| Policy |
5.1 |
Policy relating to EPCG Scheme is given in Chapter 5 of FTP. |
| Application Form |
5.2 |
An application for grant of an authorization may be made to RA
concerned in ANF 5A along with documents prescribed therein. (Ref.
DGFT Public Notice NO. 99(RE 2008)/2004-2009, Dated : 30th October,
2008)
[Old - An application for grant of an authorization, upto Rs.50
Crore of duty saved amount may be made to RA concerned in ANF 5A along with
documents prescribed therein. ] |
|
| Consideration of Applications |
5.3 |
Deleted
Ref.
DGFT Public Notice NO. 99(RE 2008)/2004-2009, Dated : 30th October,
2008)
[Old - For cases wherein duty saved amount is above Rs. 50 crores,
applicant may apply to DGFT Headquarters directly with a copy
endorsed to concerned RA. In such cases, concerned RAs will
issue EPCG authorisation according to directions from DGFT. ] |
|
5.3.1 |
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 and thereafter forward a copy of the EPCG authorization
to the concerned
Jurisdictional Central Excise Authority. |
|
5.3.2 |
Authorisation 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.
In the case of import of spares, the installation certificate shall be submitted
by the Authorisation holder within a period of three years from the date of
import.
However, in case of units not registered with Central Excise Authorities,
theAuthorisation holder shall produce to the concerned R.A, a certificate from
an independent Chartered Engineer confirming the said installation of Capital
goods / spares. |
|
|
5.3.3 |
EPCG authorization shall be issued with a single port of registration
mentioned in paragraph 4.19 of HBP v1 for imports. However, exports can be made
from any port specified in paragraph 4.19. |
|
5.3.4 |
- An applicant may also apply for import of spares, tools, spare refractories and catalyst as are required for installation and maintenance of
capital Goods.
Application shall contain list of plant / machinery installed in factory /
premises of applicant for which spares, tools, spare refractories and catalyst
are required, duly certified by Chartered Engineer or Jurisdictional Central
Excise authorities.
In such cases EPCG authorization shall not specify list of
spares but shall indicate:-
- Name of plant/machinery for which spares are required.
- Value of duty saved allowed under the authorization.
- Description of product to be exported with value of export
obligation as per FTP.
- Deleted
- Further, at time of final redemption of export obligation,
authorization holder shall submit certificate from Independent Chartered
Engineer confirming use of spares, tools, spare refractories and catalyst so
imported in the installed capital goods on the basis of stock & consumption
register maintained by authorization holder.
|
| EPCG Scheme to resultant DTA Unit from conversion of EOU / Relocated SEZ
Units |
5.4 |
An EOU/ a relocated SEZ unit, while converting to a DTA unit,
may apply for an EPCG authorization in ANF alongwith documents
prescribed therein. ‘No Objection Certificate’ should be produced
from concerned Development Commissioner. (This para amended by
DGFT PUBLIC NOTICE NO.164(RE-2008)/2004-09, Dated : 25th March, 2009)
[ Old - An EOU/a relocated SEZ unit after conversion to DTA Unit, may apply for an EPCG authorization in ANF alongwith documents prescribed therein. “No Objection Certificate” should be
produced from concerned Development Commissioner. ] |
| Indigenous Sourcing of Capital Goods |
5.5 |
EPCG authorization holder intending to source capital
goods indigenously, either alongwith application or after issuance of
EPCG
authorisation, shall request to RA for invalidation of EPCG
authorization for direct import / issue of ARO, alongwith name
and address of source person of the capital goods. |
|
5.5.1 |
RAconcerned 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
ofAdvance authorization for import of inputs including components
required for manufacture of capital goods to be supplied to EPCG
authorization holder. |
|
5.5.3 |
Deleted |
| Leasing of Capital Goods |
5.6 |
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 fulfillment of export obligation. |
| Condition for Fulfilment |
5.7 |
In addition to conditions mentioned in paragraph
5.4 of FTP
of Export Obligation following conditions shall also be applicable for
fulfillment of export
obligation. |
|
5.7.1 |
EPCG authorisation holder shall export either directly or through
third party(s). If a merchant exporter is EPCG authorisation holder, name of
supporting manufacturer shall also be indicated on shipping bills. At the time
of export, EPCG authorisation No. 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 realised 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 |
Deleted. |
|
5.7.3.1 |
Supplies made to Oil and Gas sector also may be counted towards
discharge of export obligation against an EPCG Authorisation provided it has
been issued on or before 31.3.2000 and no benefit under paragraph 8.3 of FTP has
been claimed on such supplies. |
|
5.7.4 |
Exports made to former USSR, or to such countries as notified by DGFT,
shall not be counted for fixing average level of exports.
