DGFT clarifies on value addition norms for availing duty exemption in Gem and Jewellery

Oct 04, 2019 | by Avantis RegTech Legal Research Team

The Directorate General of Foreign Trade (DGFT) on September 27, 2019, has clarified on value addition norms for availing duty exemption in Gem and Jewellery.

However, Para 4.38 of Foreign Trade Policy (FTP) specifies the calculation of minimum value addition for Gem and Jewellery, namely:

VA = A - B × 100


Where A = FOB value of the export realized/ FOR value of supply received.

B = Value of inputs (including domestically procured) such as gold/silver/platinum content in export product plus admissible wastage along with value of other items such as gemstone etc. Wherever gold has been obtained on loan basis, value shall also include paid in free foreign exchange to foreign supplier.

Further as per Para 4.82 (c) for Replenishment scheme, price shall be actual price at which gold/silver/platinum is purchased by nominated agencies plus permitted service charges levied by nominated agencies shall be included with the price of gold/silver/platinum for value addition.

Therefore, DGFT clarified that for the purpose of value addition, inputs in ‘B’ in para 4.38 mean duty free (either on advance or replenishment basis) gold/silver/platinum content in the export product plus the admissible wastage.

[Policy Circular No. 28/2019-2020]


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