EPCG SCHEME

 

What are the conditions and obligations under EPCG Scheme?
What are the conditions for import of capital goods under EPCG scheme? Can second hand goods be imported under this scheme?
What are the duty concessions available and Export obligation to be fulfilled under the EPCG Scheme ?
Who are eligible to avail of the EPCG Scheme?
How to obtain an Import Licence under the EPCG Scheme?
Is the Import of components and goods in SKD/CKD condition allowed under this Scheme?

 

 

 

Q.1      Who are eligible to avail of the EPCG Scheme?

 

A.        The manufacturers, Exporters and Merchant Exporters are eligible to avail of this Scheme.

 

Q.2      How to obtain an Import Licence under the EPCG Scheme?

 

A.        The eligible persons who desire to operate under the EPCG Scheme should make an application in the form given in Appendix 10 A of the Hand Book alongwith documents prescribed therein too the Director General of foreign Trade (DGFT) or to the regional Licensing authorities along with necessary information/documents to obtain an Import licence.  Licences are issued, under this scheme by the director general of foreign trade or his regional officers depending upon the value of the licence subject to execution of legal undertaking and bank guarantee by them undertaking among other things to fulfill their export obligation within the specified period.   The import licences issued under this scheme shall be deemed to be valid for the goods already shipped/ arrived provided, the customs duty has not been paid for the goods have not been cleared from the customs.

 

 

 

 

 

Q.3      What are the duty concessions available  and Export obligation to be fulfilled under the EPCG scheme?

 

Customs Duty

Export Obligation

Period

FOB Basis

NFE Basis

10%

 il duty (in case CIF value is Rs.20 crore or more)

(a)    Nil duty in case CIF Value is Rs.1 crore or more for electronics, food processing, textiles, plastics, leather, sports goods, gem & jewellery sectors and produce and products of agriculture, aquaculture, animal husbandry, floriculture, horticulture, piscculture, viticulture, poultry and sericulture, bio-technology sector, the following sub-sectors of Engineering sectors: Machine tools, parts and accessories; thereof automotive components and accessories, bicycle parts and accessories, handtools, cutting and small tools; castings and forgings (ferrous and non-ferrous) all sorts; pumps, electric motors  and parts thereof; fasteners all types (ferrous and non-ferrous) bright bars and shafting; scientific and surgical instruments and the following sub-sectors of chemicals; organic chemicals; Hotels, Travel agents tour operators or tourist transport operators who are recognized as Export House, Trading House, Star Trading House and Super Star Trading House or Service Export House, International Service Export House, International Star Service Export House, International Super Star Services Export House.

(b)   Nil duty incase CIF value is Rs.10 lakh or more for software sector

4 times cif value of CG

6 times cif value of CG

 

6 times cif value of CG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 times cif value of CG

 

 

 

 

 

 

 

 

 

 

 

 

 

Not applicable

5 times cif value of CG

 

6 times cif value of CG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5 times cif value of CG

5 years

8 years

 

6 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 years

 

 

Q.4      What are the conditions for import of capital goods under EPCG scheme? Can second hand goods be imported under this scheme?

 

A.        Import of capital goods under this scheme shall be subject to actual used condition till the export obligation is completed.  Both new an second hand capital good may be imported.  Second hand capital goods at permitted subject to the condition that such goods have a minimum of residual life of 5 years and the importer furnishing to the customs at the time of clearance of goods a self declaration to the effect that the second hand capital goods being imported have a minimum residual life of five years in the prescribed form.   In case the value of the second hand capital goods imported is rupees one crore or more the importers shall also furnish to the customs at the time of clearance of goods a certificate from the Inspection and certification agency to the effect that the purchase price is reasonable.   In case of imports at zero duty the minimum residual life of the second hand goods shall be ten years.  The concessional assessment is extended only to the goods covered by an licence issued under the EPCG Scheme.

 

 

 

 

 

Q.5      Is the Import of components and goods in SKD/CKD condition allowed under this Scheme?

     

A.        An eligible person may apply for a licence under the EPCG scheme t import the capital goods in SKD/CKD condition or components of the capital goods in SKD/CKD condition or components of such capital goods and may assemble or manufacture, as the case may be the capital goods.  This facility shall not be available for replacement of parts.

 

 

 

 

 

Q.6      What are the conditions and obligations under EPCG Scheme?

 

A.        The following are the conditions and obligations;

(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;

(ii)                The exports shall be direct exports in the name of the importer.  However, the importer may export through a third party provided the name of the importer/licence holder is also indicated  in the Shipping Bill.  If a merchant exporter is the importer the name of the manufacturer shall be indicated in the Shipping Bill;

(iii)               Export proceeds shall be realized in freely convertible Currency;

(iv)              Exports shall be physical exports. Deemed exports shall also be taken into consideration for fulfillment of export obligation but the licencee shall not be entitled to claim any benefit of Deemed Exports;

(v)                The export obligation shall be in addition to any other export obligation undertaken by the importer and shall be over and above the average level of exports of the same product achieved by him in the preceding three licensing years.  If the exporter achieves an export of 75 per cent of the annual value of the production of the relevant export product, the export obligation under this scheme shall be subsumed under that export provided, however, that the aggravate value of such exports during the specified period shall not be less than the aggregate value of the export obligation fixed.

(vi)              Where the manufacturer exporter has obtained licences for the manufacture of the same export product both under this scheme and the Duty Exemption Scheme,, the physical exports made under the Duty exemption Scheme shall also be counted towards the discharge of th4e export obligation under this scheme; and

(vii)             In the case of export of computer software, the export obligation shall be determined in accordance with policy but the conditions that exports hall be over and above the average level of exports in the preceding three licensing years shall not apply.