Additional Export Obligation (over and above indicated average) for all previous
EPCG Licenses, which have not been redeemed, will be indicated separately.
Exports made against an EPCG licence/authorization, which have not
been redeemed, shall not be added up for calculating the average
export performance for the purpose of subsequent EPCG authorization.
(This para is added by ref.
DGFT Public Notice No.39(RE
2008)/2004-09, dated 04-07-2008.) |
|
5.7.5 |
Exports under EPCG scheme shall also be entitled for benefits under
Chapter 4 of FTP. |
|
5.7.6 |
In case of export of goods relating to handicraft, handlooms, cottage,
tiny sector, agriculture, aqua-culture, animal husbandry, floriculture,
horticulture, pisciculture, viticulture, poultry and sericulture, shall not be
required to maintain average level of exports.
Goods, excepting tools imported under EPCG scheme by such sectors, 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. Transfer of capital goods
would be permitted within the group companies, after fulfillment of EO but
before five years from the date of imports, under intimation to RA and
jurisdictional Central Excise Authority. |
|
5.7.7 |
Deleted |
|
5.7.8 |
Deleted |
|
5.8 |
The Authorisation 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 Authorisation |
Minimum export obligation
to be fulfilled |
| Block of 1st to 6th year 50% |
Block of 7th and 8th year 50% |
|
|
5.8.1 |
In respect of Authorisations, 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 in the following proportion:-
| Period from the date of
issue of Authorisation |
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 export obligation of a particular block of year may
be set off by the excess exports made in the preceding block year.
TheAuthorisation 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 export obligation of any particular block of years is not fulfilled
in terms of the above proportions, except in such cases where the export
obligation prescribed for a particular block of years is extended by the RegionalAuthority for authorizations upto Rs.50 crores, and by DGFT for other
cases, subject to payment
of composition fee of 2% on duty saved amount equal to unfulfilled portion of
EO, such Authorisation holder shall, within 3 months from the expiry of the
block of years, pay duties of customs (along with applicable interest as
notified by DoR) of an amount equal to that proportion of the duty leviable on
the goods which bears the same proportion as the unfulfilled portion of the
export obligation bears to the total export obligation. |
|
5.8.4 |
EPCG Authorisations issued upto 31.3.2000 shall be governed by provisions
laid down in paragraph 6.11 in HBP v1 (RE-99). Notwithstanding the same in HBP
v1 (RE-99), authorisation holder shall not have to surrender Special Import
licence in case of value wise shortfall.
Authorisations issued from 1st April, 2000 upto 31st March, 2002 shall be
governed by provisions of Chapter 6 of HBP v1 (RE-01) as amended from time to
time.
Authorisations issued from 1st April, 2002 upto 31st August, 2004
shall be governed by provisions of para 5.8 of HBP v1 (RE-02)
as amended from time to time. |
|
5.8.5 |
Deleted |
|
|
5.8.6 |
Deleted. |
| Monitoring of Export Obligation |
5.9.1 |
Authorization holder shall submit to RA concerned by 30th
April of every year, report on fulfillment of export obligation.
