Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

About RoDTEP Scheme:

• It is a flagship export promotion scheme of the Commerce Ministry of India.
• The WTO-compliant scheme aims to refund to the exporters the embedded central, state, and local duties and taxes paid on inputs that have so far not refunded or rebated. 
• RoDTEP was announced in September 2019 with the aim of boosting domestic exports and replace the export incentive scheme, Merchandise Exports from India (MEIS) scheme. 
  • This came after a World Trade Organization (WTO) ruling stated that the MEIS scheme violated the provisions of the trade agency as it was providing export subsidies for a several range of goods.
• The government decided to extend the benefit of the RoDTEP scheme to all goods, with effect from January 1, 2021, according to a notification by the Directorate General of Foreign Trade (DGFT).
• By providing support to crucial export sectors, the government aims to not only enhance their competitiveness but also create employment opportunities and contribute to overall economic growth, aligning with the vision of building an Aatmanirbhar Bharat.
• Features:
  • This scheme is open to both manufacturers and merchant exporters, without any threshold of turnover.
  • The most important condition is that such goods should have been directly exported by such a person.
  • The RoDTEP scheme covers physical exports as well as outbound shipments of services from India. Service providers can also claim refunds on applicable hidden levies.
  • A rebate will have to be claimed as a percentage of the Freight On Board value of exports.
  • It will be implemented by Customs through a simplified IT System. 
  • Rebates will be issued in the form of a transferable duty credit/ electronic scrip(e-scrip), which will be maintained in an electronic ledger by the Central Board of Indirect Taxes and Customs (CBIC).
  • The rebates would not be available in respect of duties and taxes already exempted, credited, or remitted.
  • Rebates on certain export products will also be subject to a value cap per unit of the exported product. 
  • Certain categories which would not avail the benefits include export goods that are subject to the minimum export price, restricted and prohibited items, deemed exports, supplies of goods manufactured by domestic tariff area units to special economic zones (SEZs), and products manufactured or exported by units situated in SEZs. 

What is Freight on Board (FOB)?

• It is also called Free on Board (FOB), is a term used to indicate who is liable for goods damaged or destroyed during shipping.
• FOB origin means the buyer is at risk and takes ownership of goods once the seller ships the product.
• FOB destination means the seller retains the risk of loss until the goods reach the buyer.

Q1: What is the Central Board of Indirect Taxes and Customs (CBIC)?

CBIC (erstwhile Central Board of Excise and Customs) is a part of the Department of Revenue under the Ministry of Finance, Government of India. CBIC administers all the indirect tax-related matters in India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST, and Narcotics to the extent under CIBC's purview.

Source: Tea industry seeks higher RoDTEP rates to make exports competitive overseas