Debonding of EOU under a EPCG

[VIRAF DEBOO]

An EOU unit after achieving positive NFE was debonded under EPCG in 2008. As per the EXIM policy EO is 6/8 times of the duty saved. However there is a circular No 84(RE:2008)/2004-09 dated 30 April 2009, which clarifies that in case of the firm/company having DTA and as well as EOU unit which is debonded under EPCG, then the EO will be 6/8 times of the depreciated value. Kindly advise what 'depreciated value' stands for and advise whether the said circular is consistent with the EXIM policy as the policy specifies calculation of EO in relation with the duty saved only.

[Lekh Sood]

Your point is right. This seems to be an error in the circular, may be inadvertent.

AI Summary

Clarification Sought on 'Depreciated Value' in 2009 Circular for EPCG Scheme Debonding; Potential Error Admitted An Export Oriented Unit (EOU) was debonded under the Export Promotion Capital Goods (EPCG) scheme in 2008 after achieving positive Net Foreign Exchange (NFE). According to the EXIM policy, the Export Obligation (EO) should be 6 to 8 times the duty saved. However, a 2009 circular states that for a firm with both Domestic Tariff Area (DTA) and EOU units debonded under EPCG, the EO is based on 6 to 8 times the depreciated value. A participant questioned the meaning of 'depreciated value' and its consistency with the EXIM policy. A respondent agreed that this might be an error in the circular.