TaxTMI 
TaxTMI 
TaxTMI 
EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME
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....EC shall be submitted to the concerned Regional Authority alongwith copy of the bill of entry, within 30 days from the date of import of the Capital Goods. 5.3 Nexus Certification (a) RA concerned shall, on the basis of nexus certificate from an Independent Chartered Engineer (CEC) submitted by the applicant in Appendix 32A, issue EPCG authorization. Reasonable wastage, if any, anticipated at the time of installation of capital goods will also be certified by the Chartered Engineer in the nexus certificate and the same would be mentioned in the condition sheet of the EPCG authorization at the time of issue. (b) RA shall thereafter forward a copy of the EPCG authorization to the concerned Jurisdictional Central Excise Authority. The wastage so permitted at the time of issuance of authorization would be allowed to be sold on payment of applicable duty on sale of scrap/ waste. 5.3.1 (a) Authorization holder shall produce to the concerned RA a certificate from the Jurisdictional Central Excise Authority, confirming installation of Capital Goods at factory/ premises of authorization holder or his supporting manufacturer(s) /vendor(s) within six months from ....
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....for direct import / Issuance of ARO. (b) This request can be made either alongwith application or after issuance of EPCG authorization. (c) Applicant shall give the name and address of the source person of the capital goods. 5.5.1 RA concerned will issue such invalidation letter/ARO, in duplicate. 5.5.2 Indigenous manufacturer intending to supply capital goods to EPCG authorization holder may apply to RA in ANF for issuance of Advance authorization for import of inputs including components required for manufacture of capital goods to be supplied to EPCG authorization holder. 5.6 Sourcing of domestic Capital Goods on lease basis An EPCG authorization holder may, source capital goods from a domestic leasing company. In such cases, the Bill of Entry of imported capital goods or commercial invoice of indigenous capital goods, shall be signed jointly by EPCG authorization holder and leasing company. However, EPCG authorization holder shall alone be fully responsible for fulfilment of export obligation. 5.7 Conditions for fulfilment of Export Obligation In addition to conditions mentioned in paragraph 5.5 of FTP, following conditions shall also be applicable for fu....
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....nbsp; (xi) Carpets, (xii) Coir, and (xiii) Jute the EPCG authorization holders shall not be required to maintain average level of exports. (b) However, this exemption from maintenance of average level of exports shall not be allowed for import of fishing trawlers, boats, ships and other similar items. (c) Goods, excepting tools imported under EPCG scheme by sectors specified in sub-para (a) above, shall not be allowed to be transferred for a period of five years from date of imports even in cases where export obligation has been fulfilled. However, transfer of capital goods to group companies, within five years from the date of import would be permitted after fulfilment of EO, under intimation to RA and jurisdictional Central Excise Authority. 5.8 EO fulfilment blocks The Authorization holder under the EPCG scheme shall fulfill the export obligation over the specified period in the following proportions: Period from the date of issue of Authorization Minimum export obligation to be fulfilled Block of 1st to 4th year 50% Block of 5th&n....
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....ization, authorization shall be deemed to have been enhanced by that proportion. Customs shall automatically allow clearance of goods in excess, upto 10% of authorization value/duty saved amount, without endorsement by concerned RA. (b)In such case, authorization holder shall furnish additional fee to cover excess imports effected, in terms of CIF value/duty saved amount, to RA concerned, within one month of excess imports taking place. Export obligation shall automatically stand enhanced proportionately. (c) In case of utilization being more than 10%, concerned RA as per their financial powers, may endorse as per extant provisions. Authorization holder shall furnish additional BG/LUT to the customs authority. 5.10.1 Similarly, if EPCG authorization holder has utilized authorization less than the value earmarked in authorization, his export obligation shall stand reduced on pro-rata basis with reference to actual utilization of authorization. 5.11 Extension of Export Obligation Period (a) In respect of EPCG authorizations (other than zero duty EPCG) issued upto 17.4.2013, concerned RA, may consider one or more requests for grant of extension in export obligation period, on pay....
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....hority. 5.11.2 (a) To provide relief to exporters of those sectors where total exports in that sector/product group has declined by more than 5% as compared to the previous year, average export obligation for the year may be reduced proportionate to reduction in exports of that particular sector/product group during the relevant year as against the preceding year. However, in case export decline is continuous over consecutive years, the base year for calculation of eligibility and calculation of reduction in average export obligation will be taken as the year after which the exports have shown continuous decline. (b) The sectors /product groups for which this relaxation is to be allowed shall be conveyed by the DGFT to all the RAs within seven months of the end of the previous financial year, and the RAs shall re-fix the annual average EO for previous year accordingly, for exporters in that sector / product group. 5.11.3 Automatic EO extension in the event of ban on export product Whenever a ban/restriction is imposed on export of any product, export obligation period in respect of EPCG authorizations already issued prior to imposition of ban on such export product....
