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Average Export Obligation not maitained under EPCG, Other Topics

Issue Id: - 111364
Dated: 12-1-2017
By:- Narendra Soni
Average Export Obligation not maitained under EPCG

  • Contents

Dear Experts,

Please suggest what are consequences and what are remedies if Average Export Obligation could note be maintained under EPCG


Posts / Replies

Showing Replies 1 to 15 of 15 Records

1 Dated: 12-1-2017
By:- Ganeshan Kalyani

The duty which was saved while importing would required to be paid if export obligation is not met. Thanks.

2 Dated: 13-1-2017

I endorse the views of Sh.Ganeshan Kalyani, Sir. There is penalty provision also for non-performance of export obligation. There is also possibility of charging interest.

3 Dated: 13-1-2017

Export obligation as per FTP 50% with in 4 years and balance 50% with in next 4 years if importing under terms of 8 years. if you Average export obligation is not meet first block of 4 years. you may request to PRC -Delhi and completed with in next block of 4 years in such situation you need not to pay duty.. first contact your local DGFT office and follow the guide line.

4 Dated: 13-1-2017
By:- Narendra Soni

Dear Sir,

I think,the 50% in first bock and 50% in balance block is applicable for specific export obligation only.You have to maintain the average export obligation mentioned in EPCG authorisation in each year untill completion of specific obligation.

Please confirm my view.

5 Dated: 13-1-2017

Not each year 50% of first block you have to maintained.

6 Dated: 13-1-2017
By:- Narendra Soni

Dear Sir, Please see the para 5.14 (a) of FTP (procedures):-

5.14 Block - wise Fulfilment of EO

(a)The Authorisation holder under the EPCG scheme shall, while maintaining the average export obligation,fulfill the specific export obligation over the prescribed block period in the following proportions:

Period from the date of issue of Authorisation and Minimum export obligation to be fulfilled :-

Block of 1 st to 4th year = 50%, and Block of 5th and 6th year = Balance EO.


Experts are requested to comment on the above para, whether Block wise EO is applicable both for AEO and SEO, or only for SEO.

Thanks n Regards.

7 Dated: 13-1-2017
By:- Ganeshan Kalyani

I support the views of Sri Mukund Ji. The replies is in accordance with the extract of the provision reproduced here in TMI by Sri Soni Ji. The condition mentioned is applicable for specific export obligation while maintaining average export obligation.Thanks.

8 Dated: 13-1-2017
By:- Narendra Soni

Dear Kalyani Ji,

Thanks for supporting Mr.Mukund.

But, as per our Jt.DGFT, Block wise EO facility is not applicable in Average annual EO, what ever average annual obligation fixed by DGFT in authorisation, exporter has to maintain every year.

Block wise facility is only for Specific EO.

Hence requested to please re-check and confirm.

Thanks N Regards.

9 Dated: 13-1-2017
By:- Ganeshan Kalyani

Pls read last sentence of my last reply.

10 Dated: 14-1-2017

Replies by both experts have enriched my knowledge. Thanks a lot to Sh.Mukund Thakkar, Sir and Sh.Ganeshan Kalyani, Sir.

11 Dated: 26-1-2017

enriching discussions

12 Dated: 26-1-2017
By:- Ganeshan Kalyani

Yes, in fact.

13 Dated: 23-2-2017
By:- Subhash Modi

The past annual average obligation has to be mandatorily fulfilled year-on-year basis, It is the specific EO which is to be fulfilled up to 50% within the first block of 4 years and balance 50% within the ensuing 2 years or extension allowed as per the Policy provisions. All exports during a year serially should be fist accounted towards annual average and remaining excess exports accounted towards specific EO. In that case duty that was will have to be repaid with interest not entirely but proportionate to unfulfilled specific EO. It is possible that while applying for issue of EPCG inadvertently in the figures furnished for the past 3 years exports, the exports under valid EPCG may have been included though not required as per HBP V1 Para 5.12:

5.12 Calculation of Average Export Obligation While calculating Average Export Obligation, exports counted/being counted for fulfilling specific EO against EPCG Authorisations within valid EO Period (whether original or extended) that have been made in the preceding 3 years will not be taken into account.

If there is such a case then past annual average can be re-fixed by submitting fresh CA certificate first showing all exports of past 3 years and then deducting therefrom the exports made during the 3 year towards EPCG EO fulfillment..

The annual average obligation can further be refixed in terms of yearwise PN issued qua the HBP Para 5.19:

5.19 Relief in Average Export Obligation (a) To provide relief to exporters of those sectors where total exports in that sector/product group has declined by more than 5% as compared to the previous year, average export obligation for the year may be reduced proportionate to reduction in exports of that particular sector/product group during the relevant year as against the preceding year. However, in case export decline is continuous over consecutive years, the base year for calculation of eligibility and calculation of reduction in average export obligation will be taken as the year after which the exports have shown continuous decline. (b) The sectors /product groups for which this relaxation is to be allowed shall be conveyed by the DGFT to all the RAs within seven months of the end of the previous financial year, and the RAs shall re-fix the annual average EO for previous year accordingly for exporters in that sector / product group.

14 Dated: 24-2-2017
By:- Narendra Soni

Than Mr.Subhash Modi,

Exactly correct reply in detail,appreciate your effort.

15 Dated: 23-7-2017
By:- babu varghese

Dear all experts and wellwishers,

We have a case as follows.The export obligation was 2.27 cr in 6 years above the Average export obligation of 4.06468Cr.

In the first year we had very less exports as we had an ongoing project which was not approved. In the second year we had a good export and by third year we have finished the export obligation .But the issue is our first year Export is less and not meeting the Average export obligation.What is the correct way to solve this so that we can close our EPCG license.EPCG license was taken in 8/12/2014.


Average Fixed

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