Clarification on EPCG

[Kishan Barai]

Respected Sir,

As per FTP 2015 "Special 25% EO would be less if goods sourced from India" Is it for capital goods or raw material used in machinery.

If machinery is bought from India then how EPCG is beneficial as there would be no payment of Import duty.

Please enlighten...

AI Summary

Reduced export obligation for indigenous capital goods: EPCG requires export obligation compliance and permits TED refund or CENVAT.
Reduced export obligation under EPCG applies only when capital goods are sourced indigenously, not to raw material inputs. The domestic supplier must be linked by an invalidation letter; the buyer may claim excise charged as CENVAT credit or seek a TED refund from DGFT. Applicants must furnish a bond or BG unless exempted; the licence carries an export obligation (generally six times duty saved) enforceable by demand, interest, penalty and BG invocation. The EPCG scrip is the licence and does not itself constitute TED payment.