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....rity. Consequently, EO would be re-fixed. 5.16.1 Replacement of Capital Goods Capital Goods imported and found defective or otherwise unfit for use may be exported, and Capital Goods in replacement thereof be imported under EPCG scheme. In such cases, while allowing export, the Customs shall credit the duty benefit availed which can be debited again at the time of import of such replaced Capital Goods. 5.17 Penal Action In case of failure to fulfill export obligation or any other condition of authorization, authorization holder shall be liable for action under FT (D&R) Act, 1992, Orders and Rules made thereunder, provisions of FTP and Customs Act, 1962. 5.18 Clubbing of EPCG authorization Clubbing of two or more EPCG authorizations issued w.e.f 18.04.2013 to the same authorization holder would be permitted. 5.18.1 An application for clubbing can be made to RA concerned in ANF5D. Clubbing shall not be permitted in case authorizations are issued by different RAs. 5.18.2 Total export obligation would be re-fixed taking into account total of duty saved. 5.18.3 On Clubbing, authorizations for all purpose shall be deemed to be a single EPCG authorization....
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....h proof of fulfilment of EO. Subsequently, only proof of fulfilment of EO additionally completed vis-à-vis specific EO fixed (as in c(iii) above) may be submitted, unless there has been any changes in documents / proofs submitted earlier. (e) RA shall issue freely transferable duty credit scrip(s) equivalent to proportionate EO fulfilled. (f) The computation of freely transferable Duty Credit Scrip(s) will be based on basic customs duty amount paid. (g) Where the exporter has obtained EPCG authorisation under Para 5.22 (c) of HBP v1, declaring that he shall not avail CENVAT Credit, the Export Obligation shall be fixed with reference to the basic customs duty paid. In such cases Duty Credit Scrip will be issued based on the certificate from Central Excise regarding non-availment of CENVAT credit. Such certificate from central excise regarding non-availing of CENVAT credit will not be required where the unit is not registered with central excise. (h) All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this scheme. (i) The CG im....
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....porter." 3. Substituted vide Public Notice No. 12 (RE-2012)/ 2009-14, dated 26/07/2012, before it was read as:- "(g) Duty Paid amount will evidenced from the Bill of Entry/Central Excise Gate Pass (in case of sourcing under Para 5.6 of FTP) alongwith proof of Cenvat availment or otherwise." 4. Substituted vide Public Notice No. 48/2009-2014 (RE-2012) Dated the 8th February, 2013, before it was read as "(f) The computation of freely transferable duty credit scrip(s) will be based on duty paid amount (not cenvated), instead of duty saved amount." 5. Substituted vide Public Notice No. 48/2009-2014 (RE-2012) Dated the 8th February, 2013, before it was read as "(g) (i) Bill of Entry indicates the duty paid on the import made. Subsequently, Cenvat Credit, if availed, shall not be taken into account for grant of duty credit scrip. In the absence of a certificate from the jurisdictional Central Excise Authority stating that 'Cenvat Credit on this Bill of Entry(ies) has not been availed and will not be availed in future' no duty credit scrip would be granted on the CVD component. In all cases where CVD portion is considered for ....
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....ndition sheet of the EPCG authorization at the time of issue. (b) RA shall thereafter forward a copy of the EPCG authorization to the concerned Jurisdictional Central Excise Authority. The wastage so permitted at the time of issuance of authorization would be allowed to be sold on payment of applicable duty on sale of scrap/ waste. 5.3.1 (a) Authorization holder shall produce to the concerned RA a certificate from the Jurisdictional Central Excise Authority, confirming installation of Capital Goods at factory/ premises of authorization holder or his supporting manufacturer(s) /vendor(s) within six months from date of completion of import. (b) In the case of import of spares, the installation certificate shall be submitted by the Authorization holder within a period of three years from the date of import. (c) However, in case of units not registered with Central Excise Authorities, the Authorization holder shall produce to the concerned RA, a certificate from an independent Chartered Engineer confirming the said installation of Capital goods/spares. 5.3.2 EPCG authorization shall be issued with a single port of registration mentioned in paragraph 4.19 of HBP Vol. I fo....
