| Introduction |
Manufacturing businesses in India frequently rely on imported raw materials, components, and capital goods. Under the traditional customs framework, import duty is required to be paid at the time of clearance of goods, which often results in significant working capital blockage for importers.
In order to ease this burden and promote trade facilitation, the Government has expanded the facility of deferred payment of customs duties to a new category of importers known as Eligible Manufacturer Importers (EMI).
The framework has been introduced through Notification No. 12/2026-Customs (N.T.) dated 1 February 2026, issued under the proviso to Section 47(1) of the Customs Act, 1962, which enables the Government to permit deferred payment of import duty for specified classes of importers.
The operational aspects, eligibility criteria and application process have been prescribed through CBIC Circular No. 08/2026-Customs dated 28 February 2026.
| Background and Policy Objective |
The facility for deferred payment of customs duties was earlier available primarily to importers holding Authorized Economic Operator (AEO) status, particularly AEO-T2 and AEO-T3 entities.
While the AEO programme offers substantial trade facilitation benefits, obtaining higher-tier certification involves a rigorous compliance framework, which limited the number of entities able to avail the deferred duty payment benefit.
Recognizing this challenge, the Union Budget 2026 proposed expanding the facility to a wider set of manufacturing importers through the creation of the Eligible Manufacturer Importer (EMI) category.
The scheme will be operational from 1 April 2026 until 31 March 2028, during which period the Government expects that compliant EMIs would gradually obtain AEO-T2 or AEO-T3 accreditation, thereby integrating them into the broader trade facilitation ecosystem.
This initiative is expected to:
- Improve working capital efficiency
- Facilitate faster customs clearance
- Encourage higher compliance standards among manufacturers
| Key Feature of the Scheme |
Under the deferred duty payment facility, eligible importers are allowed to clear imported goods without immediate payment of customs duty.
Instead, the customs duty payable on imports during a particular period may be paid at a later consolidated date, in accordance with the timelines prescribed under the Deferred Payment of Import Duty Rules, 2016.
Once EMI approval is granted, the importer can avail the facility by selecting the deferred payment option in the Bill of Entry within the Customs automated system.
| Eligibility Criteria for EMI |
To qualify for EMI status and avail the deferred duty payment facility, an applicant must satisfy several eligibility conditions prescribed by CBIC. Key conditions include:
- Manufacturer Importer Requirement
- The applicant must be an importer engaged in manufacturing; or
- An importer sending inputs or capital goods to job workers under the provisions of GST law.
- Importer Exporter Code (IEC)
- The entity must possess a valid IEC issued by the Directorate General of Foreign Trade.
- Customs Transaction History
- Minimum 25 Bills of Entry / Shipping Bills filed in the preceding financial year
- Relaxed to 10 documents for MSMEs.
- GST Registration
- At least one active GST registration must exist.
- Manufacturing Declaration
- At least one GST registration must declare the business activity as factory/manufacturing.
- Turnover Threshold
- Aggregate turnover under the same PAN must exceed ₹5 crore in the preceding financial year.
- Business Continuity
- Minimum two years of business operations.
- GST Compliance
- All GST returns must be filed and there must be no instance of tax collected but not deposited.
- Financial Solvency
- The applicant must be financially solvent during the preceding two financial years, supported by a Chartered Accountant certificate.
- Clean Compliance Track Record
- No prosecution or conviction under Customs, GST, Central Excise, Service Tax or allied laws.
| Application Process |
Entities intending to avail the deferred duty payment facility must apply for Eligible Manufacturer Importer (EMI) approval through the AEO India portal.
The application must be submitted electronically along with supporting documentation relating to:
- GST compliance
- financial solvency
- customs transaction history
- manufacturing activity.
The application is examined by the Directorate of International Customs (DIC), CBIC, which grants approval after verification of eligibility conditions. Once approved, the deferred payment facility is activated in the Customs Automated System, enabling the importer to select the deferred payment option while filing Bills of Entry.
| Due Dates for Payment of Deferred Customs Duty |
The due dates for payment of deferred customs duty are prescribed under the Deferred Payment of Import Duty Rules, 2016, as amended by Notification No. 13/2026-Customs (N.T.).
| Period of Bill of Entry Returned for Payment | Due Date for Payment of Customs Duty |
| Bills of Entry returned for payment from 1st day to last day of any month (except March) | 1st day of the following month |
| Bills of Entry returned for payment during March | 31st March of the same financial year |
Importers may also opt to make payment earlier than the due date, if desired.
| Conclusion |
The extension of the deferred payment of customs duty facility to Eligible Manufacturer Importers represents a significant step towards improving trade facilitation for the manufacturing sector.
By allowing deferred payment of customs duties until 31 March 2028, the Government has created an opportunity for compliant manufacturers to optimize working capital while transitioning towards higher compliance frameworks such as AEO-T2 and AEO-T3 certification.
Manufacturing importers with significant import volumes should carefully evaluate their eligibility and consider applying for EMI status to benefit from improved cash flow management and smoother customs clearance processes.
Thank You.
CA Manoj Malpani
