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EPCG Scheme

EPCG SCHEME

Export Promotion of Capital Goods Scheme(EPCG)

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    EPCG Scheme

    Export Promotion of Capital Goods Scheme(EPCG)

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      6000 +
      Business served
      9.6/10
      Customer Ratings
      100 %
      Satisfaction

      What is EPCG Scheme?

      EPCG Scheme was launched by the government that allows import of capital goods at zero rates of customs duty. However, the scheme is subject to an export obligation, which equivalent to 6 times of duty saved on the importation of such capital goods within 6 years from the date of issuance of the EPCG authorisation.

      WHO IS ELIGIBLE TO CLAIM EPCG BENEFITS?

      Manufacturer exporter(s) tied up with or without supporting manufacturer(s)

      Merchant exporter(s) tied up with a supporting manufacturer(s)

      Service exporter(s)

      WHAT ARE EPCG BENEFITS?

      Duty Exemption

      EPCG Scheme allows exemption of the following duties:

      • Basic Customs Duty (BCD)
      • Additional duties listed under sub-section (1), (3), (5) of Customs Tariff Act 1975
      • IGST (available up to 31st March 2019)

      Export Obligation

      However, these benefits are subject to an export obligation, which is equivalent to 6 times the duty saved on the import of capital goods to be fulfilled in 6 years. Additionally, the Export Obligation should be over and above the average level of exports in the preceding 3 financial years.

      HOW WILL WE HELP YOU GET EPCG BENEFITS?

      PLANNING & STRATEGY

      We help you in Extension of Export Obligation period in case the export obligation is not fulfilled in the allotted time.

      DOCUMENTATION & PAPERWORK

      We help in completing the procedural requirement and documentation that includes forms, declarations, certificates and submitting them before Director General of Foreign Trade

      FOLLOW UP & QUERIES

      We follow up with DGFT Authorities and draft replies to all the queries / deficiencies raised to get the EPCG Authorisation in time with a minimal delay

      CERTIFICATION & BOND

      We help you get Export Obligation Discharge Certificate (EODC) and Bond-Cancellation after fulfilling the export obligation

      TRACKING & PERFORMANCE

      We help you in post EPCG compliance by keeping a track of export performance and fulfilled export obligation.

      EXTENSION & SUPPORT

      We help you in Extension of Export Obligation period in case the export obligation is not fulfilled in the allotted time.

      Frequently Asked Questions

      All you need to know before applying for EPCG Scheme:

      In EPCG Scheme, the exporter can import capital goods duty free i.e. Zero custom duty and one has to export finished goods worth 6 times of the actual duty saved value in 6 years. The main goal of the EPCG Scheme is to improve India’s competitiveness in the manufacturing sector.

      The duty free authorization issued by DGFT RA is called EPCG License. It is Non-transferable license. It is used to import duty free capital goods.

      Zero duty EPCG Scheme allows import of capital goods for pre-production, post production and production at zero customs duty, subject to an export obligation equivalent to 6 times of actual imported duty-saved value in 6 years.

      In order to obtain an EPCG License from DGFT, the primary requirement is to file an online application with the RA of DGFT with DSC. While applying online application all the necessary documents are required to be uploaded. We have an experience team who can help you in applying for EPCG License.

      Maintenance of Average Export Obligation is a major problem in EPCG Cases which we come across regularly. Therefore If the Company is sure to achieve stable export orders in the years to come, then the EPCG Scheme is a very good option for them.

      Yes, the Average Export Obligation imposed in such cases will be zero.

      This scheme is beneficial for those Exporters who intend to pay all the duties in cash at the time of Import and after fulfilling an Export Obligation, then claim the benefit of duty-free in the form of Duty Credit Scrips.

      On receiving the EPCG License from DGFT the next step would be to register the license at Customs. It is not possible to clear the machinery duty-free unless you register the license at the port where the consignment will arrive. License is registered to the port of customs as mentioned in the license.

      Yes, it is mandatory to register EPCG License at customs.

      Yes, we can amend the EPCG License and below are the details-

      • If the Authorization holder has received the license but wanted to procure indigenously, the holder can amend the license and take an invalidation letter.
      • Due to changes in contract or increase in the value of imported capital goods, there will be a change in CIF value so we can amend the license.
      • Some time we are unable to import due to some or the other problem and the validity of import is going to expire so we can apply for revalidation of license.
      • Sometimes we want to add a new export product in the EPCG License due to some or the other reason. In such cases also, an EPCG license can be amended and new export products can be added.

      The following details should be mentioned in the shipping Bill to be counted in EPCG Scheme,

      1. EPCG License No. Should be mentioned in the shipping bill,
      2. Export Product with ITC HS code mentioned in the shipping bill should be the same as on License.

      Yes, Capital Goods/ machinery can be obtained from Domestic Suppliers with the help of an Invalidation Letter.

      1. Benefit to Domestic Supplier – he can claim the benefits of Deemed Exports against such supplies.
      2. Benefit to EPCG Authorization Holder – Specific Export Obligation will be decreased by 25% and such supplies will not attract GST until 31.03.2021. (Date may be extended from time to time).

      Yes, we can calculate the shipping consisting of Advance Authorization/Duty Drawback/DFIA/MEIS No. to be counted in EO fulfillment only if EPCG license no. is mentioned. It means that the EPCG Scheme can be combined with any other export promotion scheme.

