TMI BlogAverage Export Obligation not maitained under EPCGX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Experts, Please suggest what are consequences and what are remedies if Average Export Obligation could note be maintained under EPCG Thanks.. - Reply By Ganeshan Kalyani - The Reply = The duty which was saved while importing would required to be paid if export obligation is not met. Thanks. - Reply By KASTURI SETHI - The Reply = 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. - Reply By MUKUND THAKKAR - The Reply = 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Reply By Narendra Soni - The Reply = 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. - Reply By MUKUND THAKKAR - The Reply = Not each year 50% of first block you have to maintained. - Reply By Narendra Soni - The Reply = Dear Sir, Please see the para 5.14 (a) of FTP (procedures):- 5.14 Block - wise Fulfilment of EO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. - Reply By Ganeshan Kalyani - The Reply = 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition mentioned is applicable for specific export obligation while maintaining average export obligation.Thanks. - Reply By Narendra Soni - The Reply = 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. - Reply By Ganeshan Kalyani - The Reply = Pls read last sentence of my last reply. - Reply By KASTURI SETHI - The Reply = Replies by both experts have enriched my knowledge. Thanks a lot to Sh.Mukund Thakkar, Sir and Sh.Ganeshan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalyani, Sir. - Reply By YAGAY AND SUN - The Reply = enriching discussions - Reply By Ganeshan Kalyani - The Reply = Yes, in fact. - Reply By Subhash Modi - The Reply = 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verage 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. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Reply By Narendra Soni - The Reply = Than Mr.Subhash Modi, Exactly correct reply in detail,appreciate your effort. - Reply By babu varghese - The Reply = 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood 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. Year Average Fixed Average Completed Unfulfilled 2014-2015 40,468,103 6,676,470.18 33,791,632.82 2015-2016 40,468,103 172,390,454.01 0 2016-2017 40,468,103 62,786,758.56 0 - Average Export Obligation not maitained under EPCG - Query Star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted By: - Narendra Soni Dated:- 12-1-2017 Other Topics - Got 15 Replies - Indian Laws - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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