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Regarding definition of capital goods given in sub-clauses (d), (e) and
(f) of clause (1) to explanation to zero duty EPCG notification No. 29/
97-Customs dated 1.4.1997
Circular No. 85
dated 27th October 2000
Attention is
invited to paragraph 1(i) and condition (5) of para 2 of notification No. 29/
97-Customs dated 1.4.1997 issued under Zero duty EPCG Scheme. In terms of para
1(i) to the notification, inter-alia CVD exemption is extended to capital goods
for marine sector. In terms of condition (5) of para 2 of the notification, it
is specified that zero duty benefit would be available if the minimum value of
imported capital goods is not less than Rs. 20 crore. The first proviso to
condition (5) of para 2 of the said notification further provides that,
inter-alia, in respect of textile and chemical sectors the normal threshold
limit of Rs. 20 crores gets reduced to Rs. 1 crore. For the purpose of this
notification, the definition of capital goods is given in Explanation (1) to the
notification and sub-clauses (d), (e) and (f) of clause (i) thereof further
defines capital goods for marine, textile and chemical sectors respectively.
2.
Doubts have been expressed whether on account of the definition of
capital goods for marine, textile and chemical sectors as given in sub clauses
(d), (e) and (f) of clause (i) to Explanation (1) to notification No. 29/ 97-Cus
dated 1.4.1997, benefit of the notification would be available to all machinery
required by the aforesaid 3 sectors or it would be available only to machinery
specified in Annexures II, III and IV of the said notification even if the total
value of imported machinery exceeds Rs. 20 crores.
3.
The issue has been examined in the Board. It is clarified that the
intention behind specifying machinery required for marine sector in Annexure II
of notification No. 29/ 97-Customs was to ensure that for marine sector CVD
exemption is extended only to the machinery specified in Annexure II. Similarly,
for textile and chemical sectors, the intention behind specifying the list of
machinery in Annexures III and IV respectively was to ensure that the lower
threshold limit of Rs. 1 crore is extended only to the machinery specified in
the said two Annexures. In other words, for marine, textile and chemical
sectors, zero duty benefit under said notification would continue to be
available to all other machinery not specified in the said 3 Annexures so long
as the total CIF value of imported machinery is not less than Rs. 20 crores.
This intention of the Government is clear on a collective reading of para 1(i),
condition (5) of Para 2 and Explanation (1) to notification No. 29/ 97-Cus.
4.
Suitable Public Notice for information of the trade and standing order
for guidance of the staff may be issued on the above lines.
5. The receipt of
this circular may please be acknowledged.
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