[Deleted -Such report
shall also be submitted electronically on DGFT website]. RA
concerned may issue partial EO fulfillment certificate, provided
export performance is proportionately adequate to fulfillment of
export obligation.
(The above deleted Sentence Ref.
Public Notice No.
48(RE-2008)/2004-2009, dated 08-07-2008.) |
| Automatic Reduction/
Enhancement upto 10%
of CIF value and Prorata Reduction/ Enhancement in Export Obligation |
5.10 |
If authorization issued has actually been utilized for import of a value in excess, upto 10% of CIF value / duty saved amount
of authorization, 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.
In such cases, 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.
In case of utilization being more than 10%, concerned RA as per
their financial powers, may endorse as per extant provisions.
Authorisation holder shall furnish additional BG/ LUT to the
customs authority. |
|
5.10.1 |
Similarly, if EPCG authorization holder has utilised authorization
less than the value earmarked in authorization, his export obligation
shall stand reduced on prorata basis with reference to actual
utilisation of authorization. |
| Extension of Export Obligation Period |
5.11 |
Concerned Regional Authority may consider request for grant of
first extension in E.O. 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 two years. (This Para is
amended by
DGFT PUBLIC NOTICE No 126/ (RE-2008)2004-09, date :
06-01-2009 )
[ Old - Concerned RA, may consider one or more request for grant of extension in export obligation period, on payment of
composition
fee of 2% of total duty saved under authorization 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 extension can be for a maximum period of 2 years. ]
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.
Extension in export obligation period shall also be subject to such terms and
conditions as may be prescribed by competent authority. |
|
5.11.1 |
The firm / company, which is applying for registration with BIFR/
Rehabilitation Department of State Government, shall also intimate DGFT with
regard to relief sought for EPCG authorization, if any, within 30 days of
receipt of application by agency concerned.
DGFT, thereafter shall take up the matter with agency concerned
to safeguard government interest on account of default in fulfillment of export
obligation imposed on EPCG authorization obtained by such firm/companies.
DGFT may consider such application for grant of period of extension upto 12
years, or as per rehabilitation package prepared by operating agency and
approved by BIFR board / state authority. |
|
5.11.2 |
Deleted (Ref.
DGFT PUBLIC NOTICE NO: 162 (RE: 2008)/2004-2009, dated
: 23-03-2009.)
[Old - Waiver of EO may be considered where, because of force majeure or other
unforeseen circumstances / reasons which are beyond the control of the exporters
(like steep fall in international prices, technological obsolescence etc.), and
the exporter is unable to fulfill export obligation. Such requests shall be
considered by a committee comprising representative(s) of DoC and DoR under
DGFT. Decision of this committee shall be notified by DoR for implementation.
] |
|
5.11.3 |
To provide relief to exporters of those sectors where total
exports in that sector / product group has declined by more than 5%,
average export obligation for 2008-09 may be reduced proportionate
to reduction in exports of that particular sector / product group
during 2008-09 as against 2007-08. (This sub para is amended by
DGFT PUBLIC NOTICE No 151/ (RE-2008)2004-09, dated :
26.02.2009.)
To provide relief to exporters of those sectors where total exports
in that sector / product group has declined by more than 5%,
average export obligation for 2007-08 may be reduced proportionate to reduction
in exports of that particular sector / product groups during 2007-08 as against
2006-07.
The sectors / product groups for which this relaxation is to be allowed shall be
conveyed by the DGFT to all the RAs within three months of the end of the
previous financial year, and the RAs shall re-fix the EO for previous year
accordingly, for exporters
in that sector / product group.
|
| |
5.11.4 |
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/restriction of such export
products, would stand automatically extended for a period equivalent
to the duration of ban/restriction, without any composition fee and
exporter would not be required to fulfill average E.O. as well, for
the ban/restriction period. (This paragraph is amended by
DGFT Public Notice No. 67(RE-2008)/2004-09, dated 20th, August,
2008.)