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....ods from a domestic leasing company. In such cases, the Bill of Entry of imported capital goods or commercial invoice of indigenous capital goods, shall be signed jointly by EPCG authorization holder and leasing company. However, EPCG authorization holder shall alone be fully responsible for fulfillment of export obligation. 5.7 Conditions for fulfillment of Export Obligation In addition to conditions mentioned in paragraph 5.5 of FTP, following conditions shall also be applicable for fulfillment of export obligation: 5.7.1 (a) EPCG authorization holder shall export either directly or through third party(s). If a merchant exporter is EPCG authorization holder, name of supporting manufacturer shall also be indicated on shipping bills. (b) At the time of export, EPCG authorization number and date shall be endorsed on shipping bills which are proposed to be presented towards discharge of export obligation. 5.7.2 Export proceeds shall be realized in freely convertible currency except for deemed exports. Exports to SEZ units /Supplies to developers/ Co-developers, irrespective of currency of realization would also be counted for discharge of Export Obligation. 5.7.3 ....
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....respect of Authorizations, on which the value of duty saved is Rs.100 crore or more, the export obligation shall be fulfilled over a period of 12 years (not applicable to zero duty EPCG scheme) in the following proportion:- Period from the date of issue of Authorization Minimum export obligation to be fulfilled Block of 1st to 10th year 50% Block of 11th and 12th year 50% 5.8.2 However, the EO of a particular block of year may be set off by the excess exports made in the preceding block year. The Authorization holder would intimate the regional authority on the fulfillment of the export obligation, as well as average exports, within three months of completion of the block, by secured electronic filing using digital signatures. 5.8.3 Where EO of any particular block of years is not fulfilled in terms of the above proportions, except in such cases where the EO prescribed for a particular block of years is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount equal to unfulfilled portion of EO, such Authorization holder shall, within 3 months from the expiry of the block of years, pay duties of customs (alongwith applicab....
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....ligation Period (a) Concerned RA, may consider one or more requests for grant of extension in export obligation period, on payment of composition fee equal to 2% of proportionate duty saved amount on unfulfilled export obligation or an enhancement in export obligation imposed to the extent of 10% of total export obligation imposed under authorization, as the case may be, at the choice of exporter, for each year of extension sought. Such first extension in EO period can be for a maximum period of 2 years. (b) Extension in EO period beyond two years' period available above, may be considered, for a further extension upto 2 years with a condition that 50% of duty payable in proportion to the unfulfilled export obligation is paid by authorization holder to Custom authorities before an endorsement of extension is made on EPCG authorization by RA concerned. In such cases, no composition fee is to be paid or additional EO is to be imposed as prescribed in the Para above. In case the firm is still not able to complete the export obligation, duty already deposited will be deducted from total duty plus interest to be paid for EO default. (c) However for zero duty EPCG scheme only one exte....
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....n export obligation arising out of duty saved amount. 5.13 Redemption (a) As evidence of fulfillment of export obligation, authorization holder shall furnish application in ANF 5 B with documents prescribed therein. (b) On being satisfied, RA concerned shall issue a certificate of discharge of export obligation to the EPCG authorization holder and send a copy to customs authorities with whom BG/LUT has been executed. (c) RA shall ensure disposal of such applications within 30 days. Shortcomings, if any, shall be pointed out in one go. All correspondence, thereafter, shall relate to these deficiencies only. Fresh correspondence, if necessary, shall be within 15 days. Once documents are complete, EO will be discharged within 30 days of receipt of complete documents /information. (d) Process of issue of final discharge certificate/ rejection shall be completed within a period of 90 days from date of receipt of initial request. Applications that remain outstanding beyond a period of 90 days shall be reported to DGFT alongwith reasons thereof, immediately thereafter. 5.14 Regularization of Bonafide Default In case, EPCG authorization holder fails to fulfil prescribed export oblig....
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....bbed authorizations would be highest of average export obligations endorsed on individual authorizations so clubbed. 5.18.5 No clubbing would be permitted after expiry of EOP. 5.18.6 The aforesaid provisions for Clubbing of EPCG Authorizations shall be applicable for authorizations issued on or after 1.4.2007. However, EPCG authorizations issued prior to 1.4.2007 shall be governed by provisions contained in Chapter 5 of HBP Vol.1 (RE-2006). 5.19 Refixation of Export Obligation upon conversion from CIF based to duty based EO (a) EPCG authorization holder can apply for refixation of export obligation as given in Para 5.5 (a) of FTP in ANF5C. (b) For all EPCG authorizations, authorization holder should have fulfilled mandated (original or amended) block wise export obligation, till previous block to application date. In all such cases, refixed export obligation would be computed as under: (% export obligation unfulfilled) x (8) x (duty saved on authorization issue-date) (c) There would be no change in average export obligation fixed or export obligation period of original authorization. 5.20 Technological Upgradation of Capital Goods Application for technological up....