EPCG Scheme for Export Promotion of Capital Goods

EPCG-EOU-STP Schemes Dr M.S Krishna Kumar, advocate

Export Promotion Capital Goods Scheme- EPCG Object facilitate import of capital goods for producing quality goods/services - Upgradation of technology for indigenous industry - facilitate import of CG to produce quality goods/services enhance India s export competitiveness pre- production, production, post production Import of capital goods except in negative list (Appendix 5F) allowed Zero Customs Duty, IGST, Compensation Cess (earlier 0% to 3%) for physical exports Presently 0% EPCG Scrip Presently 6 times duty saved 6 years Capital goods for project imports also permitted - can be procured indigenously Para 5.07 FTP Authorization valid 24 months revalidation not permitted Capital goods include As defined in Para 11.08 FTP including CKD/SKD Computer system & software which are part of capital goods Spares, moulds, dies, jigs, fixtures, tools & refractories

EPCG Scheme Coverage of Scheme Manufacturer exporter with or without supporting manufacturer Merchant exporter tied to manufacturer exporter Name of supporting manufacturer mentioned in EPCG before installation in the premises of supporting manufacturer In case of change in supporting mfr the RA to intimate jurisdictional customs Conditions Actual user condition till EO fulfilled and EODC granted EO to be fulfilled by export of goods by AA holder or through supporting mfr

EPCG IGST, Compensation Cess paid in cash same shall not be taken for computation of duty saved Restricted import/export items permitted after approval of Exim Facilitation Committee (EFC) of DGFT Available for common service provider (CSP) certified by DGFT/PM-MITRA electricity, water, sanitation, gas, telecom, transport covered under CSP- export by users of CSP counted for fulfillment of EO Export obligation actual duty/taxes/cess saved for domestic notional EO subject to 6 times of duties saved 6 years period in addition to average export obligation (AEO) (last 3 years) AEO not required for handicrafts, handloom, KVIC products, poultry, coir, sericulture etc.

EPCG- Conditions EO over and above average of exports of preceding 3 years for same/similar products For indigenous procurement of CG- EO shall be 25% less than fixed - Shipments under AA/DFIA, DBK, RoSCT, RODTEP schemes are also counted for fulfillment of EO EO by physical exports or Deemed exports -Para 7.03 FTP ( AA/DFIA, EOU/STP, EPCG) EPCG holder may export directly or third party exports Royalty payments received in freely convertible currency & forex payments for R& D charges are counted for EO Payment received in rupee (as mentioned in Appendix 5D) also to be counted for export obligation Indigenous CG when sourced from domestic manufacturer he is eligible for deemed export benefits under GST regime- can be procured from EOU which will be counted for positive NFE Goods to be installed within 6 months of import- to file certificate of Chartered Engineer before Customs

EPCG Authorization holder to executed Bond with or without BG with customs BG equal to 100% of differential duty (merchant exporters) 25% in case of manufacturer exporter. Scheme permits import at NIL/Concessional rate customs to have effective control and liaison with RLA DGFT Other Formalities EPCG No & date to be mentioned in SB/Invoice After fulfilment of EO to file documents with RA/DGFT EODC to be produced before customs for discharge of Bond/BG RA can grant extension of block-wise period upto 2 yrs on payment of composition fee of 2% of duty saved RA can grant further 2 year period of EO if Authorization holder pays 50% differential duty on unfulfilled EO portion

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