The Advance License, also known as the Advance Authorisation Scheme, is a beneficial export incentive program offered under the Foreign Trade Policy (FTP) by the Directorate General of Foreign Trade (DGFT). It allows importers to bring in raw materials, components, and inputs duty-free for the purpose of producing export goods.
This scheme helps exporters minimize production costs, improve international competitiveness, and ensure seamless trade operations. However, to fully enjoy these benefits, exporters must also comply with post-export obligations, including the submission of the Advance License EODC (Export Obligation Discharge Certificate).
What is Advance License EODC?
The Advance License EODC is an essential compliance document that certifies the completion of export obligations under the Advance License Scheme. Once an exporter fulfills the prescribed export requirements, they must apply to the DGFT for the EODC.
This certificate confirms that the exporter has successfully utilized the imported duty-free inputs for manufacturing and exporting goods as per the license terms. Without obtaining the Advance License EODC, the exporter risks non-compliance, leading to penalties, suspension, or future ineligibility for DGFT benefits.
Key Features of the Advance License
The Advance License is designed to empower exporters by reducing their cost of production. Below are its key features:
- Duty-Free Import:
Importers can bring in inputs required for manufacturing export products without paying customs duties. - Specified Quantity and Value:
The quantity and value of imports are determined based on the Standard Input Output Norms (SION) approved by DGFT. - Export Obligation:
Exporters must fulfill the obligation by exporting finished goods within the validity period specified in the license, usually 18 months from the date of issue. - Transferability:
The Advance License is non-transferable; however, the finished goods produced using duty-free imports can be exported to any country. - Validity Extension:
DGFT may extend the validity of the license or export obligation period upon request, subject to specific conditions.
Importance of the Advance License EODC
The Advance License EODC is more than just a formality it serves as proof that an exporter has met all the legal and procedural requirements under the DGFT scheme. Here’s why it’s important:
- Regulatory Compliance:
It ensures the exporter complies with customs and DGFT regulations, avoiding legal complications. - Smooth Closure of License:
Once the EODC is issued, the Advance License is considered closed, and no further obligations remain. - Eligibility for Future Benefits:
Exporters who successfully obtain their Advance License EODC remain eligible for future DGFT schemes and incentives. - Avoidance of Penalties:
Non-submission of EODC can result in demands for customs duty payment with interest, or even blacklisting by DGFT.
Step-by-Step Process to Obtain Advance License EODC
Obtaining an Advance License EODC involves several procedural steps that must be followed carefully:
1. Fulfill Export Obligation
Ensure all export commitments under the Advance License are completed within the validity period. The exports must be properly documented through shipping bills and invoices.
2. Compile Required Documents
Prepare all essential documents, such as:
- Copy of the Advance License
- Shipping bills and e-BRCs (Bank Realization Certificates)
- Chartered Accountant (CA) certificate
- Input-Output statements
- Customs bond discharge certificate
3. Online Application on DGFT Portal
Log in to the DGFT portal and navigate to the “Advance Authorisation Closure” section. Submit the application for EODC along with supporting documents in digital format.
4. Regional Authority Verification
The concerned DGFT Regional Authority reviews the submitted documents to ensure the export obligations are met.
5. Issuance of EODC
After successful verification, DGFT issues the Advance License EODC, marking the closure of the license. Exporters should download and retain the certificate for their records.
Common Challenges in Advance License EODC Filing
Many exporters face challenges in obtaining the Advance License EODC, mainly due to documentation errors or incomplete submissions. Common issues include:
- Mismatch in export data between customs and DGFT records
- Missing e-BRCs or shipping bills
- Delayed submission of export documents
- Non-adherence to SION norms
To avoid these complications, exporters should maintain accurate records from the start of the export process and perform regular reconciliation between shipping and banking data.
Benefits of Timely Advance License EODC Submission
Filing for the Advance License EODC on time offers several long-term advantages:
- Quick License Closure: Faster clearance and closure of the export license.
- Business Credibility: Builds trust with regulatory bodies and enhances reputation in international markets.
- Access to Future DGFT Schemes: Keeps exporters eligible for additional incentives under MEIS, RoDTEP, or EPCG.
- Prevention of Financial Loss: Avoids penalties, duty demands, or forfeiture of bank guarantees.
Tips for Managing Advance License and EODC Compliance
Efficient management of the Advance License and Advance License EODC process can save exporters from unnecessary delays and penalties. Here are a few expert tips:
- Maintain digital and physical copies of all shipping and banking documents.
- Track export obligations regularly to avoid missing deadlines.
- Conduct internal audits before EODC filing.
- Seek professional assistance from DGFT consultants or legal experts for complex cases.
Conclusion
The Advance License EODC plays a crucial role in ensuring that exporters fully comply with DGFT and customs regulations after availing duty-free import benefits. Timely and accurate submission of this certificate not only secures compliance but also preserves the credibility and eligibility of the exporter for future government incentives.
By understanding the procedure and maintaining meticulous documentation, businesses can make the most of the Advance License scheme while staying fully compliant with export obligations.
