Inter Unit Transfer of Capital Goods

[RAM SHARMA]

Dear Experts,We have purchased some machine under EPCG scheme hence there is no cenvat credit available on that. Now, we want to remove these capital goods our other unit. Whether excise duty is applicable under rule 3(5) or 3(5)a on these capital goods. Please advice.Thanks&Regards

[YAGAY and SUN]

Dear Ram,

You cannot remove the machines which is purchased under EPCG scheme until unless you fulfill export obligation, EODC certificate and redemption. If still you remove then you would have to pay duty foregone, interest, penalty as per the Customs, Central Excise, DGFT and FT(DR) Act.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Arun Kumar Singh]

If export obligation has been fulfilled then no need to pay excise duty at the time of clearance of capital goods.

[Mahir S]

EPCG scheme is allowed with actual user condition.

You may also refer to para 5.4 of FTP.

However, instead of removing the EPCG Scheme machinery to other unit; it can also be utilized for carrying out job work of other unit in your own unit.

[RAM SHARMA]

Our both units address are mention in epcg licence.

[YAGAY and SUN]

Dear Ram,

We do request to you that while raising any query on this portal, please disclose all material facts as only on the basis of written facts we do provide you the actionable advice, as, we do not pursue your documents. If, we get facts in fragmented form, then, our inputs/views/opinions would not have any value.

It is a very good platform to get solutions for issues pertaining to tax matters. Please try to incorporate all material facts in one go for the purpose of raising queries on this portal, as, we are here to help you out.

Now, coming back on your query, if the address of the other unit is duly mentioned on the EPCG license, then, in this scenario, there is no need to debit any excise duty but you would have to get the installation certificate cancelled for existing unit and get the new installation for the other unit as per the provisions of FTP 2009-2014 read with HBP Vol.1 2009-2014. An Invoice will be prepared under the provisions of Rule 11 of the CER, 2002.

Please also seek clarification/permission or provide intimation from/to Customs Department/DGFT/Central Excise/VAT Department (as the case may be) before transferring the machine from one unit to other unit.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[RAM SHARMA]

Thanks for your valuable reply.

[MUKUND THAKKAR]

Dear Ram,

I am agree with the suggestion given by Khatri sir, In addition of the same , you mention that "Our both units address are mention in epcg licence." which has based on your branch code, please check your Bill of entry, only one specific address will be their. In such situation you can not canalled your installation certificate.or transfer your capital goods before EODC , other wise you may facing problem from Excise, DGFT and Custom please check all technical angles before doing any things.

[YAGAY and SUN]

Dear Ram,

In our previous reply we had suggested that you musk seek permission/clarification or provide intimation to the concerned Departments for transferring of machine which was purchased under EPCG scheme.

We had provided our views on the basis of following decision which was taken by the EPCG committee, as the EPCG committee have all the power to take such decision. We are appending herewith one relevant decision for your kind perusal.

MINUTES OF EPCG COMMITTEE MEETING HELD UNDER THE CHAIRMANSHIP OF SHRI Mukesh Bhatnagar, ADGFT AT 10.30 A.M. ON 10.10.2012

Following officers attended the meeting:

(a) Shri Jaikant Singh, Joint Director General, DGFT

(b) Shri R. A. Lal, Director, O/o Textile Commissioner, Noida

(c) Shri K. K. Tiwari, Industrial Adviser, D/o Heavy Industry

(d) Shri K. K. Sinha, Industrial Adviser, D/o Industrial Policy and Promotion

(e) Shri A. K. Pandey, Sr. Technical Officer, D/o Revenue

(f) Shri Gajraj Singh, Sr. D.O., D/o Heavy Industry

(g) Smt. Rita Mahana, Deputy Director General, DGFT

(h) Shri A. K. Gopal, Foreign Trade Development Officer (EPCG.I), DGFT

(i) Shri S. K. Swarnkar, Foreign Trade Development Officer (EPCG.II), DGFT

(j) Smt. Rekha Sharma, Foreign Trade Development Officer (P-5), DGFT

2. Minutes of the last Meeting held on 18.09.2012 were confirmed.

3. The Committee deliberated upon all the cases and following decisions were taken:

Sl No.	Firm’s Name and Numbers	Licence No./ Date	Subject	Decision of the Committee
17.	M/s EIH Limited, Delhi, 01/36/218/ 126/AM-12/EPCG-I	0530151846 dated 21.04.2010	Permission to transfer 5 vehicles imported against EPCG Authorization No. 0530151846 dated 21.04.2010 from one of the unit of M/s Trident Nariman Point, Mumbai to another unit of their unit/branch (The Oberoi, New Delhi).	The Committee observed that: a. Similar dispensation to the firm in respect of 15 vehicles was given by the Committee in its meeting held on 17.11.2011; b. The firm have, now sought transfer of 5 remaining vehicles, out of the total 20 imported against the subject EPCG Authorization, to one of their own unit/branch (The Oberoi, New Delhi) stating that these vehicles are lying as surplus at one of their unit/branch at “Trident – Nariman Point, Mumbai”; c. Addresses of both the units/branches are included in IEC and RCMC. The Committee, therefore, decided to recommend to DG to allow transfer of the 5 remaining vehicles, out of total 20 imported against subject EPCG Authorization, from their unit at Trident – Nariman Point, Mumbai to The Oberoi, Delhi. The Committee, however, cautioned the firm to plan the imports as per their requirements. DG has approved the case.