      After obtaining an EPCG license from DGFT, it has to be registered at Customs. Once capital goods is cleared duty-free from Customs, it has to be installed at the said factory premises. An Installation Certificate has to be obtained from the Independent Chartered Engineer or Customs authority as a proof of Installation & commissioning. Once production starts, applicant should complete the export obligation in given time frame and submit all the export documents to DGFT office to close the EPCG license.

      An EPCG Authorization holder needs to install the capital goods imported within a period of six months in front of an Independent Chartered Engineer. The chartered engineer will check that as per the authorization capital goods have been installed in given factory / supporting manufacturer premises or not and also cross verify the capital goods imported details with the license. And as per the verification, he will generate a certificate mentioning company name, Imported capital goods with quantity, BOE details, capital goods installation date on his letterhead with signed and stamped. The certificate generated by an Independent Chartered engineer is called the Installation Certificate. The same original copy should be submitted in DGFT and customs and receive the acknowledgment for the same.

      Export Obligation is a task/job given by the DGFT to the applicant to export certain value of goods in certain time frame. Export obligation is mandatory to be fulfilled.

      No, in the current Foreign Trade Policy 2015-21, there is no provision to fulfill export obligation through alternate products. Export Obligation will be completed only with those finished goods produced from imported capital goods mentioned in the EPCG License.

      Yes, Deemed export is counted towards fulfillment of Export Obligation under EPCG Scheme. Supply to EOU/STP/EHTP/BTP Unit is called as deemed export and can be counted towards EO Fulfillment along with supply to SEZ units.

      Yes, but in such cases Shipping Bill / Bill of Exports should contain the name of Third Party along with EPCG Authorization number.

      In case of direct export, EO is calculated as 6 times of actual duty saved value. And in domestic sourcing, EO is calculated as 6 times of duty save value calculated as per notional custom duty on FOR Value.

      Provisions for extension in the EO Period shall be governed as per the EPCG license issue date. For example, the EPCG License issued prior to the notification of FTP 2015-20 shall be governed by relevant provisions of HBP Vol 1 applicable at the time of issuance of EPCG Authorization. As per Current Policy in place – Yes, We can extend the Export Obligation period by two years after completion of 6 Years (6+2=8 Years). We can extend by paying a composition of 5% for the first year and 10% for the second year on the proportionate Duty saved value on pending / unfulfilled Export Obligation. But the minimum composition fee to be paid is Rs. 10,000/-. Alternatively, if the Exporter doesn’t want to pay the composition fees and has procured new export orders. He can enhance the EO by 10%/20% for the first/second-year respectively. In such cases, no composition fees will be required.

      Further extension of EO after (6+2=8 Years) is difficult. You have to apply to the EPCG Committee at DGFT New Delhi for an extension. The extension can be granted of an additional 2 years in case of genuine hardships only.

      If the authorization holder failed to fulfill the specific export obligation but maintained average export obligation, the holder has to pay proportionate Duty Saved Amount with 15% annual interest on pending specific export obligation on actual imported capital goods at customs and submit the proof of duty paid to license authority concerned.

      If Average Export Obligation is not fulfilled, but Specific EO is fulfilled, Then Entire duty saved amount with 15% annual interest should be paid at Customs and submit the proof of duty paid to DGFT for regularization.

      If the Authorization holder has fulfilled 100% Average Export Obligation each year from the issue of license and 75% or more of Specific Export Obligation in half or less than half of the original Export Obligations period, the holder can redeem the license as per para 5.09 FTP.

      If the EPCG Scheme is availed for the below mentioned Export products, then the average export obligation will be exempted:

      • Handicrafts,
      • Handlooms,
      • Cottage & Tiny sector
      • Agriculture
      • Aqua-culture (including Fisheries), Pisciculture,
      • Animal husbandry,
      • Floriculture & Horticulture,
      • Poultry,
      • Viticulture,
      • Sericulture,
      • Carpets,
      • Coir, and
      • Jute.

      Apart from the exemption to the above sectors, relaxation is also provided to such sectors where the global growth rate has declined more than 5% for a particular FY.

      The next step is to close the EPCG License and apply for redemption/Closure. We need to fill the redemption form ANF 5B along with the specified documents mentioned in the form and submit it with the original license at the DGFT RA for Closure.

      EPCG Redemption or EPCG License closure procedure is a mechanism through which the DGFT monitors the fulfilment of the export obligation given to holder by the Government. We can help you in closure of EPCG License by preparing correct documents as per DGFT Rule.

      The License holder has to fill the redemption form of ANF 5B with the relevant documents mentioned and submit to DGFT RA. The DGFT will issue a closure certificate called Export Obligation Discharge Certificate.

      Yes, we do help in redemption of EPCG License.

      We can surrender the EPCG License, if the holder does not want to import capital goods by submitting the relevant documents. We can help you in preparing and submitting the documents for surrender at DGFT.

      No, EPCG License is non-transferable.

      No, EPCG License is not possible to sell.

      The import validity of EPCG License is 2 years and export validity of EPCG License is of 6years from the issue of license.

      More questions? Seek help of our experts

      Call us at: +91 9930500991

      Email us: info@avigroup.in

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