EPCG Scheme in FTP 2002
Ř Specifies basic
customs duty of five percent with full exemption of additional and special
additional duty
Ř Licence issued by DGFT
will be debited by the customs
Ř Bond, surety and
security to available export obligation at five times of the import value to be
executed with customs.
Ř Specifies proportion
of export obligation to be fulfilled in four blocks covering eight years and
twelve years.
Ř Export obligation
fulfillment will be checked by the customs and unfulfilled obligation will be
attracted interest at 24 percent on the proportionate duty saved amount.
Ř Certificate of
installment from Excise Commissioner or Chartered Engineer required within six
months of imports.
Ř
Other
conditions relates exceptions for supporting manufacturers, agricultural
products, service exporters, extension of export obligation, defective goods,
export obligation fulfillment to third party and deemed exports.
Ntfn 44 In exercise of the powers conferred
19.04.2002 by sub-section (1) of section
25 of the Customs
Act, 1962 (52 of 1962), the Central Government, being satisfied that it is
necessary in the public interest so to do, hereby exempts goods specified in
the Table annexed hereto from so much of the duty of customs leviable thereon
which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of
1975) as is in excess of the amount calculated at the rate of five percent
ad valoram and from the whole of the additional duty and special
additional duty leviable thereon respectively under section 3 and 3A of the
said Customs Tariff Act.
2.
The exemption
contained in above paragraph, shall be subject to the following conditions,
namely:-
(1)
the goods imported are covered by a valid licence issued under the Export
Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Export and
Import Policy permitting import of goods at the rate of five percent duty and
the said licence is produced for debit by the proper officer of the customs at
the time of clearance;
Provided
that for the import of spare parts, the validity period of the licence shall be
deemed to be the period permitted for fulfillment of the export obligation in
full;
(2) the importer executes a bond in
such form and for such sum and with such surety or security as may be specified
by the Assistant Commissioner of Customs or Deputy Commissioner of Customs
binding himself to fulfil export obligation equivalent to five times the CIF
value of the goods imported on FOB basis, as specified in the licence, or for
such higher sum as may be fixed by the Licensing Authority, within a period of
eight years from the date of issue of licence, in the following proportions,
namely:-
|
SNo. |
Period from the date
of total issue of licence |
Proportion of export
obligation |
|
(1) |
(2) |
(3) |
|
1. |
Block of 1st and 2nd year |
Nil |
|
2. |
Block
of 3rd and 4th year |
15% |
|
3. |
Block
of 5th and 6th year |
35% |
|
4. |
Block
of 7th and 8th year |
50% |
Provided
that where the CIF value of licence is not less than Rs. 100 crores or where
the licence is issued to Unit in the agri export zones as may be notified by
the Director General of Foreign Trade in the Ministry of Commerce and Industry
the export obligation shall be fulfilled within a period of 12 years from the
date of issue of licence in the following proportions, namely-[Substituted by
116/28.10.2002]
|
SNo. |
Period from the date
of issue of licence |
Proportion of total
export obligation |
|
(1) |
(2) |
(3) |
|
1. |
Block of 1st, 2nd, 3rd, 4th and 5th year |
Nil |
|
2. |
Block
of 6th, 7th and 8th year |
15% |
|
3. |
Block
of 9th and 10th year |
35% |
|
4. |
Block
of 11th and 12th year |
50% |
Provided further that where a sick
unit notified by the Board for Industrial and Financial Reconstruction (BIFR)
is subsequently taken over by anther unit for revival, the export obligation
may be fulfilled within a period of 12 years from the date of issued of
license:
Provided
also that the export obligation of particular block may be set off against the
excess exports made in the said preceding block(s); [Substituted by
116/28.10.2002]
(3)
the importer produced within 30 days from the expiry of each block from the
date of issue of licence or within such extended period as the Assistant
Commissioner of Customs or Deputy Commissioner of Customs may allow, evidence
to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner
of Customs showing the extent of export obligation fulfilled, and where the
export obligation of any particular block is not fulfilled in terms of the
preceding condition, the importer shall within three months from the expiry of
the said block pay duties of customs of an equal amount equal to that portion
of duties leviable on the goods but for the exemption contained herein which
bears the same proportion as the unfulfilled portion of the export obligation
bears to the total export obligation together with interest at the rate of 15%
per annum from the date of clearance of the goods;
[Substituted by 113/16.10.2002]
(4)
the capital goods imported, assembled or manufactured are installed in the
importer’s factory or premises and a certificate from the jurisdictional
Assistant Commissioner of Central Excise or Deputy Commissioner of Central
Excise or an independent Chartered Engineer, as the case may be, is produced
confirming installation and use of capital goods in the importer’s factory or
