Procedure for Registration of EPCG Authorizations

The following Public Notice was issued by the Commissioner of Customs (Export) Air Cargo Complex, Mumbai on 8th June 2010.

[Customs Public Notice No. 22 dated 8th June 2010]

Sub: Procedure for Registration of Authorization and Obligations of Authorization Holders – EPCG Scheme.

Reference is invited to various Customs Notifications pertaining to the EPCG scheme, related Board’s Circulars like No. 38/1997- Cus dated 9.9.1997, 24/2002– Cus dated 6.5.2002, 58/2004- Cus dated 21.10.2004, 17/2009- Cus dated 25.5.2009, 26/2009- Cus dated 30.9.2009, 5/2010- Cus dated 16.3.2010, as well as this office Public Notices such as No. 20/2003 dated 24.4.2003, 8/2009 dated 31.3.2009 and 14/2009 dated 30.6.2009.

2. The procedure to be followed in registering EPCG Authorizations (EPCGAs) and the broad mechanism of monitoring obligations are being consolidated and/or prescribed as follows. It may be noted that these shall not, in any way, interfere with the requirements of the customs notifications and specific Board’s Circulars.

Procedure for Registration of EPCGAs

3. After bulletin verification at New Custom House, Mumbai, the Authorization Holder (AH) (reference to who shall include his authorized representative) will bring original customs copy of EPCGA (including condition sheet) to License Section where Appraiser (License) shall check the particulars against ‘Alerts’ and, if there is no alert, endorse ‘No Alert’ with signature and stamp and return the EPCGA to AH. However, if there is an Alert, matter will be escalated to DC/AC (License).

4. AH will then submit to DOS/TA (EPCG) -

a) Application requesting registration of license.

b) Original Customs copy of EPCGA including condition sheet along with photocopy.

c) Original Bond (with photocopy) in format prescribed (vide Board’s Cir No. 58/2004 – Cus) covering the duty ordinarily leviable but for the relevant exemption, and interest @ 15% for the period as per export obligation specified on the EPCGA.

d) Original Bank Guarantee (with two copies) signed by two Officers of the Bank and valid for the entire period of export obligation under the EPCGA, as the case may be. If validity of BG is for lesser period, then too BG validity should be valid for at least 3 years and with unconditional self renewal clause or undertaking from Bank to keep it alive till Bond (for which BG given) is fully discharged by Customs.

e) It may be noted that normal bank guarantee is 100%.

f) But where a lower BG is claimed in terms of Board’s Circular No.58/2004 - Cus dated 21.10.2004 (as modified, by Cir No. 17/2009-Cus) –

AH shall submit an Affidavit affirming that AH has not been defaulted on export obligation in respect of any Advance Authorization / EPCG Authorization issued to him in the past and also that he has not been penalized, during the last 3 financial years, under provisions of Customs Act, 1962, Central Excise Act, 1944, Foreign Exchange Management Act (FEMA) and /or Foreign Trade (Development and Regulation) Act 1992.

In addition,

I. If AH claims Nil BG in terms of Para 3.1 (a) to (e) of Board’s Circular No.58/2004 - Cus dated 21.10.2004 (as modified, by Cir No. 17/2009-Cus), he shall submit-

A) If registered with Central Excise, the relevant proof duly certified by jurisdictional Superintendent of Central Excise

B) If not registered with Central Excise but registered member of an Export Promotion Council, a certificate from the concerned EPC

C) In other cases, a Certificate (along with evidences of export) duly authenticated by a practicing Chartered Accountant (who is a Service Tax assessee and declares his ST code and other registration details on the Certificate)

II. If AH claims concessional (non – Nil) BG in terms of Para 3.1 (f) (1) of Board’s Circular No.58/2004 - Cus dated 21.10.2004 (as modified) he shall submit any one of the following document sets -  

A) Permanent Central Excise Registration Certificate duly certified by Jurisdictional Superintendent of Central Excise and PAN Card

B) Permanent S.S.I. Registration Certificate issued by District Industries Centre and PAN Card

C) Permanent Registration Certificate issued by Secretariat for Industrial Assistance, New Delhi and PAN Card or

D) Any other Registration Certificate as a proof of his manufacturer exporter status and previous export performance certificate certified by Chartered Accountant/any Export Promotion Council and PAN Card.

