You Ask We Answer
Q 458: What is the Mercosur group of countries? Is there any duty benefit while importing from these countries?
A: 1. Mercosur Member States is a group of countries which includes Argentina, Brazil, Paraguay and Uruguay.
2. Mercosur is the Southern Common Market. It is a regional trade bloc in South America, primarily focused on promoting free trade and economic integration among its member states.
3. India has a Preferential Trade Agreement with Mercosur Member States since 2009.
4. The full particulars are available in Custom Notification No. 57 dated: 30.05.2009. This notification has been amended from time to time. The last amendment was 45/2024 dated: 30.09.2024 with effect from 01.10.2024.
5. Importer gets duty exemption/concession on select products when imported from Mercosur Member States.
6. The importer has to prove to the satisfaction of the Customs officer that the goods in respect of which the benefit of this exemption is claimed are of Mercosur Member Country Origin.
7. Import will be subject to determination of Origin rules 2009.
8. Only those goods which are notified under 57/2009, and amended will get the benefits.
9. Extent of tariff concession are 10% - 20% - 100% depending on the classification of imported goods.
10. Mercosur Group of countries use NCM Code instead of HS Code.
11. The word NCM stands for Nomenclature Common Mercosur.
12. Between HS Code and NCM Code, the first 4 digits are common.
13. A company in Pondicherry imported engineering product from Argentina instead of China and availed the benefit of duty concession under Preferential Trade Agreement with Mercosur Member States.
14. Import will be subject to Customs Administration Rule of Origin under Trade Agreements Rules 2020 – CAROTAR 2020. Cus. Circular No. 38/2020 dated: 21.05.2020 as amended from time to time.
15. Importer should have all the proper documents for Customs clearance.
Q 459: We understand from our Customs Broker that we have to execute Bank Guarantee under Advance Authorisation, DFIA and EPCG schemes. Kindly provide the details.
A: 1. Advance Authorisation and DFIA are schemes prescribed in Chapter 4 of Foreign Trade Policy, 2023.
2. Advance Authorisation is with Actual User condition, which means neither the Authorisation nor goods, imported thereunder, can be transferred, sold or disposed of in any manner other than consumption by the Authorisation Holder or this supporting manufacturer. Job working is allowed.
3. If the Advance Authorisation holder imports the goods before the export, then he has to execute Bank Guarantee/LUT – Letter of Undertaking.
4. Export Promotion Capital goods are covered under Chapter 5 of Foreign Trade Policy, 2023.
5. GST has come into force from 01.07.2017.
6. Circular No. 58/2004-Cus. dated 21.10.2004 provides details about execution of Bank Guarantee and LUT under above schemes.
7. This Circular has been amended from time to time.
8. These Circulars prescribe the norms for execution of Bond/Bank Guarantee in respect of imports made under the AA, DFIA and EPCG schemes.
9. The said Circular and amendment Circular No. 17/2009-Cus. dated 25.05.2009 extend exemption from execution of Bank Guarantee based on:
• Export turnover.
• Quantum of duty/tax paid etc.
10. In the wake of GST regime, the norms for execution of Bank Guarantee under AA, DFIA and EPCG schemes have been reviewed and the following clarification is given:
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Manufacturer Exporters/Service Providers registered with the GST authorities who have been exporting during the previous 2 financial years
And Have minimum export of Rs 1 crore or more during the preceding financial year shall also be eligible to claim exemption from furnishing Bank Guarantee
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Manufacturer Exporters/Service Providers registered with the GST authorities who have paid GST of Rs 1 crore or more during the preceding financial year shall also be eligible to claim exemption from furnishing Bank Guarantee |
11. The AA/DFIA/EPCG Authorisation Holder shall produce a certificate of export performance or payment of duty/GST for the purpose of availing Bank Guarantee exemption from the concerned Export Promotion Council.
12. In certain cases, he may produce such certificate duly authenticated by a practicing Chartered Accountant who is registered with the GST Department for payment of GST.
Q 460: What is the export turnover required for a Status Holder?
A: The eligibility criteria for Status Holder Certificate is as below:
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FTP – 2023 |
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One Star |
3 million USD |
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Two Star |
15 million USD |
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Three Star |
50 million USD |
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Four Star |
200 million USD |
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Five Star |
800 million USD |