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CHAPTER 6 EXPORT PROMOTION CAPITAL GOODS SCHEME |
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Scheme |
6.1 |
New capital goods, including computer software systems, may be imported under the Export Promotion Capital Goods (EPCG) Scheme |
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Import on Concessional Duty |
6.2 |
Capital goods (CG), including jigs, fixtures, dies, moulds and spares upto 20% of the CIF value of the capital goods may be imported at 5% Customs duty subject to an export obligation equivalent to 5 times CIF value of capital goods on FOB basis or 4 times the CIF value of capital goods on NFE basis to be fulfilled over a period of 8 years reckoned from the date of issuance of licence. For calculation of NFE, the provision of paragraph 12.6 of the Policy shall apply. |
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Eligibility |
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(a) |
Under the scheme, manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers are eligible to import capital goods. The capital goods imported by the licence holder shall be installed at the factory of the licence holder or his supporting manufacturer(s)/ vendor(s). However, agricultural exporters and service providers shall be allowed to shift the capital goods, provided advance intimation is given to the concerned Assistant Commissioner of Customs and Excise. Such equipments shall not be sold or leased by the licence holder. |
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(b) |
If the licence issued under the scheme has actually been utilised for import of a value in excess of or less than 10% of the CIF value of the licence, license shall be deemed to have been enhanced/ reduced by that proportion. Export obligation shall accordingly be enhanced/ reduced as per the actual utilisation of the licence. |
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Conditions for Import of Capital Goods |
6.4 |
Import of capital goods shall be subject to Actual User condition till the export obligation is completed. |
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Export Obligation |
6.5 |
The following conditions shall apply to the fulfillment of the export obligation: |
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(i) |
The export obligation shall be fulfilled by the export of goods manufactured or produced by the use of the capital goods imported under the scheme. The export obligation may also be fulfilled by the export of same goods, for which EPCG licence has been obtained, manufactured or produced in different manufacturing units of the licence holder/ specified supporting manufacturer(s)/vendor(s). However, if exporter is processing further to add value on the goods so manufactured, the export obligation shall stand enhanced by 50%. |
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(ii) |
The exports shall be direct exports in the name of the EPCG licence holder. However, the export through third party(s) is also allowed provided the name of the EPCG Licence holder is also indicated on the shipping bill. If a merchant exporter is the importer, the name of the supporting manufacturer shall also be indicated on the shipping bills. At the time of export, the EPCG licence No. and date shall be endorsed on the shipping bills which are proposed to be presented towards discharge of export obligation. |
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(iii) |
Export proceeds shall be realised in freely convertible currency. |
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(iv) |
Exports shall be physical exports. However, deemed exports as specified in paragraph 10.2 (a), (b), (d), (f), and (g) of Policy shall also be counted towards fulfillment of export obligation, but the EPCG licence holder shall not be entitled to claim any benefit under paragraph 10.3 of this Policy in respect of such deemed exports |
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(V) |
The export obligation shall, in addition to any other export obligation undertaken by the importer, except the export obligation for the same product under the Duty Exemption/ Remission Scheme, be as specified in paragraph (vi) below. The export obligation shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products. Wherever the average level of export was fixed taking into account the exports made to such countries as are notified by the DGFT from time to time for this purpose, the average level of exports shall be reduced by excluding exports made to these countries. This waiver shall be applicable to all EPCG licences which have not been redeemed/ regularised. However, exports made against any EPCG licence, except the EPCG licences , which have been redeemed, shall not be added up for calculating the average export performance for the purpose of the subsequent EPCG licence. If the exporter achieves an export of 75% of the annual value of the production of the relevant export product, the export obligation against the EPCG licence shall be subsumed under that export, provided the aggregate value of such exports during the specified period shall not be less than the aggregate value of the export obligation fixed under paragraph 6.2 of this Policy. |
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(vi) |
Where the manufacturer exporter has obtained licences for the manufacture of the same export product both under EPCG and the Duty Exemption/ Remission Scheme or Diamond Imprest Licence/ Replenishment Licence (under chapter-8), the physical exports made under the Duty Exemption Scheme including the DEPB/ DFRC/ Diamond Imprest Licence/ Replenishment Licence shall also be counted towards the discharge of the export obligation under this scheme. |
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(vii) |
In case of export of computer software, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture, the export obligation shall be determined in accordance with paragraph 6.2 of the Policy, but the licence holder shall not be required to maintain the average level of exports as specified in sub- paragraph (v) above. |
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6.6 |
Deleted |
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Import of Components and Goods in Disassembled/ Un-assembled Condition |
6.7 |
A person may apply for a licence under the EPCG scheme to import the capital goods in dis-assembled/ un-assembled condition to be assembled into capital goods by the importer or components of such capital goods required for assembly or manufacture of capital goods by the importer. This facility shall not be available for replacement of parts. |
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Indigenous Sourcing of Capital Goods |
6.8 |
A person holding an EPCG licence may source the capital goods from a domestic manufacturer instead of manufacturing them. In the event of a firm contract between the parties for such sourcing, the domestic manufacturer may apply for the issuance of Advance Licence for Deemed Exports for the import of inputs including components required for the manufacturer of said capital goods . The domestic manufacturer may also replenish the inputs including components after supply of capital goods the EPCG licence holders. The export obligation relating to the EPCG licence shall be reckoned with reference to the CIF value of the licence actually utilized. (Notification No: 36 dated 29.09.2000) |
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Benefits to Domestic Supplier |
6.9 |
The domestic manufacturer supplying capital goods to EPCG licence holders shall be eligible for deemed export benefit under paragraph 10.3 of the Policy. |
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