Can You Transfer or Amend an Advance Authorisation After Import? Legal Position Explained
No, you cannot transfer an Advance Authorisation or the materials imported under it due to the Actual User Condition. However, you can amend the license for technical errors or HSN corrections, provided the inputs have not yet been consumed and you follow specific DGFT procedures.
What is the Advance Authorisation Scheme?
The Advance Authorisation Scheme is a duty-exemption program by the DGFT that allows exporters to import raw materials at 0% customs duty. The logic is simple: if you are importing materials to manufacture a product that will eventually be exported, the government waives the taxes to keep your costs low.
However, because this is a “pre-export” benefit, it comes with strict legal strings attached. Understanding whether you can change or move this license after the goods have landed in India is important to avoiding heavy penalties.
Can You Transfer an Advance Authorisation License to Someone Else?
The short answer is no. Under the Foreign Trade Policy (FTP) 2023, an Advance Authorisation is issued subject to the Actual User Condition. This means the person or company that imported the goods must be the one to use them in their factory to manufacture the export product.
Why is Transfer of Advance Authorisation Not Allowed?
- Duty Exemption: The government gives you a tax break because you promised to export. If you sell the material, the “nexus” (link) between the import and the export is broken.
- Preventing Misuse: If transfers were allowed, people might import raw materials duty-free and sell them in the local market for a profit, which is illegal.
Note: Even after you fulfil your export obligation under the Advance Authorisation Scheme and get your EODC certificate, the materials imported duty-free cannot be sold. They must still be used by the Actual User.
Is it Possible to Amend an Advance Authorisation After Import?
While you cannot transfer the license, you can often amend it. An amendment is a correction or a change in the details of the license.
However, amending a license after the goods have been cleared through customs is much harder than doing it before. The DGFT and Customs authorities are very careful about changes once the goods are already in the country.
When Can You Request an Amendment After Import?
There are specific situations where the DGFT may allow you to fix or change details on your Advance Authorisation License:
1. Correcting Technical or Clerical Errors
If there is a typo in the address, company name, or a small mistake in the quantity that doesn’t change the value of the license, you can apply for a correction.
2. Changing the HSN Code
Sometimes, the Customs department classifies a product under a different HSN code than what is written on your license. In such cases, you must get your Advance Import License amended to match the Customs records to ensure smooth EODC online processing later.
3. Adding a Supporting Manufacturer
If you are a Merchant Exporter and need to change the factory where the goods will be processed, you can apply to add or change a Supporting Manufacturer. This must be done before the materials are consumed.
What are the Limitations of Amending a License After Import?
You cannot use an amendment to bypass the rules. The DGFT will generally reject your request if:
- You are trying to increase the quantity of goods after they have been imported.
- The raw materials have already been used in production.
- The amendment changes the basic nature of the Advance License export obligation.
What is the Advance Authorisation Procedure for Amendments?
If you need to make a change, you must follow the formal Advance Authorisation procedure on the DGFT portal:
| Step | Action |
| 1. Online Filing | Log in to the official DGFT portal and select the “Amendment” service under the Advance Authorisation tab. |
| 2. Documentation | Upload a letter explaining why the change is needed and provide supporting proof (like a Customs query or a revised invoice). |
| 3. Fee Payment | Pay the processing fee (usually a few hundred rupees). |
| 4. RA Review | The Regional Authority (RA) reviews the request. They may ask for more details or a personal hearing. |
| 5. Port Registration | Once the DGFT approves the change, you must ensure the amendment is updated in the Customs ICEGATE system. |
What Happens if You Violate the Actual User Condition?
If you transfer materials or use them in a way not allowed by the Advance Authorisation License, the consequences are severe:
- Payment of Duty: You will have to pay the full Customs duty that was originally waived.
- Interest Penalties: You will be charged 15% interest per year from the date of import.
- Blacklisting: Your company could be placed on the Denied Entity List (DEL), preventing you from getting any future licenses.
How DGFT Guru Delivers Success in Complex Amendments
Amending a license after import is a high-stakes task. One wrong move can lead to an investigation. At DGFT Guru, we provide a clear path forward:
1. Problem Assessment
We look at your situation to see if an amendment is legally possible.
We don’t want you to waste time or money. We check the rules to see if your request will be accepted by the DGFT officers.
2. Professional Implementation
We handle the paperwork and talk to the DGFT for you.
We draft the legal explanations and file the advance authorisation procedure online. We ensure your “Nexus” remains intact so your EODC certificate is not at risk.
3. Final Issuance of License
We follow up until the amended license is in your hands.
We track the application daily and handle any questions the government might have, ensuring your bond at Customs remains valid.
Conclusion
While you cannot transfer an Advance Authorisation because of the Actual User Condition, the law does allow for genuine amendments. The key is to act quickly and stay transparent with the authorities. Trying to hide a mistake or selling duty-free material is never worth the risk of losing your export benefits entirely.
If you are unsure whether your license can be changed, it is always better to consult with a specialist before the materials are consumed.
Frequently Asked Questions (FAQs)
Q1: Can I sell the scrap generated from raw materials imported under an Advance License?
Yes, you can sell the scrap in the local market, but you must pay the applicable GST on the sale of that scrap.
Q2: Can I move the imported material to a different factory of the same company?
Yes, provided that the factory address is already registered on your IEC and endorsed on the advance authorisation license as a manufacturing unit.
Q3: What if the company undergoes a merger or name change?
In the case of a legal change like a merger, the license can be transferred to the new entity. However, you must first amend the IEC and then apply to the DGFT for a “Change in Constitution” amendment on the license.
Q4: Can I export a different product than what is mentioned in the license?
No. You must export the specific products mentioned. If you need to change the export item, you must apply for an amendment before you ship the goods.
Q5: How long does the DGFT take to process an amendment?
Usually, a simple amendment is processed within 7 to 15 working days, provided all documents are in order.
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