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EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME

Chapter 5 - Procedure - Hand Book of Procedure - DGFT - Chapter 5 - CHAPTER 5 5.01 Policy Policy relating to EPCG Scheme is given in Chapter 5 of FTP. 5.02 Application Form An application for grant of an authorisation may be made by Registered Office or Head Office or a Branch Office or Manufacturing Unit of an eligible exporter to RA concerned in ANF 5A along with documents prescribed therein. 5.03 Nexus Certification 2[(a) RA concerned shall, on the basis of nexus certificate from an Independe .....

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a copy of the EPCG authorisation to the concerned Jurisdictional Central Excise Authority. The wastage so permitted at the time of issuance of authorisation would be allowed to be sold as scrap/waste on payment of applicable duty. 5.04 Certificate of Installation of Capital Goods (a) Authorization holder shall produce, within six months from date of completion of import, to the concerned RA, a certificate from the jurisdictional Central Excise Authority or an independent Chartered Engineer, at .....

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In the case of import of spares, the installation certificate shall be submitted by the Authorization holder within a period of three years from the date of import. 5.05 Port of Registration EPCG Authorisation shall be issued with a single port of registration as per paragraph 4.37 of HBP, for imports. However, exports can be made from any port specified in paragraph 4.37 of HBP. 5.06 Import of spares, tools, refractories and catalysts (a) Applications for procurement of capital goods covered un .....

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iii) Description of product to be exported and value of export obligation. (c) Authorisation holder shall maintain a register of stock & consumption of capital goods covered under sub-paragraphs (a) (iii) and (iv) of paragraph 5.01 of FTP imported under the scheme and at the time of final redemption of export obligation, authorization holder shall submit certificate from independent Chartered Engineer confirming their use in the installed capital goods on the basis of such register. 5.07 Con .....

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cy (FTP). (c) If a standalone EOU / SEZ unit wishes to de-bond from EOU to EPCG Scheme, there shall be no requirement for maintenance of average export obligation and the unit shall be required to maintain only specific export obligation equivalent to six times of the proportionate duty saved amount of the depreciated value of capital goods for which the Authorisation has been obtained. (d) In case one unit of a firm / company opts to de-bond from EOU to EPCG Scheme, while other unit(s) are DTA .....

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of the Capital Goods would be imposed on the de-bonding unit shifting to the EPCG Scheme. 5.08 Sourcing of Capital Goods Manufactured Indigenously (a) EPCG authorisation holder intending to source capital goods manufactured indigenously shall make a request to the RA for invalidation of EPCG authorisation for direct import / issuance of Advance Release Order (ARO) for availing deemed export benefits as given in paragraph 7.03 of FTP read with paragraph 7.02(c) of HBP. (b) This request can be mad .....

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for manufacture of capital goods to be supplied to EPCG authorisation holder. 5.10 Conditions for fulfilment of Export Obligation In addition to conditions in paragraph 5.04 of FTP, the following conditions shall also be applicable for fulfilment of export obligation: (a) Name of the supporting manufacturer as well as the exporter shall be indicated on export documents. (b) EPCG authorisation holder may export either directly or through third party(ies). (c) In case the Authorization Holder want .....

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been installed. (d) The EPCG authorization holder shall submit the following additional documents for discharge of EO through third party (ies): (i) A copy of agreement entered into between the authorization holder and the ultimate exporter undertaking to export the goods manufactured by the authorization holder/supporting manufacturer for fulfilment of the export obligation against the EPCG authorization in question. (ii) Proof of having despatched the goods from authorization Holder s factory .....

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An undertaking from the 3rd party on a stamp paper, declaring that the products exported for fulfillment of EO by them on behalf of the license holder as per details given in the statement of exports, were manufactured by the license holder. (v) Financial evidence for having received proceeds through normal banking channel from third party exporter s account to the authorization holder s account towards such third party supplies. (vi) Disclaimer certificate from third party that they shall not .....

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rage 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. 5.13 Exemption from maintenance of average export obligation (a) In case of export of goods relating to the following the EPCG authorisation holder shall not be required to maintain average export obligation: (i) Han .....

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heme by sectors specified in sub-paragraph (a) above, 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. 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 Minimum expo .....

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ional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block. (d) (i) Authorisations issued from 1st April, 2002 upto 31st August, 2004 shall be governed by provisions of paragraph 5 .....

