Wait...
Search Global Export Import Trade Data
Recent Searches: No Recent Searches

Chapter - 5 Export Promotion Capital Goods(EPCG) Scheme Policy and Application Form Conversion of EOU and Goods,Leasing of Capital Goods.


Chapter - 5 : Export Promotion Capital Goods ( EPCG) Scheme


  • 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
    1. 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:-
      1. Name of plant/machinery for which spares are required.
      2. Value of duty saved allowed under the authorization.
      3. Description of product to be exported with value of export obligation as per FTP.
    2. Deleted
    3. 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.

Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Both
 Buyers
 Suppliers
 Both
OR
 Exim Help
+


What is New?

Date: 29-11-2022
No.98 /2022-Customs (N.T.)
Amendment of notification no. 47/2022–Customs (N.T.), dated the 31st May, 2022

Date: 29-11-2022
NOTIFICATION No. 99/2022-Customs (N.T.)
Amendment of notification number 48/2022-Customs (N.T.) dated the 31st May, 2022

Date: 25-11-2022
NOTIFICATION No. 61/2022-Customs
Seeks to amend certain specific FTA/PTA notifications.

Date: 23-11-2022
NOTIFICATIONNo. 23/2022 – Central Tax
Seeks to empower the Competition Commission of India to handle anti-profiteering cases under CGST Act, 2017 with effect from 01.12.2022.

Date: 23-11-2022
NOTIFICATION No. 24/2022 – Central Tax
Seeks to make fourth amendment (2022) to CGST Rules with effect from 01.12.2022.

Date: 18-11-2022
Notification No. 58/2022-Customs
Seeks to amend Notification No. 27/2011- Customs, dated the 1st March, 2011 in order to withdrawal export duty on iron ore & steel products.

Date: 18-11-2022
Notification No. 59/2022-Customs
Seeks to amend Notification No. 50/2017-Customs, dated the 30th June, 2017 in order to withdrawal BCD exemption on Anthracite and PCI Coal, Coke & Semi coke and ferronickel.

Date: 18-11-2022
Notification No. 60/2022-Customs
Seeks to amend Notification 11/2021-Customs, dated the 1st February, 2021 in order to withdrawal AIDC exemption on Anthracite ,PCI Coal and Coking Coal.

Date: 17-11-2022
Notification No. 97 /2022 - Customs (N.T.)
Seeks to giv exemption from BCD for the motor car if imported by the Governor of the state .

Date: 17-11-2022
Notification No. 57/2022-Customs
Seeks to giv exemption from BCD for the motor car if imported by the Governor of the state .



Exim Guru Copyright © 1999-2022 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.

EximGuru.com

C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001