Presentation on theme: "Export Promotion Capital Goods (EPCG) SCHEME. EPCG is a foreign trade term used in India for imports and exports of capital goods. EPCG is one of the schemes."— Presentation transcript:
Export Promotion Capital Goods (EPCG) SCHEME. EPCG is a foreign trade term used in India for imports and exports of capital goods. EPCG is one of the schemes provided by government of India to importers and exporters to promote exports.
Criteria for Export and Import An EPCG authorization holder can export either directly or through third parties export proceeds are to be realized in freely convertible currency except for deemed exports. Import of capital goods under the EPCG scheme shall be subject to Actual User condition.
Eligibility EPCG scheme covers manufacturer exporters with or without supporting manufacturers, vendors, merchant exporters tied to supporting manufacturers and service providers. This scheme is applicable to Engineering, Electronic Product, Basic Chemicals & Pharmaceuticals, Apparel & Textiles, Plastic, Handcraft, Chemical & Allied Products, Leather & Leather Products, Paper & Paperboard and articles thereof, Ceramic Products, Refectories, Glass & Glass ware, Rubber & articles thereto, Plywood & allied products, Marine Products, Sports goods & toys.
Non Eligibility Zero duty EPCG Scheme under para 5.1 of FTP shall not be available for import of capital goods relating to export of products covered under following chapters/headings of ITC(HS) classification: Chapters 1, 2, 4 to 24, 25 to 27, 31, 43, 44 (except plywood and allied products), 45, 47, 68, 71, 81 (metals in primary and intermediate forms only), 89, 93,97, 98. ITC(HS) 4011 to 4013, ITC(HS) 7401 to 7406, 7501 to 7504, 7601 to 7603, 7801,7802, 7901 to 7903, 8001, 8002 and 8401. Zero duty scheme shall also not be available for units who are currently availing any benefits under Technology Upgradation Fund Scheme (TUFS) administered by Ministry of Textiles, Government of India. Zero duty EPCG scheme shall also not be available to applicants, who avail in that year, the benefit of Status Holder Incentive Scheme under Paragraph 3.16 of FTP.
How to obtain an EPCG License. For grant of EPCG licence an application in Aayaat Niryaat form 5A along with necessary supporting document (mentioned below) has to be made to the licensing authority i.e..DGFT Documents required 1. Self-Certified copy of IEC 2. Self-Certified copy of RCMC 3. Digital Signature 4. Registration Certificate from tourism department - self certified copy 5. Service tax registration - self certified copy 6. Pan card - self certified copy 7. Excise registration - self certified copy (if registered) 8. Vat certificate - self certified copy (if registered) 9. Proforma Invoice - self certified copy 10. Catalogue/Brochure - self certified copy 11. Chartered Accountant certificate as per appendix 26 (Original + self certified copy) 12. Chartered Engineer certificate as per appendix 32A (Original + self certified copy) 13. ITC/ HS codes for each item, Description, Technical description, country of origin(import). 14. EFT (Electronic Fund Transfer) facility for online payment.
Port of registration - Import and Export. EPCG authorization shall be issued with a single port of registration mentioned in paragraph 4.19 of HBP Vol.I for imports. However, exports can be made from any port specified in paragraph 4.19.
Installation of Capital goods. After import of capital goods, an EPCG authorization holder shall produce to the concerned Regional Authority a certificate from the Jurisdictional Central Excise Authority or Independent Chartered Engineer, confirming that the capital goods are installed at the factory premises of authorization holder or his supporting manufacturer within a period of 6 months from the date of completion of import. However, extension in time for Installation of Capital Goods upto a maximum period of 18 months from the date of completion of import may be considered by the concerned RA.
Monitoring Export Obligation. An EPCG Authorization holder shall prepare and submit to RA concerned by 30 th April of every year, report on fulfillment of export obligation. RA concerned may issue partial EO fulfillment certificate, provided export performance is proportionately adequate to fulfillment of export obligation. Incase the Export Obligation is not fulfilled then a NIL report should be filed.
Fulfillment of Export Obligation. EO shall be fulfilled by export of goods manufactured / services rendered by the applicant from the date of issue of Authorisation. The Authorization holder on the fulfillment of the export obligation as well as average exports would intimate the regional authority within three months of completion of the block.
Minimum export obligation to be fulfilled blockwise. For Zero Duty EPCG Scheme. For concessional 3% duty EPCG Scheme. Period from the date of issue of Authorization. Minimum export obligation to be Fulfilled. Block of 1st to 6th year 50% Block of 7th and 8th year 50% Period from the date of issue of Authorization. Minimum export obligation to be Fulfilled. Block of 1st to 4th year50% Block of 5th and 6th year50%
Conditions for block wise EO fulfillment. The export obligation 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. 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 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 (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.
Automatic Reduction/Enhancement of CIF value Or Export Obligation. If authorization issued has actually been utilized for import of a value in excess, upto 10% of CIF value /duty saved amount of authorization, Customs shall automatically allow clearance of goods in excess, upto 10% of authorization value/ duty saved amount, without endorsement by concerned RA. In case of utilization being more than 10%, Authorization holder shall furnish additional BG/ LUT to the customs authority. If EPCG authorization holder has utilized authorization less than the value earmarked in authorization, his export obligation shall stand reduced on prorata basis with reference to actual utilization of authorization. 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.
Extension of Export Obligation Period. Regional Authority may consider 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 at the choice of exporter, such extension in EO period shall be for maximum period of 2 years.
Export Obligation Shortfall. Regional Authority may condone shortfall upto 5% in export obligation arising out of duty saved amount.
EPCG REDEMPTION. On fulfilling the export obligation the EPCG holder may apply to the regional authority in Aayaat Niryaat Form 5B along with below documents for redemption of the EPCG authorization. Documents for redemption : 1. Original copy of EPCG license (Both copies - Customs and Exchange control copy) 2. Original BRC, Shipping bills. 3. Original FIRC’s. 4. Self certified copy of Bill of Entry (BOE). 5. Statement of EO –certified by Chartered Accountant and Banker. 6. Statement of Average EO –certified by Chartered Accountant and Banker. 7. Self certified copy of installation certificate. The regional authority shall issue final discharge certificate/ rejection within a period of 90 days from date of receipt of initial request if all documents are in order.
Regularization of bonafide default. 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 also be availed by EPCG authorization holder to exit at his option. The authorization holder will have the option to furnish valid duty credit scrips, issued under Chapter 3 of FTP & DEPB, for payment of the customs duty component.
Maintenance of Records. 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.
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 there under, provisions of FTP and Customs Act, 1962.