Paragraphs 7 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Once a supply is a deemed export under paragraph 7.02, paragraph 7.03 says which benefits can follow: an Advance Authorisation route, deemed export drawback, and refund of terminal excise duty. Paragraph 7.04 is a table showing which benefit goes with which category. Paragraphs 7.05 and 7.06 set conditions for the refund and the drawback, and paragraph 7.08 deals with cement, steel and fuel. The Handbook adds the rate procedure (paragraph 7.06) and the exemption from terminal excise duty (paragraph 7.08).
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. The procedure is taken from Chapter 7 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Notifications and Public Notices should be checked. The GST refund route for the same supplies is a separate claim; see our GST refund on deemed exports service.
Paragraph 7.03 lists three benefits: (a) Advance Authorisation, Advance Authorisation for annual requirement or DFIA; (b) deemed export drawback; (c) refund of terminal excise duty for excisable goods mentioned in Schedule 4 of the Central Excise Act, 1944, if the supply is eligible and there is no exemption. Drawback is on the All Industry Rate where no CENVAT credit was availed, or on brand rate on proof of actual payment of basic customs duties (paragraph 7.06). Under the Handbook, brand rate can be fixed where the All Industry Rate is absent or is less than four-fifths of the duties actually paid.
Paragraph 7.03: three benefits
Deemed exports are eligible for any or all of the following benefits in respect of manufacture and supply of goods qualifying as deemed exports, subject to the terms and conditions in the Handbook and ANF-7A (named only):
- (a) Advance Authorisation, Advance Authorisation for annual requirement or DFIA (the duty-exempt import authorisation scheme the Policy abbreviates as DFIA);
- (b) Deemed Export Drawback;
- (c) Refund of terminal excise duty for excisable goods mentioned in Schedule 4 of the Central Excise Act, 1944, provided the supply is eligible under that category of deemed exports and there is no exemption.
Paragraph 7.04: benefits to the supplier or recipient, by category
The table in paragraph 7.04 matches the categories of supply in paragraph 7.02 with the benefits of paragraph 7.03. On the PDF page the heading of the first benefit column is cut off; by position and sequence it is the paragraph 7.03(a) column. As printed:
| Category under paragraph 7.02 | Advance Authorisation route (7.03(a)) | Drawback (7.03(b)) | Terminal excise duty refund (7.03(c)) |
|---|---|---|---|
| (a) | Yes (for intermediate supplies against an invalidation letter) | Yes (against ARO) | Yes |
| (b) | Yes | Yes | Yes |
| (c) | Yes | Yes | NA |
| (d) | Yes | Yes | NA |
| (e) | Yes | Yes | NA |
| (f) | Yes | Yes | NA |
| (g) | Yes | Yes | NA |
The categories themselves are explained in our article on paragraphs 7.00 to 7.02.
Paragraph 7.05: terminal excise duty refund
Supply of goods is eligible for refund of terminal excise duty under paragraph 7.03(c), provided the recipient does not avail CENVAT credit or rebate on such goods. The paragraph speaks in terms of the Central Excise regime; for the present GST position see the GST guides, for example Deemed Exports under GST.
Paragraph 7.06: deemed export drawback
Supplies are eligible for deemed export drawback under paragraph 7.03(b) as follows: refund of drawback on the inputs used in the manufacture and supply under the category can be claimed on the "All Industry Rate" of the Duty Drawback Schedule notified by the Department of Revenue from time to time, provided no CENVAT credit has been availed by the supplier on excisable inputs; or on "Brand Rate" basis upon submission of documents evidencing actual payment of basic customs duties. No rate is stated in this article. For the drawback system see Duty Drawback: Rates, Claim Process and Brand Rate and Section 75 of the Customs Act, 1962 on drawback.
Paragraph 7.08: cement, steel and fuel
| Item | Benefit available |
|---|---|
| Cement | Deemed export benefits are available for supplies of cement under paragraph 7.02(d) only. |
| Steel | Available on supply (a) as an input to an Advance Authorisation, annual Advance Authorisation or DFIA holder, or an EOU; (b) to multilateral or bilateral funded agencies as per paragraph 7.02(d). |
| Fuel | Available on supply of eligible fuel items covered under Schedule 4 of the Central Excise Act, 1944 to (a) EOUs and (b) Advance Authorisation or annual Advance Authorisation holders. |
Procedure under the Handbook
Paragraph 7.06 (rate of drawback). Normally drawback may be allowed at the All Industry Rate fixed by the Department of Revenue in the Drawback Schedule where no CENVAT credit has been availed by the supplier. An application in ANF-7A, with the documents prescribed in ANF-7A and Appendix-7E (named only), may be made to the RA or the DC, as the case may be, for fixation of a brand rate where the All Industry Rate of drawback is not available or is less than four-fifths of the duties actually paid on the raw materials or components used in the production of the goods.
Paragraph 7.08 (exemption from payment of TED). For claiming exemption from payment of terminal excise duty, wherever applicable, the procedure prescribed by the Central Excise authority is followed.
Example with invented names
Narmada Cement Works Ltd supplies cement to an irrigation project financed by a multilateral agency under category (d) of paragraph 7.02, a funded project notified by the DEA where bids were evaluated without customs duty. Paragraph 7.08(i) says cement gets deemed export benefits under category (d) only, so a cement sale to an Advance Authorisation holder would not qualify under that paragraph. For drawback, if no All Industry Rate exists for its product, it may apply in ANF-7A for a brand rate; the Handbook allows this also where the All Industry Rate is less than four-fifths of the duties actually paid on raw materials or components.
What is not said
The Policy and the Handbook do not give any drawback rate here and this article gives none. The text of paragraph 7.05 and 7.06 uses terms of the Central Excise and CENVAT era; the paragraphs print no present GST equivalent. The GST claims are governed by section 147 of the CGST Act and the notifications under it; see Section 147 of the CGST Act, 2017.
Related reading and the Act
Conditions of supply are in our article on paragraph 7.07; the claim procedure is in Handbook paragraphs 7.03 to 7.05, 7.07 and 7.09. General guide: Deemed Exports Under FTP: Categories and Benefits. The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992; the Handbook is issued under section 6. The Policy is not a statute; it binds through the Act and the conditions of each authorisation.
Need help with the refund that goes with a deemed export?
Policy benefits and the GST refund are separate claims with separate conditions. Our GST refund on deemed exports team can help you sequence them.
Key takeaways
- Paragraph 7.03: Advance Authorisation route, deemed export drawback and terminal excise duty refund.
- Paragraph 7.04: terminal excise duty refund applies to categories (a) and (b) only; the table marks (c) to (g) NA.
- Paragraph 7.05: no CENVAT credit or rebate by the recipient.
- Paragraph 7.06: All Industry Rate or brand rate; brand rate fixation in the Handbook where the rate is absent or below four-fifths of the duties paid.
- Paragraph 7.08: cement under category (d) only; steel and fuel to the recipients named.
Read next
- Paragraphs 7.00 to 7.02 of the Foreign Trade Policy, 2023: deemed exports and categories of supply
- Paragraph 7.07 of the Foreign Trade Policy, 2023: common conditions for deemed export benefits
- Paragraphs 7.03 to 7.05, 7.07 and 7.09 of the Handbook of Procedures, 2023: claiming deemed export benefits
- Deemed Exports Under FTP: Categories and Benefits
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.