Annual RoDTEP Return (ARR): Key Compliance for Exporters introduced!

The Government of India introduced the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme on January 1, 2021. The scheme aims to refund various embedded duties and taxes that are incurred during the production of exported goods, making Indian products more attractive on the global stage. This scheme benefits in the form of scrips which can be utilised for the payment of Basic Custom Duty, or these scripts can be saleable in open market.

As part of its evolving framework, the scheme now includes the Annual RoDTEP Return (ARR) requirement, a key compliance measure aimed at ensuring transparency and accuracy in claims under the scheme. This blog explores the salient features of the RoDTEP scheme, the recently introduced ARR filing requirement, the compliance obligations for exporters, and the significant amendments made to expand its scope. 

Let’s understand the details!

What is RoDTEP Scheme?

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, introduced by the Government of India on January 1, 2021, is designed to boost the global competitiveness of Indian exports. It replaces the Merchandise Exports from India Scheme (MEIS), which was found non-compliant with World Trade Organization (WTO) norms. RoDTEP addresses this issue by refunding various embedded duties and taxes on exported goods, aligning with international trade standards.

Key Features of the RoDTEP Scheme:

• Duty Credit Scheme: Exporters are issued electronic duty credit scrips, which can be used to pay customs duties or sold in the open market, similar to the MEIS scheme.
• Eligible Goods: Only goods specified in Appendix 4R of the Foreign Trade Policy (FTP) can claim RoDTEP benefits, with value caps per unit where applicable.
• Calculation of Benefits: The benefits are calculated based on the FOB value of exported goods, and exporters must declare their claim in the shipping bill at the time of export.
• Issuance and Utilization: Duty credit scrips are issued only after export completion and can be used for customs duty payments on imports.
• Digitization: The RoDTEP scheme operates via a fully digitized process, where exporters can generate e-scripts through the ICEGATE portal.
• Transferability: RoDTEP scrips are transferable and can be sold to other importers.

Annual RoDTEP Return (ARR) Requirement

In respect of the aforesaid scheme, recently DGFT issued Public Notice No. 27/2024-25 dated October 23, 2024. The aforesaid notice brings a mandatory requirement of filing an Annual RoDTEP Return ('ARR') filing for exporters claiming benefits over INR 1 crore in a financial year under the RoDTEP Scheme. 

This return is essential for verifying the actual taxes and duties incurred during the production of exported goods. The ARR must be filed by March 31 following the financial year, with a grace period until June 30 for late submissions. For the first year, ARR filed in FY 2023-24 must be submitted by March 31, 2025.

Key Compliance Points for ARR

• Mandatory Submission: Exporters claiming RoDTEP benefits exceeding INR 1 crore must submit the ARR via the DGFT portal.
• Penalties for Non-Compliance: Exporters who delay the submission of the ARR beyond March 31 may file it by June 30 with a composition fee of INR 10,000. For filings post-June 30, the fee doubles to INR 20,000.  
• Suspension of Claims: Failure to file the ARR on time results in the suspension of RoDTEP benefits. Upon payment of late fees, the DGFT will resume processing RoDTEP scrolls within 45 days until an automated API message exchange is implemented between DGFT and Customs. This resumption will also apply to any shipping bills previously withheld due to non-compliance with the ARR requirement.
• Record Retention: Exporters must maintain records for at least five years to support their duty remission claims.
• Risk-Based Scrutiny: The RoDTEP Committee may review filings, and discrepancies may lead to refunds or adjustments to claims.

Conclusion

The RoDTEP scheme plays a vital role in enhancing the competitiveness of Indian exports by ensuring that embedded duties and taxes are refunded, bringing India in line with global trade practices. The introduction of the Annual RoDTEP Return (ARR) requirement adds a layer of compliance, ensuring that exporters’ claims reflect the actual duty burdens faced in the production process.

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