Duty Free Import Authorization (DFIA)
Enable duty-free imports of inputs for manufacturing export products under SION norms with 20% value addition requirement
Explore DFIA SchemeScheme Overview
📜 What is DFIA?
A Duty Free Import Authorization (DFIA) is issued to allow duty free import of inputs which are used in the manufacture of an export product, making normal allowance for wastage, and energy, fuel, catalyst etc. that are utilized in the course of their use to obtain the export product.
Scheme Launch: The DFIA scheme has been in force since 1st May 2006, providing exporters with a mechanism to import inputs without paying basic customs duty.
Key Features
SION Based Authorization
Import entitlement limited to quantities mentioned in Standard Input Output Norms (SION)
Post Export Basis
Authorization issued after completion of export obligations and realization of proceeds
Transferable Authorization
DFIA is fully transferable with 12 months validity from date of issue
Includes Consumables
Import of oil, fuel, catalyst consumed in production process also allowed
For Manufacturers & Merchants
Available to both manufacturer exporters and merchant exporters tied to supporting manufacturers
Split DFIA Facility
Can be split into multiple authorizations of minimum Rs. 10 lakh CIF value each
Regulatory Framework
Policy Reference: The DFIA scheme is governed by Chapter 4 of Foreign Trade Policy (FTP) and detailed procedures are outlined in the Handbook of Procedures.
Authority: The Director General of Foreign Trade (DGFT) administers the scheme and can exclude any products by means of Public Notice in public interest.
⚠️ Important Exclusion: Duty Free Import Authorization Scheme is NOT available for import of raw sugar.
Duties Exempted & Financial Benefits
💰 Customs Duty Exemption
DFIA provides exemption ONLY from payment of Basic Customs Duty (BCD). Additional customs duty is NOT exempted.
Additional Customs Duty Treatment
CENVAT Credit: Additional customs duty (which is not exempted under DFIA) shall be adjusted as CENVAT credit as per Department of Revenue rules.
Drawback Eligibility
Drawback on Duty Paid Inputs
Drawback as per rate determined and fixed by Customs authority is available for duty paid inputs, whether imported or indigenous, used in the export product
Declaration for Non-SION Inputs
If drawback is claimed for inputs NOT specified in SION, applicant must clearly indicate details of such duty paid inputs in the DFIA application
Regional Authority Endorsement
Regional Authority must clearly endorse details of all such duty paid inputs in the condition sheet of the DFIA based on application details
Value Addition Requirement
Special Cases: For items where higher value addition has been prescribed under the Advance Authorization scheme, the same higher value addition shall be applicable for DFIA as well.
Eligibility & Requirements
Who Can Apply?
Manufacturer Exporters
Companies that manufacture and directly export products can apply for DFIA
Merchant Exporters
Merchant exporters tied to supporting manufacturers can also apply with proper documentation
Essential Eligibility Criteria
- SION Availability: DFIA issued only for products for which Standard Input Output Norms (SION) have been notified
- Post Export Basis: Authorization issued AFTER completion of export and realization of export proceeds
- Supporting Manufacturer Details: Merchant exporters must mention name and address of supporting manufacturer on export documents (Shipping Bill / Bill of Export / Tax Invoice for export)
- Pre-Application Filing: Application must be filed with Regional Authority BEFORE effecting export under DFIA
- Value Addition Compliance: Must achieve minimum 20% value addition (or higher if prescribed)
Restrictions & Exclusions
⚠️ DFIA NOT Available For:
- Inputs subject to pre-import conditions
- Inputs where SION prescribes 'Actual User' condition
- Inputs where Appendix-4J prescribes pre-import condition
- Import of raw sugar (completely excluded from scheme)
Applicable FTP Provisions
These provisions of Foreign Trade Policy are also applicable to the DFIA scheme.
Application Process & Timeline
Step-by-Step Application Process
File Online Application
Submit application in ANF 4G format along with required documents online to concerned Regional Authority BEFORE starting export
Receive File Number
Upon acceptance, system generates a unique file number for tracking your DFIA application
Complete Export Within 12 Months
Export must be completed within 12 months from date of online filing and generation of file number
Indicate File Number on Export Documents
Mention the file number on Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules
Realize Export Proceeds
Ensure full realization of export proceeds as per RBI guidelines within prescribed timeline
Request Transferable DFIA
After export completion and proceeds realization, request issuance of transferable DFIA within 12 months from export date OR 6 months from realization date (whichever is later)
Receive DFIA with 12 Months Validity
Regional Authority issues transferable DFIA valid for 12 months from date of issue (no revalidation allowed)
Important Timelines
| Activity | Timeline |
|---|---|
| Export Completion | 12 months from date of file number generation |
| Request for DFIA Issuance | Within 12 months from export date OR 6 months from realization (whichever is later) |
| DFIA Validity | 12 months from date of issuance (no revalidation) |
| Late Application Filing | Allowed beyond 24 months from file number generation as per Para 9.02 of HBP |
| Account Records Preservation | Minimum 3 years from date of redemption |
Applicable HBP Provisions
Additional Applicable Paragraphs: Provisions of paragraphs 4.26, 4.27, 4.28, 4.48, 4.49(e), 4.49(f), and 4.52 of Handbook of Procedures shall also be applicable for DFIA Scheme.
