Brief

In a significant trade facilitation measure announced in Budget 2026, the Government has extended the benefit of deferred payment of Customs import duty to a newly recognised category of importers termed as “Eligible Manufacturer Importers (EMI)”.

This reform enables qualifying manufacturers to clear imported goods without immediate payment of customs duty and discharge the duty liability at prescribed deferred timelines. The measure is expected to ease working capital pressures, accelerate cargo clearance, and enhance supply chain efficiency.

The Central Board of Indirect Taxes and Customs (CBIC), vide circular 08/2026 dated 28 February 2026, has now prescribed detailed eligibility conditions, documentation requirements, compliance safeguards, and the application procedure for availing this facility.

This insight provides an overview of the scheme, eligibility criteria, procedural requirements, and practical implications for businesses.

Background

The Deferred Payment of Import Duty Rules, 2016 presently allow specified categories of importers — primarily AEO Tier 2, AEO Tier 3 entities and certain authorised undertakings — to defer payment of customs duty.

Budget 2026 expanded the scope of this facility to include “Eligible Manufacturer Importers” with effect from 1 April 2026. The benefit shall remain available until 31 March 2028, during which period such entities are expected to progress towards AEO Tier 2 or Tier 3 accreditation.

The extension aims to:

• Promote domestic manufacturing
• Improve liquidity for genuine manufacturers
• Encourage higher compliance standards
• Expand India’s AEO ecosystem
• Facilitate ease of doing business

Meaning of Eligible Manufacturer Importer

An Eligible Manufacturer Importer must:

• Be an “Importer” as defined under the Customs Act, 1962; and
• Be a “Manufacturer” as defined under Section 2(72) of the CGST Act, 2017

Alternatively, an importer who sends inputs or capital goods to a job worker under Section 143 of the CGST Act may also qualify, subject to fulfilment of prescribed conditions.

Eligibility Conditions

An applicant must satisfy the following key conditions:

• Possess a valid Importer Exporter Code (IEC).
• Have filed at least 25 Bills of Entry or Shipping Bills in the previous financial year (minimum 10 for MSMEs).
• Hold at least one active GST registration.
• Have declared “factory/manufacturing” as business activity in REG-01 of at least one active GSTIN.
• Have aggregate turnover exceeding ₹5 crore in the preceding financial year (considering all GSTINs under the same PAN).
• Have been engaged in business activities for at least two financial years prior to application.
• Have filed all pending GSTR-3B returns.
• Have no instance of tax collected but not deposited under GST, Central Excise or Service Tax laws.
• Be financially solvent for the preceding two financial years.
• Not be under insolvency, liquidation or bankruptcy proceedings.
• Not have been arrested, convicted, or subject to prosecution under Customs, GST, Excise or related tax laws.

Existing AEO Tier 1 entities may also apply, provided they meet the above eligibility criteria.

Application Process

Applications must be filed electronically on the AEO India portal under the “Eligible Manufacturer Importer” tab. Applicants are required to upload IEC, PAN, GST registration certificates, GSTR-9C, ITC-04 (if applicable), audited financial statements, and a Chartered Accountant certificate confirming solvency.

Operational Mechanism

Upon approval by the Directorate of International Customs (DIC), the importer must obtain ICEGATE login and select payment flag “D” while filing the Bill of Entry. OTP authentication by the nodal person is mandatory.

Deferred Payment Timelines

For Bills of Entry returned for payment during any month other than March, duty must be paid by the 1st of the following month. For Bills returned during March, duty must be paid by 31 March.

Takeaway

The EMI scheme provides a significant liquidity advantage for compliant manufacturers. Businesses should proactively assess eligibility, ensure GST compliance, and prepare required documentation to seamlessly avail this benefit from 1 April 2026.