Dual Issue of Zero Duty EPCG and SHIS
Benefits in FTP 2009-14 Regularised, One of the Two Benefits to be Surrendered
[DGFT Public
Notice No. 30 dated 8th September 2016]
Effect of
this Public Notice: The exporters who have incorrectly
availed simultaneous benefit of zero percent EPCG and SHIS have been provided
an option to surrender one of the benefits subject to certain conditions.
Subject: Notification
of procedure to be followed in cases of incorrectly issued simultaneous
benefits of Zero Duty EPCG and SHIS in FTP 2009-14 by the Director General of
Foreign Trade in exercise of powers conferred under Para 2.04 of the Foreign
Trade Policy 2015-2020.
This Directorate had
received references from Directorate of Revenue Intelligence and various
exporters, on the subject of incorrectly issued simultaneous benefits of Status
Holder Incentive Scheme (SHIS) and Zero Duty EPCG Authorization under Foreign
Trade Policy 2009-14. The issue involves Para 5.1(b) of FTP and Para 3.10.3(b) of
HBP 2009-14. The representations have been examined by this Directorate in
consultation with Department of Revenue and it has been decided that exporters
who have been issued or availed such simultaneous benefit of these schemes
shall be allowed flexibility, to the extent specified in this public notice, to
choose one of the two schemes. The option to return either benefit shall be
subject to the following:-
A. Return of SHIS
In case of
return of SHIS (including splits), the unutilized SHIS (part or whole) may be
surrendered by the original holder to whom such SHIS was issued by surrender of
the original SHIS scrip.
The amount of SHIS that
has been utilized, by the original applicant to whom SHIS was issued (who has
not transferred the SHIS) shall be refunded In cash (with interest at the rate
prescribed under Section 28AA of Customs Act from the date of issue of SHIS by
the original applicant.
The amount
of SHIS that has been transferred by original applicant shall be treated as
amount of SHIS utilized and treated accordingly including for purpose of refund
and interest payment by original applicant.
In cases where SHIS was
issued based on exports of immediately preceding year and then zero duty EPCG
was also issued, and the exporter opts to return the SHIS, the power under Para
2.58 of FTP 2015-20
in consultation with relevant Committee would be exercised by DGFT to relax the
FTP/HBP provisions requiring the 'prior' return of SHIS.
B. Return of zero duty EPCG/Post Export EPCG
When zero
duty EPCG (i.e. all relevant authorizations) has to be returned, the amount
equivalent to the duty forgone shall be refunded in cash with interest at the rate
prescribed -
(a) Rate in EPCG notification if EPCG returned was
correctly availed
(b) Rate Under Section 28AA of Customs Act if
EPCG returned was incorrectly availed) by the exporter.
The unutilized zero duty
EPCG (whole or part) may be surrendered. Further, instead of return of zero
duty EPCG (i.e. return of all the relevant authorizations), the exporter may
opt to convert zero duty EPCGs issued till 17.4.2013 to 3% EPCGs (subject to
eligibility) by paying the differential duties plus applicable interest (at the
rate prescribed under Section 28AA) from date of clearance of the goods till
the date of payment. In such cases, SHIS scrip need not be surrendered. This
option shall not be available when the zero duty EPCG is already redeemed by
DGFT.
When zero
duty Post Export EPCG is to be returned, the authorization(s) shall be
surrendered. If any related duty credit scrip(s) against such Zero duty Post
Export EPCG authorization(s) have been issued the same if unutilized may be
surrendered by the original holder [by surrendering the original duty credit scrips]. The amount of such Post Export EPCG scrip(s) that
has been utilized by the original applicant shall be refunded in cash (with
interest at the rate prescribed under Section 28 AA of Customs Act from the
date of issue of the PE EPCG). The amount of PE EPCG Scrip(s) that has been
transferred shall be treated as amount of Post Export EPCG scrip(s) utilized
and treated accordingly including for purposes of payment of interest by exporter.
C. Mode of payment
The amount
shall be paid back to Government in cash. The facility of debiting the amount
in valid freely transferable duty credit scrip issued under Foreign Trade
Policy or in valid SHIS scrip held by the original holder to whom it was
issued, shall be allowed for paying the refund part. However, interest part
shall be always paid in cash.
D. Time Frame
A time frame
of 9 months from provision of option by DGFT is allowed to exporters for the
above.
E. No penal action in cases of incorrect issuance
On account
of different interpretations on the issue in the past, it has been decided in
consultation with DOR that any erroneous issuance of SHIS/Zero Duty EPCG
Authorisation will be considered bonafide error and
no penal action shall be taken against exporters by RAs / field formations of
Custom, including DRI. The Annexure provides the proper interpretation on the
issuance of SHIS and Zero duty EPCG/PE-EPCG benefits.
F. Consequential Action by CBEC
The CBEC
would be issuing a separate Circular for guidance of its field formations.
Annexure to Public Notice No. 30
/2015-20 dated 08.09.2016
Different
Scenarios of incorrect/simultaneous issuance of SHIS & Zero duty EPCG
benefits
Glossary:
S1 SHIS issued for exports made in year 1
S2 SHIS issued for exports made in year 2
S3 SHIS issued for exports made in year 3
S4 SHIS issued for exports made in year 4
E Zero duty EPCG scheme availed i.e. issued
N Not taken i.e not
issued
*SHIS issued
with one year late cut
* * SHIS
issued with two year late cut
|
Different scenarios in different
years on issuance of SHIS, 0% EPCG and 0% Post Export EPCG |
||||
|
|
Year |
SHIS issued |
0% EPCG issued |
REMARKS (reference to 0% EPCG
includes 0% PE-EPCG import authorization) |
|
Year 1 |
2009-10 |
|
|
Not Relevant |
|
Year 2 |
2010-11 |
S1 |
E |
EPCG issued first. Wrong issuance of SHIS. S1 will lapse forever i.e.