premises, within six months from the date of completion of imports or within
such extended period as the said Assistant Commissioner of Customs or Deputy
Commissioner of Customs may allow:
Provided
that in the case of, -
(i) manufacturer
exporter and merchant exporter having supporting manufacturer(s) or vendor(s),
(ii) import of
irrigation equipment for use in contract farming for export of agricultural
products, and
(iii) importer
rendering services,
the
capital goods may be installed at the factory or premises of such other person
whose name and address are endorsed on the licence referred to in condition (i)
and where the bond for full difference of duty, if necessary, in terms of
condition (2), with a bank guarantee is executed by the importer and such other
person binding themselves jointly and severally to fulfil the export obligation
and all other conditions of this notification and to pay duty with interest in
case of default;
(5)
Notwithstanding anything contained in condition (3), where the Licensing Authority
grants an extension of block-wise period for any block(s) or overall period of
fulfillment of export obligation upto a period of two years or regularization
of shortfall in export obligation, not exceeding five percent of such export
obligation, the said block-wise period or overall period of export obligation
may be extended and the said shortfall in export obligation be condoned by the
Assistant Commissioner of Customs or Deputy Commissioner of Customs:
Provided that in respect of license having overall export
obligation period of 12 years extension of overall period of export obligation
shall not be allowed; [Substituted by 116/28.10. 2002]
3. Where the goods are found defective
or unfit for use, the said goods may be re-exported back to the foreign supplier
within 3 years from the date of payment of duty on the importation thereof:
Provided that at the time of re-export the goods are
identified to the satisfaction of the Assistant Commissioner of Customs or
Deputy Commissioner of Customs as the goods which were imported.
4. where the total exports of a sector
or product group during the year 2007-08 has declined by more than 5% as
compared to the year 2006-07, the average export obligation of the licencee for
2007-08 may be reduced proportionate to the reduction in exports of that
particular sector or product group during 2007-08 as against 2006-07. [Inserted
by 65/09.05.2008]
|
Table |
|
|
SNo. |
Description of goods |
|
(1) |
(2) |
|
1. |
Capital
goods. |
|
2. |
Capital
goods in SKD/CKD condition to be assembled into capital goods by the
importer. |
|
3. |
Components
of capital goods required for assembly or manufacture of capital goods by the
importer. |
|
4. |
Spare
parts not exceeding twenty percent of the value of goods specified at serial
Nos. 1, 2 and 3 as actually imported and required for maintenance of capital
goods so imported, assembled, or manufactured. |
Explanation – In this notification, -
(1)
“Capital Goods” means any plant, machinery, equipment and accessories required
for –
(a)
manufacture or production of other goods, including packaging machinery and
equipments, refractories, refrigeration equipment, power generating sets,
machine tools, catalysts for initial charge, and equipment and instruments for
testing, research and development, quality and pollution control;
(b)
use in manufacturing, mining, agriculture, marine, aquaculture, animal
husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and
sericulture;
(c)
rendering services;
(2)
“Export and Import Policy” means the Export and Import Policy 2002-2007
published vide notification of the Government of India in the Ministry of
Commerce, No. 1/2002-2007, dated the 31st
March, 2002;
(3)
“Licensing Authority” means the Director General, Foreign Trade appointed under
section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of
1992) or an officer authorized by him to grant a licence under the said Act.
(4)
“export obligation”, -
(i) in
relation to importers other than those rendering services, means export, to a
place outside India, of products manufactured with the use of capital goods
imported, assembled or manufactured in terms of this notification:
Provided
that export obligation may also be fulfilled by
(a) export of same
product capable of being manufactured with the use of said capital goods; or
(b) export of same
product manufactured in different units of the licence holder; or
(c) through third
party exports made by an exporter or manufacturer on behalf of the licence
holder by exporting the same product and in such cases, inter-alia the Shipping
bills shall indicate name of both the third party and the licence holder; or
(d) making supplies of
same product in terms of sub paras (a) (b) (d) (e) (f) (g) (h) (i) and (j) of
paragraph 8.2 of the Export and Import Policy;
(ii) in relation to
importers rendering services, means, receiving payments in freely convertible
foreign currency for services rendered through the use of such capital goods;
(iii) means, export of
goods in terms of the notification of the Government of India in the Ministry
of Commerce and Industry (Department of commerce) No 28 (RE-2003)/2002-2007
dated 28th January 2004. [Sub-clause 4(iii) inserted by 29/28.01.2004]
(iv) shall
be, over and above, the average level of exports achieved by the licencee in
the preceding three licencing years for same and similar products [Inserted
by 65/09.05.2008]