We hope on the strength of this decision of EPCG committee, you would pursue your case, and get the specific permission. Further, after getting the permission, please also provide the intimation to all concerned department for the purpose of smooth transfer of machine from one unit to other unit.

Further, you may contact us, if you need our support in this matter.

We remain.

Pradeep Khatri

Founder - YAGAY and SUN

(Management and Indirect Tax Consultants)

[YAGAY and SUN]

Dear Ram,

We are providing one more decision for your kind perusal, where in EPCG Committee had permitted for such transfer one unit to other unit provided fresh Installation Certificate submitted within prescribed time limit.

Sorry for formatting error, We don't know why it is happening.

Sl No.

Firm’s Name and Numbers

Licence No./ Date

Subject

Decision of the Committee

20.

M/s Fedders Lloyd Corporation Ltd., New Delhi 01/36/218/ 87/AM-12/EPCG-I

0530154076 dated 26.11.2010 and 0530154885 dated 25.02.2011

Permission for shifting Capital Goods imported against EPCG Authorisation No. 0530154076 dated 26.11.2010 and 0530154884 dated 25.02.2011 issued to M/s Fedders Lloyd Corporation Ltd., New Delhi

The Committee observed that: a. In both the subject authorizations, the address of the factory was mentioned as Plot No. 5, UPSIDC Industrial Area, Sikandarabad, Bulandshahar, U.P.; b. Due to expiry of lease of he said plot, the firm have been allotted another plot/location at Plot No. 6/1, UPSIDC Industrial Area, Sikandarabad, Bulandshahar, U.P.; c. The firm had imported and installed 4 machines against EPCG Authorization No. 0530154885 at their supporting manufacturer’s address located at “Lloyd Electric and Engineering Limited, Industrial Park II, Saleempur Mehdood, SIDCUL, Haridwar” and obtained installation certificate as well; d. The firm is claiming that their supporting manufacturer is facing some technical problem and is unable to manufacture the desired export product using two machines out of the four machines and, therefore, they may be allowed to shift these two machines to their own unit at “Fedders Lloyd Corporation Limited, C-4, Industrial Area, Phase-II, Dist. – Gautam Budh Nagar, Noida, U.P. – 201305”; e. All the three addresses viz. “Plot No. 6/1, UPSIDC Industrial Area, Sikandarabad, Bulandshahar, U.P.”, “Lloyd Electric and Engineering Limited, Industrial Park II, Saleempur Mehdood, SIDCUL, Haridwar” and “Fedders Lloyd Corporation Limited, C-4, Industrial Area, Phase-II, Dist. – Gautam Budh Nagar, Noida, U.P. – 201305” are included in IEC and RCMC of the firm. The Committee, therefore, decided to allow (a) shifting of Capital Goods installed at “Plot No. 5, UPSIDC Industrial Area, Sikandarabad, Bulandshahar, U.P.” to their new unit at “Plot No. 6/1, UPSIDC Industrial Area, Sikandarabad, Bulandshahar, U.P.” in respect of both the Authorizations and (b) shifting of 2 Nos. of Capital Goods from their supporting manufacturer’s address located at “Lloyd Electric and Engineering Limited, Industrial Park II, Saleempur Mehdood, SIDCUL, Haridwar” to their own unit located at “Fedders Lloyd Corporation Limited, C-4, Industrial Area, Phase-II, Dist. – Gautam Budh Nagar, Noida, U.P. – 201305” subject to the condition that the firm will furnish fresh installation certificate after shifting of Capital Goods.

AI Summary

Inter-unit transfer of EPCG capital goods requires prior authorization and fresh installation certification to avoid duty liability.
Inter-unit transfers of capital goods under the EPCG scheme require prior authorization and procedural compliance: if export obligations remain unfulfilled, unauthorized removal attracts duty liability, interest and penalties; where unit addresses appear in licence/IEC/RCMC and export obligation is met, the EPCG Committee/DGFT may permit shifting provided a fresh installation certificate is submitted and relevant departments are intimated; invoicing must follow Rule 11 of the CER, 2002.