S1* and S1** will not be available in future, as E has been availed. |
|
|
|
S1 |
E |
SHIS issued first. Wrong issuance of EPCG If SHIS benefit availed was
not already surrendered, or refunded with applicable interest in case
utilized. |
|
|
|
N |
E |
S1 will lapse forever i.e. S1* and S1** will not be available in
future, as E has been availed. |
|
|
|
S1 |
N |
Scrip has been correctly issued |
|
|
|
N |
N |
Not Relevant |
|
Year 3 |
2011-12 |
S1* |
E |
EPCG issued first- S1* available if EPCG not availed in 2010-11. |
|
|
|
S2 |
E |
EPCG issued first. Wrong issuance of SHIS. S2 will lapse forever i.e.
S2* and S2** will not be available in future, as E has been availed. |
|
|
|
S1*S2 |
E |
SHIS issued first. S1* available if EPCG not availed in 2010-11. Wrong
issuance of EPCG if S2 availed was not already surrendered or refunded with
applicable interest in case utilized. |
|
|
|
N |
E |
S2 will lapse forever i.e. S2* and S3** will not be available in
future, as E has been availed. |
|
|
|
S1 * |
N |
Scrip has been correctly issued, provided 0% EPCG has not been availed
in 2010-11. |
|
|
|
S2 |
N |
Scrip has been correctly issued |
|
|
|
N |
N |
Not Relevant |
|
Year 4 |
2012-13 |
S1** |
E |
EPCG issued first. S1** available if EPCG not availed in 2010-11. |
|
|
|
S2* |
E |
EPCG issued first. S2* available if EPCG not availed in 2011-12. |
|
|
|
S3 |
E |
EPCG issued first. Wrong insurance of SHIS. S3 will lapse forever i.e.
S3* and S3** will not be available in future, as E has been availed. |
|
|
|
S1**/S2*/S3 |
E |
SHIS issued first. S1** available if EPCG not availed in 2010-11. S2*
available if EPCG not availed in 2011-12. Wrong issuance of EPCG if S3
availed was not already surrendered or refund with applicable interest in
case utilized. |
|
|
|
N |
E |
S3 will lapse forever i.e. S3* and S3** will not be available in
future, as E has been availed. |
|
|
|
S1** |
N |
Scrip has been correctly issued, provided E has not been availed in
2010-11. |
|
|
|
S2* |
N |
Scrip has been correctly issued, provided E has not been availed in
2011-12. |
|
|
|
S3 |
N |
Scrip has been correctly issued |
|
|
|
N |
N |
Not Relevant |
|
Year 5 |
2013-14 |
S2** |
E |
EPCG issued first. S3** available if EPCG not availed in 2011-12. |
|
|
|
S3* |
E |
EPCG issued first. S3* available if EPCG not availed in 2012-13. |
|
|
|
S4 |
E |
EPCG issued first. Wrong issuance of SHIS. S4 will lapse forever i.e.
S4* and S4** will not be available in future, as E has been availed. |
|
|
|
S2**/S3*/S4 |
E |
SHIS issued first. S2** availed if EPCG not availed in 2011-12. or S3* available if EPCG not availed in 2012-13. Wrong
issuance of EPCG if S4 availed was not already surrendered or refunded with
applicable interest in case utilized. |
|
|
|
N |
E |
S4 will lapse forever i.e. S4* and S4** will not be available in
future, as E has been availed. |
|
|
|
S2** |
N |
Scrip has been correctly issued, provided E has not been availed in
2011-12. |
|
|
|
S3* |
N |
Scrip has been correctly issued, provided E has not been availed in
2012-13. |
|
|
|
S4 |
N |
Scrip has been correctly issued. |
|
|
|
N |
N |
Not Relevant |
|
Year 6 |
2014-15 |
S3** |
E |
EPCG issued first. S3** available if EPCG not availed in 2012-13. |
|
|
|
S4* |
E |
EPCG issued first. S4* available if EPCG not availed in 2013-14. |
|
|
|
S3**/S4* |
E |
SHIS issued first. S3** available if EPCG not availed in 2012-13. S4*
available If EPCG not availed in 2013-14. |
|
|
|
N |
E |
Not relevant as the scheme has already sunset on 31 March 2013 |
|
|
|
S3** |
N |
Scrip has been correctly issued, provided E has not been availed in
2012-13. |
|
|
|
S4* |
N |
Scrip has been correctly issued, provided E has not been availed in
2013-14 |
|
|
|
N |
N |
Not relevant as the SHIS scheme has already sunset on 31 March 2013 |
|
Year 7 |
2015-16 |
S4** |
E |
EPCG issued first. S4** available if EPCG not availed in 2013-14 |
|
|
|
S4** |
E |
SHIS issued first. S4** available if EPCG not availed in 2013-14. |
|
|
|
S4** |
N |
Scrip has been correctly issued, provided E has not been availed in
2013-14. |
|
|
|
N |
E |
Not relevant as the SHIS scheme has already sunset on 31 March 2013. |