Introduction to RoDTEP Scheme
Remission of Duties and Taxes on Export Product (‘RoDTEP’) is a scheme under Chapter 4 of the Foreign Trade Policy, 2023 (‘FTP 2023’) which provides refund of unrefunded taxes and levies borne on products produced and exported from India like Mandi Tax, VAT, Coal Cess, Central Excise Duty on fuel etc.
Earlier, to claim the benefit under the said scheme, exporters were merely required to indicate in their shipping bills that they intend to claim the benefit under the said scheme. Such benefit would be granted to the eligible exporters at a notified rate as a percentage of FOB value as mentioned in Appendix 4R of FTP 2023. Refund amounts were issued in the form of a transferable duty credit / electronic scrip (e-scrip). Such e-scrips are maintained in an electronic ledger at ICEGATE. However, there was no mandate to file any Returns in order to claim RoDTEP benefit. Such a requirement has recently been introduced.
Filing of Annual RoDTEP Return
DGFT, vide Public Notice No. 27/2024-25 dated 23 October 2024 (‘Public Notice’), has inserted a new para 4.94 under Handbook of Procedure, 2023 (‘HBP 2023’). Under the same, exporters are mandated to file Annual RoDTEP Return (‘ARR’) in the format prescribed under Appendix 4RR, in order to avail the RoDTEP benefit. This mandate is only applicable to those exporters whose total RoDTEP claim exceeds INR 1 crore in a financial year.[1]
Thus, in light of para 4.94 of the HBP 2023, it is now mandatory for all concerned exporters (expecting a RoDTEP benefit of more than INR 1 crore in the given financial year) to file ARR, for exports made from period FY 2023-2024. Vide the ARR, the exporter is required to provide details of the taxes/duties suffered on the manufacture and distribution of the product being exported.
The data collected through ARR is intended to be utilised by the DGFT for dual purpose: (a) to ensure that no excess benefit, over and above the costs incurred by the exporter, are being given to the exporter; and (b) to check and ensure that the RoDTEP rates determined are accurate.[2]
It is important to note that if basis the ARR filed, the RoDTEP Committee is of the view that some benefit, over and above what they are entitled to, has been issued to the exporter, then the exporter would be required to return the excess benefit.[3] However, there is no corollary provision entitling the exporter to additional RoDTEP benefit, in case their costs are more than the RoDTEP benefit issued.
If the exporter fails to file such Appendix 4RR, it shall result in denial of the RoDTEP Benefit.[4]
Document Help Manual and FAQs released by DGFT provides guidelines on the ARR to be filed.[5] The ARR to be filed is linked to the 8-digit HS Code (‘Tariff Item’) being adopted by the exporter. The exporter is required to file as many ARR as the number of Tariff Items under which claimed RoDTEP benefit of Rs. 50 Lakh or more is being claimed. That is, the ARR is not product specific and is instead Tariff Item specific.[6] Even if multiple products are being exported under same Tariff Item, and the RoDTEP benefit available for each product is individually less than Rs. 50 Lakh, even then if cumulatively the products exported under the said Tariff Item are eligible for RoDTEP above Rs. 50 Lakh, then the ARR will have to be filed for the said Tariff Item. In the ARR so filed, data pertaining to all the products exported under that Tariff Item must be provided, and not just of the product for which the RoDTEP benefit is above INR 50 lakh.
If an exporter is claiming RoDTEP of more than INR 1 crore, but in respect of no single Tariff Item the claim is more than INR 50 lakh, then in that case, the exporter is required to file only 1 single ARR. The ARR so filed must be for the Tariff Item in respect of which the highest RoDTEP is being claimed.[7] The data so provided for this single Tariff Item, will be deemed to apply to all remaining products also for which no return is being filed because of the threshold limit.
The date for filing of ARR initially was 31 March 2025 as set out in Public Notice with a grace period of 3 months i.e., 30 June 2025. However, the same is now extended from 31 March 2025 to 30 June 2025 and the grace period is also extended from 30 June 2025 to 30 September 2025 vide Public Notice No. 51/2024-25 dated 19 March 2025. Benefit of grace period is available subject to payment of composition fees of INR 10,000/-. For delay of beyond 3 months extension shall be subject to composition fees of INR 20,000/-.[8]
Separate returns are required to be filed for DTA and AA/EoU/SEZ Exports.[9] This is due to the reason that government has given separate ARR rates for exports made through AA/EOU/SEZ scheme and separate rate for exports made without using any of the said schemes.