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to RA concerned by 30th April of every year, report on fulfilment of export obligation by secured electronic filing using digital signatures. RA concerned may issue partial EO fulfilment certificate, provided export performance is proportionately adequate for fulfilment of export obligation. 5.16 Automatic Reduction/ Enhancement upto 10% Duty saved amount and pro rata Reduction/ Enhancement in export obligation If authorization issued has actually been utilized for import of goods: - (a) in exce .....

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y. (b) in excess of duty saved amount indicated on the authorization by more than 10%, the RA concerned, as per its delegated powers, may allow enhancement in duty saved amount of the EPCG authorization. The Authorisation holder shall furnish additional BG/LUT to the Customs Authority. (c) less than the duty saved amount indicated on the authorization, the export obligation shall stand reduced on pro-rata basis with reference to actual utilization of the authorization. 5.17 Extension in Export O .....

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extension or an enhancement in export obligation imposed to the extent of 10% of total export obligation imposed under authorization for each year of extension, as the case may be, at the choice of the exporter. (c) Request for extension in EO Period shall be made to RA within 75 days from the date of expiry of original EO Period. (d) Extension in export obligation period shall also be subject to such terms and conditions as may be prescribed by competent authority. 5.18 Provision for Units unde .....

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h firm/companies. 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 c .....

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n the event of ban on export product Whenever a ban/restriction is imposed on export of any product, export obligation period in respect of EPCG authorisations already issued prior to imposition of ban on such export products would stand automatically extended for a period equivalent to duration of such ban, without any composition fee. Authorisation holder would not be required to maintain average E.O. as well for the ban period. 5.21 Export Obligation Shortfall RA concerned may condone shortfa .....

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ilment shall also be enclosed with the certificate. (c) RA shall process such applications ordinarily 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. (d) Applications that remain outstanding beyond a period of 60 days after receipt .....

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id duty credit scrips, issued under Chapter 3 or Chapter 5 of FTP, for payment of the Customs duty component. (b) Authorisation holder can also pay duty and interest suo-motu on the basis of self /own calculation as per the procedure specified in paragraph 4.50 of HBP. 5.24 Maintenance of Records Every EPCG authorisation holder shall maintain, for a period of 2 years from date of redemption, a true and proper account of exports/ supplies made and services rendered towards fulfilment of export ob .....

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ported 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. 1[(c). Capital Goods imported under EPCG Scheme, may be re-exported for repairs abroad within three years from the date of clearance by Customs of such goods, with permission of RA/Customs Authority. The duty component on the expenditure incurred on the repairs as well as the insurance and the freight, b .....

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horisation holder would be permitted. (b) An application for clubbing can be made to RA concerned in ANF 5C. Clubbing shall only be permitted in case export products endorsed on the authorisations are same /similar and if authorisations are issued by the same RA. (c) Total export obligation would be re-fixed taking into account total of duty saved amount of the clubbed authorisations. Provision of Paragraph 5.21 shall not be applicable in case of such clubbed authorisations. (d) On Clubbing, aut .....

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rovisions contained in Chapter 5 of HBP Vol.1 (RE-2006). The EPCG Authorisations issued between 01.04.2007 and 17.04.2013 shall be governed by provisions contained in Chapter 5 of HBP Vol.1 (RE-2012). The EPCG Authorisations issued from 18.04.2013 till the issue of Notification of FTP 2015-20 shall be governed by provisions contained in Public Notice No.1 dated 18.4.2013. 5.28 Post Export EPCG Duty Credit Scrip(s) (a) Exporters can exercise this option by filing an application in ANF5A with the .....

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e request, in ANF5B, for issuance of Duty Credit Scrip(s) in proportion to the EO completed within the specified EOP. Only for first such request, proof of actual duty payments on Capital Goods (including proof of duty in respect of CENVAT availed or otherwise), nexus and installation certificate(s) of Capital Goods shall be submitted alongwith proof of fulfilment of EO alongwith proof of maintenance of Average EO. Subsequently, only proof of fulfilment of specific EO (alongwith proof of mainten .....

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ot avail CENVAT Credit, the Export Obligation shall be fixed with reference to the basic Customs duty paid. In such cases Duty Credit Scrip will be issued based on the certificate from Central Excise regarding non-availment of CENVAT credit. Such certificate from central excise regarding non-availing of CENVAT credit will not be required where the unit is not registered with central excise. (h) All provisions of the existing EPCG Scheme shall apply insofar as they are not inconsistent with this .....

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