III. If AH claims concessional (non – Nil) BG in terms of Para 3.1 (f) (2) or (3) of Board’s Circular No.58/2004 - Cus dated 21.10.2004 (as modified, last by Cir No. 17/2009-Cus dated 25.5.2009) any set of documents showing evidencing fulfillment of criteria specified in said amended Board’s Circular.

IV. If AH claims concessional (non – Nil) BG in terms of Para 3.1 (g) of Board’s Circular No.58/2004 - Cus dated 21.10.2004 (as modified, last by Cir No. 17/2009-Cus dated 25.5.2009), attested copy of the appointment as Custodian by jurisdictional Customs/Central Excise Authority.

a) DOS/TA (EPCG) shall submit the file with the abovementioned documents, and a letter (for confirming genuineness of BG) addressed to the concerned Bank/Financial Institution, to the AO/Supdt (EPCG] who shall further scrutinise and cross check the terms and conditions of the Bond/BG including calculation of duty foregone as per the relevant Customs notification and exemption duty structure for Bond amount, and claim of BG other than 100% in terms of Board’s Circulars, its renewal clauses. The AO/Supdt shall, inter alia, indicate in his noting the month/year in which each of the bolck obligations would fall due. AO/Supdt also make the appropriate recommendation regarding acceptance of Bond/BG and its countersignature to the DC/AC and put up the file.

b) On acceptance of Bond/BG by DC/AC, the reverse of the original EPCGA shall bear endorsement of both AO/Supdt and DC/AC (EPCG).

c) AO/Supdt (EPCG) shall then return file to DOS/TA (EPCG) along with the letter for confirming genuineness of the BG, signed by the AO/Supdt.

d) DOS/TA (EPCG) will Record in EPCG Master Register, against S/40 number (Serial number of entry in the Register), the details of EPCGA, Customs Notification, the relevant month/year in which different block obligations are due (from the file), duty foregone, details of Bond, details of BG accepted including BG No., expiry date, name and full address of Bank/FI, etc.

e) Then DOS/TA (EPCG) shall send file containing original Bond & Bank Guarantee to BBG Cell for generation of Job Number.

f) BBG cell will send the Job Number printout (Bond Checklist) to DC/AC (EPCG), who will electronically accept the Bond in EDI System, thereby generating the Bond Number.

g) The Bond Number shall be endorsed by BBG Cell on the file/original EPCGA along with endorsement of having received the original Bond/BG and then file will be returned to DOS/TA (EPCG).

h) DOS/TA (EPCG) will endorse EDI Bond Number in EPCG Master Register and endorse the S/40 number on the letter (already signed by AO/Supdt) to the Bank/Financial Institution, and cross check that relevant photocopies of EPCGA, Bond, BG continue to be in the file along with the original EPCGA .

i) Then DOS/TA (EPCG) shall return the original EPCGA to the AH against acknowledgement in the S/40 Register, only after ensuring that the entries in EPCG Master Register specified in j) and n) above are complete.

j) The DOS/TA (EPCG) shall issue the letter to Bank/Financial Institution and keep files serially, S/40-wise in EPCG Section.

k) Meanwhile, the AH shall submit the details of EPCGA & Bond Number to the AO/Supdt (License) by way of producing the original EPCGA which contains these details on its reverse. The AO/Supdt (License) will then activate the EPCGA in EDI.

l) In cases where the Bank confirms authenticity of BG, it shall be so entered in EPCG Master Register and countersigned by AO/Supdt (EPCG). Where no reply is recevied from Bank/FI in 10 days, the DOS/TA (EPCG) shall put up the file to the Group AC/DC (EPCG) through the AO/Supdt (EPCG) for further necessary action.

m) In the intervening time, with the AO/Supdt (License) having activated the EPCGA in EDI, import may occur under the relevant EPCG License/Customs notification.

n) When import occurs, the AO/Supdt of Import Shed granting ‘Out of Charge’ will invariably forward photocopy of the Bill of Entry to EPCG Section, where DOS/TA shall enter the details of Bill of Entry in the EPCG Master Register and specifically indicate on the Register, the month/year in which the six month period for producing Installation/Registration (in case of vehicle) Certificate shall fall due.

