Voluntary disclosure guidelines for irregular export of SCOMET items

Partner: Samsuddha Majumder, Senior Associate: Pranjal Srivastava, Associate: Advetita

1. New guidelines for voluntary disclosure of irregular SCOMET exports

On 15 January 2025, the Directorate General of Foreign Trade (DGFT) notified the standard operating procedure/guidelines (voluntary disclosure guidelines) for voluntary disclosure of non-compliance or violations of the applicable laws related to the export of Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) items. This voluntary disclosure process allows entities to report non-compliance and potentially avoid penalties. However, the process does not cover cases of non-compliance or violations pertaining to items falling under SCOMET Categories 0, 1A, 1B and 1C. Voluntary disclosures also do not cover cases where the exporter has applied for regularisation of authorisation or post-facto export authorisation, based on communications received from the relevant authorities.

The Inter-Ministerial Working Group (IMWG) in the DGFT, constituted for considering applications for export of SCOMET items, will review these voluntary disclosure applications on a case-to-case basis to determine and mitigate administrative actions or penalties that may be imposed on the entity for any non-compliance or violation.

2. Indicative list of non-compliances under the voluntary disclosure guidelines

The voluntary disclosure guidelines provide an illustrative list of non-compliances and/or violations, including the following:

1. Export of goods/software/technology listed under SCOMET and undertaken without prior authorisation.
2. Export to United Nations Security Council-sanctioned entities and individuals.
3. Export of items not controlled under SCOMET and used/diverted for or manufacture of weapons of mass destruction or their delivery systems.
4. Use of an export authorisation by an entity other than the entity in whose name the export authorisation was issued, pursuant to a name change, merger, de-merger, etc., without prior approval/amendment from the licensing authority.
5. Failure to obtain permission from the licensing authority by a company/entity registered or operating in India, which is involved in the manufacture, processing and use of SCOMET items, for facilitating or undertaking site visits, on-site verification or access to records/documentation by foreign organisations, either directly or through an Indian party.
6. Failure to comply with reporting, record-keeping requirements, etc.
7. Unauthorised access to technical data.
8. Unauthorised provision of technical assistance.
9. Any other violation relating to SCOMET items not listed above in terms of applicable laws.

3. Procedure for voluntary disclosure and further actions

To report a voluntary disclosure, the individual/firm must notify the DGFT of the export violation by submitting all relevant details in an email to scomet-dgft@nic.in. In case the authorities confirm such violation, the SCOMET Cell, DGFT may issue a show cause notice to the applicant individual/firm or inform the applicant of the further course of action that may be warranted. The IMWG may require the following documents for the regularisation of exports made under voluntary disclosure:

1. Disclosure proforma, accompanied by a covering letter signed by a senior officer in the firm.
2. Application in ANF 10A proforma.
3. Licensing documents (e.g., license applications, export licenses, end-user certificates/statements, purchase order, contract agreement, etc.).
4. Shipping documents (e.g., shipping bills, commercial invoices, airway bills and bills of lading and any other related trade documents).
5. Any other relevant documents as may be required.

The DGFT has clarified that despite disclosures being voluntarily made by an entity, the authorities may impose penalties, administrative actions and/or sanctions, and consider criminal prosecution in accordance with the Foreign Trade (Development and Regulation) Act, 1992 and other applicable laws. However, voluntary disclosure may be considered as a mitigating factor by the IMWG when deciding penalties or sanctions. It is also possible that no further action is taken by the authorities upon a satisfactory review of the facts disclosed, supporting documents, etc.

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