Policy Circular No. 35 dated 1^st October 1999

Attention is invited to paragraph 9.27 of the policy read with paragraph 6.7 of the Handbook  (Vol.1) relating to option available to EOU/ EPZ units to debond the capital goods under the EPCG scheme.

It is clarified that units debonding capital goods under EPCG scheme are required to execute BG/ LUT with the licensing authority as per the provisions given in the Handbook  (Vol. I). The BG/ LUT is to be submitted alongwith the application for debonding under EPCG scheme.

The issue of fixation of export obligation in such cases has also been examined. It is clarified that where one unit of the firm/ company opts to debond under EPCG scheme, the average export obligation in respect of the licence issued to the firm/ company  (other than the debonding unit) shall remain unchanged. On the debonding unit, the average export obligation shall be fixed by excluding the exports made by the debonding unit from the total exports of the firm/ company, which runs concurrently for all the units of the firm/ company. Moreover, an additional export obligation equivalent to 6 times or 8 times of the depreciated value may be imposed on the unit debonding under EPCG scheme as the case may be, depending on the scheme in which unit opts for debonding.

However, if a standalone EOU/ EPZ unit wish to debond under EPCG scheme, there shall be no export obligation for maintenance of the average the only such an obligation under EPCG scheme on a standalone unit shall be imposed which may be equivalent to 6 times or 8 times of the depreciated value, as the case may be, depending upon the scheme in which the unit opts for debonding.

This issues with the approval of DGFT.