Obligation of Authorization Holders related to Bank Guarantees & Installation; Interim-block and Overall Export Obligations

5. There are specific obligations on Importer/AHs in the Customs notifications. These include, –

a) Keeping their Bank Guarantees valid till Bond is discharged by Customs

b) Producing before the DC/AC of Customs the Installation Certificate (or, in case of import of vehicles, Certificate of Registration as Tourist Vehicle) within 6 months of import. Amongst, other things, the Installation Certificate (or, in case of import of vehicles, Certificate of Registration as Tourist Vehicle) should carry details directly correlate-able with the specific bill of entry and EPCGA, for it to be acceptable.

c) Fulfilling at least 50% of export obligation up to the penultimate (last but one) block (including specific obligations for blocks prior to the penultimate block, if any); fulfilling overall export obligation in specified time frame, etc. AH have to submit proof of fulfillment of export obligation. In doing so, AH shall submit information in Statement (format specified in Anenxure A) and documents (shipping bills, BRCs) enabling the verification. The time frames/limits for submission (of such proof) broadly dovetail the export obligation periods.

6. Upon submission of installation certificates and proof of fulfillment of export obligations, the EPCG Section (Monitoring) shall deal the matter in individual files and decide outcome at the level of DC/AC. This outcome shall also be recorded on EPCG Master Register by DOS/TA and counter signed by AO/Supdt and DC/AC. It may be noted that where Installation Certificate is issued by Chartered Engineers, in 10% cases (selected by DC/AC), the outcome shall be decided by DC/AC only after contents of Certificate are cross-confirmed from Jurisdictional Central Excise Authority.

7. Presently, the active customs notifications require 50% of export obligation to be completed in first block (penultimate block). If this is verified in detail by EPCG Section (Monitoring) and found satisfactory at level of DC/AC, then when EODC is received from DGFT at end of second/final block, Customs would likely accept that EODC without further verification. Exceptions to this will arise where – (a) there is specific intelligence suggesting misuse (b) there are reasonable grounds recorded in writing calling for not accepting without verification (c) EODC from DGFT bear requirement that Customs carry out verification.

8. In all pending cases, where the export obligations up to the penultimate (last but one) block (including specific block obligations for blocks prior to the penultimate block, if any) and/or installation certificates, are already due but have not yet been verified by EPCG Section (Monitoring), the AHs are requested to come forward to have these verified. This will, inter alia, aid processing when final block gets over. In absence of such pre-final verifications, the acceptance of the final EODC will be more time consuming and require production of older records for verification. Therefore, it is in AH’s interest to come forward for pre-final verifications.

9. In cases where Customs does not receive its copy of EODC directly from DGFT, but AH submits its own copy, then this latter copy will be first sent to DGFT for confirming its genuineness.

The procedure shall be reviewed when EODCs begin to get transmitted electronically from DGFT to ACC

F.No.: S/3-Misc-EPCG-64/2010 ACC

Annexure A

Block Wise Export Obligation Fulfilment Statement

(on Company/Firm letter head)

Refer to customs file No. _______________. The export obligation in respect of the EPCG Licence No ________ dated _________ is fulfilled for the Block ______. The details are as under:

Import Details

Sr No

Bill of Entry No & date

Duty foregone Amount

Date of submission of Installation Certificate

Remarks

Export Details

Sr No

Shipping Bill No & Date

FOB value

Port of Export

BRC Date

Remarks

Summary:

1. Total Export Obligation to be fulfilled in Block:____________

2. Total Export Obligation fulfilled:____________

3. BRC yet to be received for the amount: _____________

The Foreign Exchange which is pending for realization shall be realized within the time permitted by the FEMA. We further state that the above details are true to the best of my knowledge.

Date: (Signature)

Place: Name & Designation

Company Seal

Note- signature and seal should be there on each page of this document or its attachments