NFE calculation

[sivakumar vellanki]

My company is an 100% EOU. It wants to exit from EOU scheme and switchover to EPCG Scheme. Accordingly, it got 'in principle' permission to exit from eou, from the Development Commissioner, VSEZ, Vizg. On the basis of the said permission, it got EPCG licnese from JDFT,Hyderabad, on 13th March, 2012. Afterwards, it submitted the relevant papers/documents to the Asst.  Commissioner, Kadapa Division and paid the relevant duties on DTA sales and indigenous capital goods. Now, the AC wants confirmaion of positive NFE from the Development Commissioner, VSEZ, Vizag. So, when we approached the Developemnt Commissioner, he said that the policy is not clear whether whole  value of imported capital goods to be deducted or amortization value of capital goods to be deducted from NFE. 

According to para 6.9.4 of chapter 6 of FTP 2009-14, the following sentence is added.

' For Existing units, appropriate customs and central excise duties should be paid where NFE is less than Deprecation claimed by the unit, before exit'

Hence, Development Commissioner has referred the matter to MOC. In turn, MOC refers the matter to DGFT. We clearly explained to the Development Commisisoner, Assit. Commisiioner of Custons and Central Excidse and the  Director, Joint SEcretary and Under Secretary in MOC that as the unit is exiting from EOU Scheme prior to the first ten years, only depreciation has to  be cosnidered as foreign out flow for the purpose of calculation of NFE. Circular no. 12/2008, is also shown to them. But, Development commissioner said that they will not follow the circulars issued by Ministry of Finance.

So, can you guide me in this regard.

Regards,

V. Sivakumar

9642517459

AI Summary

Company Challenges NFE Calculation Method for Transition from EOU to EPCG Scheme; Seeks Clarification on Depreciation Policy A company operating as a 100% Export Oriented Unit (EOU) seeks to exit the EOU scheme and transition to the Export Promotion Capital Goods (EPCG) scheme. They obtained necessary permissions and licenses but face issues with the Net Foreign Exchange (NFE) calculation required by the Development Commissioner. The policy ambiguity lies in whether to deduct the entire value or the amortized value of imported capital goods from NFE. The Development Commissioner referred the matter to the Ministry of Commerce (MOC), which further referred it to the Directorate General of Foreign Trade (DGFT). The discussion revolves around the correct interpretation of the Foreign Trade Policy regarding the inclusion of depreciation in NFE calculations for duty-free imported capital goods.