Merchant exporters who have availed over INR 1 crore of RoDTEP benefit in the given financial year are expected to file ARR by tying up with the manufacturer supplier of the goods for providing the information.[10]
The DGFT has not prescribed any specific methodology for the distribution of taxes and duties from various expenditures among multiple exports products. However, the exporters can follow the below-mentioned generally accepted method of distribution.
1. If the taxes and duties are incurred for a specific product, they should be disclosed in the ARR of that product only.
2. If the taxes and duties are common for multiple products, they should be allocated appropriately using a basis such as sales turnover, units produced, or time consumed, depending on the nature of the expenditure.
For computing the amount of unrefunded duties and taxes, the exporter would not be in position to calculate the exact taxes suffered since he does not know the taxes suffered down the supply chain. Hence, it is accepted that the ARR might not reflect the exact taxes suffered by the exporter which are currently unrefunded. However, reasonable and justifiable rationale should be taken for making approximations which can be substantiated during the return's scrutiny. Hence, wherever assumptions / estimates are required to adopted, the same must be reasonable and justifiable.
The exporter must also maintain the records of the remission claims for 5 years either in digital or physical form and produce as and when demanded.[11]
Conclusion
RoDTEP was introduced because its predecessor scheme: Merchandise Exports from India Scheme (‘MEIS’) was held by the WTO to be non-compliant with India’s commitments under the Agreement on Subsidies and Countervailing Measures (‘SCM’) signed by India. Thus, RoDTEP was introduced and under the same, taxes/duties alone suffered by the export products were sought to be refunded (as is permitted under the international agreements signed by India).
There is at present no challenge against RoDTEP before the WTO. However, Countervailing duty (CVD) actions have been initiated by USA and the European Union against the goods exported from India by availing RoDTEP, under the contention that RoDTEP is in reality not merely offsetting the duties/taxes suffered by the goods exported from India.
In light of the above background, it can be gleaned that the requirement of filing ARR might have been introduced to ensure that transparency is maintained to show that RoDTEP is only offsetting the duties/taxes suffered on the export goods.
Given the above, a pertinent question arises whether the threshold of INR 1 crore in RoDTEP claim per financial year is reasonable benchmark for mandating the filing of ARR. The RoDTEP rate typically varies between 0.01% to 3.9% (approximately). For convenience if a mid-way rate of 1% is adopted, then to receive a RoDTEP benefit of INR 1 crore, an exporter would generally need to achieve export turnover of approximately INR 100 crore. This effectively means that exporter with turnover below INR 100 crore would be exempt from filing of ARR. As a result, exporters below this threshold fall outside the scope this compliance requirement, despite potentially highly significant export volumes. Thus, this exemption given from filing ARR, for such a high threshold, could raise concerns, particularly in light of past WTO disputes and current ongoing investigation initiated by USA and European Union. Considering the past history of such export incentive schemes, it might be advisable for exporters (irrespective of their volume of exports and RoDTEP claim) to maintain clear data (with supporting documents) of the duties/taxes suffered on the manufacture and export of their products from India.
[The authors are Partner and Senior Associate, respectively, in Customs practice at Lakshmikumaran & Sridharan Attorneys]
[1] Refer Para 4.94 (1) of the HBP 2023.
[2] Refer para 4.94 (5), 4.94(6) of the HBP 2023
[3] Refer para 4.94 (6) of the HBP 2023
[4] Refer para 4.94 (2) of the HBP 2023
[5] Help Manual and FAQs can be accessed at - Directorate General of Foreign Trade | Ministry of Commerce and Industry | Government of India
[6] Refer general instructions of Help Manual and FAQ issued by DGFT.
[7] Refer general instructions of Help Manual and FAQ issued by DGFT.
[8] Refer para 4.94 (3) of the HBP 2023.
[9] Refer general instructions of Help Manual and FAQ issued by DGFT.
[10] Refer Question 27 of Help Manual and FAQ issued by DGFT
[11] Refer para 4.94 (4) of HBP 2023.
