Customs to Fall in Line with DGFT on Delays
in Export Obligation Discharge Certificate (EODC) in EPCG Cases
[CBEC Circular No. 16 dated 2nd
May 2017]
I am directed to invite your
attention to para 2(d) of Circular No. 5/2010-Cus dated 16.03.2010 directing initiation
of action to safeguard revenue in case of non-submission of Export Obligation
Discharge Certificate within the time period stipulated in the relevant Customs
notifications. These directions have been reiterated in para 7 (iii) of
Instruction dated 18th January, 2011.
2. Some
field formations have expressed difficulty in implementing these instructions
stating that when a notice issued (as per time lines prescribed in Customs
notifications) to exporter for enforcement of Bond/BG is taken up for decision,
the exporters plead that they have submitted documents to DGFT for issuance of
EODC and that adjudication process of their SCN may be kept in abeyance till
the time EODC is issued to them by DGFT. However, the proceedings cannot be
kept pending in Call Book as they do not fulfill
criteria prescribed in Circular No. 162/73/95-CX dated 14.12.1995. This leads
to confirmation of demand and further litigation. This is avoidable if the time
period prescribed in Customs notifications is aligned with time period for
issuance of EODC as per FTP/HBP.
3. The
matter has been examined. It is noted that during the Chief Commissioner’s
Conference dated 08-09/01/2016, it has been decided that a simple notice
will suffice to the licence/authorization holder who does not submit the
EODC/Redemption letter within the period prescribed in the relevant Customs
notifications. In these cases also, the principles of natural justice
should be followed. Further, this was reiterated during the Chief
Commissioner’s Conference dated 03.01.2017 wherein it was agreed that in view
of time taken by DGFT in issuance of EODC, the practice of issuance of SCN at
the first stage itself may be replaced by issuance of a simple notice to
defaulters.
4. In
all Advance Authorization and EPCG notifications, the Deputy/Assistant
Commissioners of Customs have power to extend the period to submit proof of fulfillment of EO without any limit. Thus there is
inherent provision in Revenue notifications to keep action of Customs pending
till EODC is issued by DGFT. Moreover, the process of issuance of EODC by DGFT
itself is linked to submission of BRC by the licence holder. The BRC itself can
be submitted as per the period allowed by RBI in terms of the Foreign Exchange
Management Act, 1999. The licence/authorization is also subject to extension,
if any, by DGFT. Hence, alignment of the time period given in Customs
notifications with that given in FTP/HBP may not be required.
5. In
view of the above, the field formations may issue simple notice to the licence/authorization
holders for submission of proof of discharge of export obligation. In case
where the licence/authorization holder submits proof of their application
having been submitted to DGFT, the matter may be kept in abeyance till the same
is decided by DGFT. Institutional mechanism set up in terms of Instruction F.
No. 609/119/2010-DBK dated 18.1.2011 for regular interaction with RA’s of DGFT
should be used to pursue such cases. However, in cases where the
licence/authorization holder fails to submit proof of their application for
EODC/Redemption Certificate, extension/clubbing etc., action for recovery may
be initiated by enforcement of Bond/Bank Guarantee. In cases of fraud, outright
evasion, etc., field formations shall continue to take necessary action in
terms of the relevant provisions.
F. No. 605/85/2016-DBK