type scrip system.

6.2. The provision of issue of the rebate under the scrip based system by the DGFT would be for the exports made in the financial year 2019-20 onwards. The Department of Revenue will suitably authorize the allocation for issue of such scrips.

6.3. DGFT would be issuing the scrips for RoSCTL over and above budget provision for the shipping bills of the period before 01.04.2019 only. The allocation for RoSL over and above budget provision for issuing scrips, would be provided by the Department of Revenue for such old cases which could not be disbursed due to budget limitation.

6.4. To exercise proper budgetary control, financial implication of revenue forgone under the ROSCTL shall be assessed by M/o Textiles and D/o Commerce in consultation with D/o Revenue on the basis of estimated exports and rates recommended by the Drawback Committee/Norms Committee.

6.5. Ministry of Textiles would obtain monthly list of rebate given against scrips by DGFT.

7. Periodic Assessment

7.1. An Inter-Ministerial Committee (IMC) headed by Secretary, M/o Textiles comprising representatives of D/o Revenue, D/o Expenditure and D/o Commerce, shall periodically assess the scheme on parameters of growth in exports and employment. Representatives of other Departments/Ministries, as required, may be co-opted into the Committee.

8. Saving Clause

8.1. Upon cessation of the ROSCTL Scheme, the non-issued rebate against applications shall be settled in accordance with the provisions of the Scheme.