EXPORT OBLIGATION

[MANISH PARMAR]

Dear experts,

Para No 5.1(e) of FTP 2015-20

(e) In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.

As per the above Para No 5.1(e) of FTP 2015-20.

I will import machinery against EPCG licence and

(1) In case Integrated Tax and Compensation Cess are paid in cash.

(2) Input Tax Credit is availed.

Q-1-What is Export Obligation ?

Q-2 6 times of Customs duty +Social Welfare Surcharge +integrated Tax + Compensation Cess

Q-3 6 times of Customs duty +Social Welfare Surcharge

Dear all expert ,

please suggest and kindly share with us reference

Manish Parmar

[Rajagopalan Ranganathan]

Sir,

According to Para 5.01 (c) & (d) of FTP (2015-20) (As on 30 June 2019)

(c) "Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation. Authorisation shall be valid for import for 18 months from the date of issue of Authorisation. Revalidation of EPCG Authorisation shall not be permitted.

(d) In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.

From the above answer to question 1 and 3 are as above. In view of answers to questions 1 & 3, answer to question 2 is No.

[MANISH PARMAR]

(d) In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.

as per the above para. If Integrated Tax and Compensation Cess are paid in cash and Input Tax Credit is availed.

Q-1-What is Export Obligation ?

A- Customs duty +Social Welfare Surcharge +integrated Tax + Compensation Cess (total duty)

B- Customs duty +Social Welfare Surcharge (Only Customs duty).

Dear sir,

please further confirm of the above.

[YAGAY andSUN]

Since you paid IGST in cash, therefore your export obligation would be 6 times of duty foregone, which you need to fulfill within six years from the date of issuance of EPCG License. Besides it, you need to also fulfill the Average Export Obligation as mentioned in your EPCG License.

AI Summary

EPCG export obligation equals duty-saved multiple; IGST and compensation cess excluded if paid cash and ITC not availed. Under the EPCG Scheme the export obligation equals six times the duties, taxes and cess saved on imported capital goods, to be fulfilled within six years; authorisation is valid for import for 18 months. If Integrated Tax and Compensation Cess are paid in cash and Input Tax Credit is not availed, their incidence is excluded from computation of net duty saved.