[Old - 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 of such
export products, would stand automatically extended for a period
equivalent to the duration of ban, without any composition fee and
exporter would not be required to fulfill average E.O. as well for
the ban period.(This paragraph is added by
DGFT Public Notice No. 26(RE-2008)/2004-09, dated 3rd, June, 2008.)
] |
| Export Obligation Shortfall |
5.12 |
RA concerned may condone shortfall upto 5% in
export obligation arising out of duty saved amount. |
| Redemption |
5.13 |
As evidence of fulfillment of export obligation, authorization
holder
shall furnish application in ANF 5B with documents prescribed therein.
(a) to (c). Deleted.
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.
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.
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. |
| Regularisation of
Bonafide Default |
5.14 |
In case, EPCG authorization holder fails to fulfill prescribed export obligation, he shall pay duties of Customs plus interest as
prescribed by Customs authority. Such facilities can be availed
by EPCG authorisation holder to exit at his option. |
| Maintenance of Records |
5.15 |
Every EPCG authorization holder shall maintain, for a period of 3
years from date of redemption, a true and proper account of
exports/supplies made and services rendered towards fulfillment
of export obligation. |
| Re-Export of Capital Goods Imported Under EPCG Scheme |
5.16 |
Capital Goods imported under EPCG scheme, which are found defective or unfit for use, may be re-exported back to foreign supplier within three years from the date of payment of duty
on
importation thereof, with permission of RA / Customs Authority.
Consequently, EO would be refixed. |
| Replacement of Capital Goods |
5.16.1 |
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. |
| Penal Action |
5.17 |
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 there under, provisions of FTP and Customs Act,
1962. |
| Clubbing of EPCG authorizations |
5.18 |
Clubbing of two or more EPCG of same
authorization
authorizations holder would be permitted. |
|
5.18.1 |
Deleted |
|
5.18.2 |
An application for clubbing can be made only to RA concerned in ANF 5D.
Clubbing shall not be permitted in case authorisations are issued by different
RAs.
(a) Deleted.
(b) Deleted.
(c) Deleted. |
|
5.18.3 |
Total export obligation would be refixed taking into account total of
duty saved or total of CIF value of imports. |
|
5.18.4 |
On clubbing, authorizations for all purposes shall be deemed to be a
single EPCG authorization. Export obligation period for clubbed authorization
shall be reckoned from first authorization issue-date. However, in cases where
clubbed CIF/duty saved value exceeds Rs 100 crore, no corresponding benefit of
increase
in export obligation period shall be admissible. |
|
5.18.5 |
Average export obligation for clubbed authorizations would be highest of
average export obligations endorsed on individual authorizations so clubbed. |
|
5.18.6 |
No clubbing would be permitted after expiry of EOP. |
|
5.18.7 |
The aforesaid provisions for Clubbing of EPCG Authorisations shall be
applicable for authorizations issued on or after 1-4-2007. However, EPCG
authorizations issued prior to 1-4-07 shall be governed by provisions contained
in Chapter 5 of HBP v1 (RE -2006).
|
| Refixation of Export Obligation upon conversion from CIF based to duty
based EO |
5.19 |
(a) EPCG authorization holder can apply for refixation
of export obligation as given in para 5.4 (i) of FTP in ANF 5C.
(b) Deleted.
(c) 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 )
(d) Deleted
(e) There would be no change in average export obligation fixed or export
obligation period of original authorization.
(f) Deleted
Technological 5.20 Application for technological upgradation of the capital
goods
Upgradation of would be made in ANF 5A.
Capital Goods |
| Import of Refurbished/ Reconditioned
Spares and Tools |
5.21 |
Import of refurbished spares shall be permitted
under EPCG Scheme.
However such refurbished / reconditioned spares must have a residual life not
less than 80% of life of original spare, which would be certified by EPCG
authorization holder.
The tools imported under EPCG Scheme may be transferred to any of units or group
companies of applicant. |
|
5.22 |
Revalidation of authorizations issued under EPCG scheme shall not be
allowed. |