TIEP-IV SCHEME

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Inward Processing

THE SCHEME

This Scheme permits exemption of the Fiscal Levies on imported Capital and Intermediate Goods used for the manufacture of products and services for export

OBJECTIVES


Capital and Intermediate Goods eligible for exemption.
Capital goods directly Involved in production process :

  • Machinery
  • Equipment
  • Accessories etc. 

Intermediate Goods which are considered essential to the manufacturing process [excluding raw material] :

  • Appliances
  • Devices
  • Supporting equipment such as Air conditioners, computers, electricity generators etc.

Other essential equipments.
  • Spare parts of project plants.
  • Transport equipment and handling equipment which are used in the production process exclusively in the factory premises or place of production.
  • Breeding stocks for agricultural projects.
WHO IS ELIGIBLE
  • Direct Exporters - Manufacturers who produce goods intended for export under inward processing scheme and ship the same to another country for export.
  • Indirect Exporters - Manufacturers who produce goods intended for export but only supply them to another eligible party for further processing and finally exports.
FACILITIES AVAILABLE

Duty and tax exemption granted under the scheme are:

100% exemption of Customs Duty in the case of exporters who export 50% or more or their output and indirect exporters who supply 50% or more of their output to direct exporters.

* Supplies of products to BOI enterprises who are entitled for duty free import of such goods are considered as deemed exports.

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APPROVAL PROCEDURE
  • Direct exporters or indirect exporters should apply to the Director General of Customs,  in prescribed form [TIEP IV] for approval.
  • Forms could be obtained from Export Facilitation Unit of the Industries and Services Directorate of the Customs Department.

DOCUMENTS NEEDED
  • Request letter
  • Duly completed prescribed form [TIEP- IV] in triplicate.
  • Project Report
  • Certificate of VAT registration.
  • If incorporated under the Companies Act No. 7 of 2007
    • Certificate of Incorporation (Form 2A/Form 41 - The Companies Act No. 7 of 2007)
    • Change of Director/Secretary and Particulars of Director/Secretary (Form 20 - The Companies Act No. 7 of 2007)
    • Articles of Association (First Schedule - The Companies Act No. 7 of 2007)
  • If registered under Business Names Statutes respective provinces
    • Certificate of Registration of an Individual Business
    • Certificate of Registration of a Firm
  • Other necessary approvals [ Tea Board, Coconut Development Board etc….] wherever applicable.
  • EDB Registration
  • I.D copies of two director

TYPES OF APPROVAL
  • General approval for a period of one year from date of approval.
  • Specific approval will be given when applications are made for single importation. [each and every time]
SECURITIES
  • The security/bank guarantee equal to the full value of the Customs Duty and VAT
  • TIEP holder should furnish a Personal/Corporate Guarantee to the Customs as determined by the DGC after one year of operation.
  • New TIEP holders who import for the first time should furnish a 100% Bank Guarantee.
  • TIEP holder who has a good track record of less than 03 years may furnish a 25% Bank Guarantee and a 75% Personal Guarantee.
  • TIEP holder who has good track record of more than 05 years may apply 100% personal guarantee or corporate guarantee.

    *   All guarantees are valid for a period of one year.

DISCHARGE OF GUARANTEES

At the end of one year from the date of commencement of the production, TIEP holder should submit to the Director General of Customs a statement on production and exports and or supplies or such product to exporters respectively, duly certified by a recognized auditor in Form TIEP -V [In Triplicate]

After discharge of the guarantee, the TIEP holder should give a written undertaking to the Director General of Customs that the items imported under this scheme will not be sold, hired, leased, disposed of or used for any other purpose other than for which the items were allowed importation, without the prior approval of the Director General of the Customs.