EPCG query

[Asked by Guest]

Dear sir

I wanted to understand, if I purchase shuttleless looms under EPCG from a domestic manufacturer/supplier, do I get refund for CST and entry tax apart from excise duty refund.

Also under EPCG do I get refund for import duty applicable on parts used for manufacturing shuttleless looms by my domestic supplier, under deemed exports.

It would be great if you can help

thanks

Prakash

[Ganeshan Kalyani]

EPCG is Export Promotion Capital Goods. The Scheme allow import of Capital Goods for pre-production, production, post-production at zero duty subject to an export obligation of certain no of times (as applicable) of duty saved on capital goods imported under EPCG license. From this phrase you can co-relate your business arrangement to avail the benefit.

[CSSANJAY MALHOTRA]

Dear Prakash,

Capital Goods can be sourced from domestic supplier against EPCG with invalidation letter. Supplies from Domestic Supplier will be treated as Deemed Exports and either the Supplier OR Buyer can claim the TED (Terminal Excise Duty) refund from jurisdictional DGFT Office.

Now if the supplier of Looms would like to source parts for manufacture of looms, he has to pay required Excise Duty and the same will be set off against Excise duty leviable on Looms supplies to you under EPCG with invalidation letter. The said duty charged by your looms supplier to you will be claimed as TED refund. Your Supplier can also claim the benefit of Drawback against deemed exports from their respective DGFT office.

Another option for your supplier can for Advance Licence from their DGFT office against the EPCG given by you for Import of Duty free material.

Hope the above addresses your question.

regards

CS Sanjay Malhotra

dear sir

thankyou for response. pls also let me know if cst and entry tax can be refunded on domestic purchase under epcg

rgds

prakash

[Ganeshan Kalyani]

Cst set off is not available, hence refund cannot be claimed. entry tax can be set off against Vat liability. but refund cannot be claimed.

[CSSANJAY MALHOTRA]

EPCG Scheme does not have any provision of Refund of CST/Entry Tax.

Entry Tax in some states is allowed to be set off against VAT/CST payable and some states don;t allow such adjustment. For e,g, Punjab VAT Rules allows set off of Entry Tax against Sales Tax liability whereas MP Govt does not allow Entry Tax set off.

Please go through your State Tax Law provisions.

thanks a lot

AI Summary

EPCG scheme: no refund of CST or entry tax on domestic purchases; deemed export excise relief and TED claim available.
EPCG permits zero duty import of capital goods subject to an export obligation; domestic procurement with invalidation is treated as deemed exports, allowing supplier or buyer to claim TED refund, with excise on parts set off against excise on supplied looms and possible drawback or Advance Licence routes. The scheme does not provide for refund of CST or entry tax; entry tax may be set off against VAT/CST only where state law permits.