Validity, Transferability & Special Features
SION Requirements for Generic/Alternative Inputs
📋 Input Specification Requirements
As per Para 12 of FTP, wherever SION permits use of either (a) a generic input or (b) alternative input, the specific input together with quantity used in manufacturing must be indicated/endorsed in Shipping Bill / Bill of Export / Tax invoice.
Import Permission: Only such actually used inputs may be permitted for import in proportion to quantities consumed in production, within overall SION quantity limits.
Grouped Inputs in SION
Multiple Inputs with Single Quantity: If SION indicates a single quantity against multiple inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to actual consumption in production.
Declaration Required: Proportion of these inputs actually used/consumed in production must be clearly indicated in Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules.
Port & SION Restrictions
Single SION Rule
Separate DFIA shall be issued for each SION. Cannot club multiple SIONs in one authorization
Single Port Requirement
Exports under DFIA must be made from a single port as mentioned in Para 37 of Handbook of Procedures
Split DFIA Facility
Minimum Split Value
Each split DFIA must have minimum CIF value of Rs. 10 lakh and in multiples thereof
Request Timing
Request for split authorization must be made at the time of seeking transferability of DFIA
Fee Structure
Fee of Rs. 1,000/- shall be paid for each split authorization requested
Port Registration
Split-up DFIAs shall be permitted with the same port of registration as appearing on the original DFIA
Re-export of Defective Goods
Identify Defective/Unfit Goods
If imported goods are found defective or unfit for use, they may be re-exported as per Department of Revenue guidelines
Certificate Generation by Customs
If goods were NOT put to use after import, Commissioner of Customs generates certificate for 95% of CIF value debited against DFIA, containing amount, description, and details of original import
Fresh DFIA Issuance
Based on certificate, Regional Authority issues fresh DFIA with same port of registration
Validity of Fresh DFIA
Fresh DFIA valid for period equivalent to balance period available on date of import of such defective/unfit goods
Sensitive Items Under DFIA
⚠️ Special Declaration Requirements
For the following sensitive inputs, exporters are required to provide declaration with regard to technical characteristics, quality and specification in the Shipping Bill. Regional Authority shall mention these specifications in the DFIA authorization.
Complete List of Sensitive Items
Compliance Requirement: Exporter must provide detailed technical specifications including quality parameters and characteristics in the Shipping Bill for all above items. Regional Authority will verify and endorse these specifications in the DFIA authorization document.
Record Keeping & Compliance
📊 Maintenance of Proper Accounts
Original DFIA holder shall maintain a true and proper account of consumption and utilization of duty free imported / domestically procured goods against each authorization as prescribed in Appendix 4H.
Account Submission Requirements
Record Format
Maintain detailed accounts as per format prescribed in Appendix 4H of Handbook of Procedures
Submission to Regional Authority
Records must be sent to Regional Authority along with request for bond waiver / redemption / discharge of export obligation / transferability
Preservation Period
All records should be preserved for a period of at least 3 years from date of redemption
What Records to Maintain
- Import Details: Complete records of all imports made against DFIA including dates, quantities, values, and customs documentation
- Consumption Records: Detailed account of how imported inputs were consumed in manufacturing the export product
- Utilization Tracking: Records showing actual utilization of duty free imported goods and domestically procured materials
- Export Documentation: Copies of Shipping Bills, Bills of Export, Tax invoices with file numbers indicated
- Wastage Records: Documentation of normal wastage as per SION norms
- Value Addition Proof: Records demonstrating achievement of minimum 20% value addition requirement
⚠️ Audit & Verification: DGFT authorities may conduct audits and verification of records at any time. Non-maintenance or improper maintenance of records may lead to penalties, cancellation of benefits, or legal action as per Foreign Trade (Development and Regulation) Act, 1992.
Quick Reference Summary
Application Form
ANF 4G - Apply online to Regional Authority
Export Timeline
12 months from file number generation
Validity Period
12 months (no revalidation allowed)
Split DFIA Fee
Rs. 1,000 per split authorization
Minimum Split Value
Rs. 10 lakh CIF value each
Value Addition
20% minimum (or higher if prescribed)
Duty Exemption
BCD only (not additional customs duty)
Record Keeping
3 years from redemption date
Transferability
Fully transferable authorization
💡 Key Takeaway: DFIA is a post-export benefit scheme that allows duty-free import of inputs based on SION norms after achieving export obligations and minimum value addition requirements. It's transferable, can be split, and requires proper account maintenance for compliance.