Concessional customs duty must be notionally applied to domestically sourced capital goods under EPCG, affecting export obligations. EPCG capital goods procured domestically are subject to the scheme's concessional customs duty on a notional basis; this duty must be charged before any Authorisation invalidation and export obligations are calculated on the reduced duty-saved amount. The measure responds to ASCM subsidy concerns and applies prospectively to new Authorisations and those not yet invalidated.