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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 (a) RA concerned shall, on the basis of nexus certificate from an Independent .....

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tted 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 the option of the authorisation holder, confirming installation of capital goods at factory/premises of authoriz .....

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hin 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 under sub-paragraphs (a) (iii) and (iv) of paragraph 5.01 of FTP shall contain a list of plant/machinery installed .....

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in 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 Conversion of EOU/ Relocated SEZ Units to DTA Unit under EPCG Scheme (a) An EOU/ a relocated SEZ unit, while conver .....

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ement 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 units, then the average export obligation in respect of the authorisations issued to the firm / company (other t .....

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al 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 made either alongwith application or during the validity period of EPCG Authorisation. (c) Applicant shall give the .....

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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 wants to export through a third party, export documents viz., shipping bills / Bill of exports etc. shall indicate n .....

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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 premises to the ultimate exporter/port of export viz. (a) ARE-1 Certificate issued by Central Excise with due a .....

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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 use such proceeds towards EO fulfillment of any EPCG authorization (s) obtained by them. 5.11 Realization of Exp .....

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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) Handicrafts, (ii) Handlooms, (iii) Cottage & Tiny sector, (iv) Agriculture, (v) Aqua-culture (including Fisheri .....

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e 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 export obligation to be fulfilled Block of 1st to 4th year 50% Block of 5th and 6th year Balance EO (b) The Authoris .....

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rtion 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 5.8 of HBP Vol. 1 (RE-02) as amended from time to time. (ii) Authorisations issued from 1st September, 2004 upto .....

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ing 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 excess of duty saved amount indicated on the authorization by not more than 10%, the authorization shall be deemed t .....

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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 Obligation Period (a) Extension in Export Obligation Period of EPCG authorization issued prior to Notification of .....

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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 under BIFR/Rehabilitation (a) An EPCG Authorisation holder, while applying for registration with BIFR/Rehabilitation .....

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here 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 af .....

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gation 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 shortfall upto 5% in specific export obligation. 5.22 Redemption (a) Authorisation holder shall apply for redemption in .....

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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 of complete documents shall be reported to the EPCG Division at DGFT headquarters alongwith reasons thereof. 5. .....

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) 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 obligation. 5.25 Re-Export / Replacement of Capital Goods Imported under EPCG Scheme (a) Capital Goods imported un .....

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d which can be debited again at the time of import of such replaced Capital Goods. 5.26 Penal Action In case of failure to fulfil export obligation or any other condition of authorisation, authorisation holder shall be liable for action under FT (D&R) Act, 1992, as amended, Orders and Rules made thereunder, provisions of FTP/HBP, Customs Act, 1962, as amended from time to time or any other law in force. 5.27 Clubbing of EPCG authorisations (a) Clubbing of two or more EPCG authorisations issu .....

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) On Clubbing, authorisations for all purpose shall be deemed to be a single EPCG authorisation. Export obligation period for clubbed authorisations shall be reckoned from first authorisation issue-date. (e) Average export obligation for clubbed authorisations would be highest of average export obligations endorsed on individual authorisations so clubbed. (f) Clubbing would be permitted only during valid EOP including extended period, if any. (g) EPCG authorisations issued prior to 1.4.2007 shal .....

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in ANF5A with the RA concerned by selecting the option for this Scheme. (b) All applicable duties shall be paid in cash by the exporter at the time of import of Capital Goods. (c) RA shall issue an Authorisation specifying (i) Not for imports on the body of the Authorisation; (ii) Average EO, if any; (iii) Specific EO @ 85% of the applicable specific EO, computed as if the imports were to take the benefit of duty exemption; and (iv) EOP, which shall commence from the Authorisation issue date. (d .....

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h proof of maintenance of Average EO) additionally completed vis-à-vis specific EO fixed {as in c(iii) above} may be submitted, unless there have been any changes in documents / proofs submitted earlier. (e) RA shall issue freely transferable duty credit scrip(s) equivalent to proportionate EO fulfilled. (f) The computation of freely transferable Duty Credit Scrip(s) will be based on basic Customs duty amount paid. (g) Where the exporter has obtained post-export EPCG authorisation declari .....

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