Compensation Fee in
EPCG Cases Streamlined
·
DGFT
Simplifies Export Promotion Capital Goods Scheme Procedures to Enhance Ease of Doing
Business
The
Directorate General of Foreign Trade (DGFT) has announced significant enhancements
to the Export Promotion Capital Goods (EPCG) Scheme aimed at simplifying processes,
reducing transaction costs and promoting automation to benefit exporters vide Public
Notice No. 15 dated 25th July 2024. These changes align with the commitment of the
Government to create a more business-friendly environment and improving India’s
manufacturing competitiveness.
As
per the changes, the scheme will now provide exporters an extended period to submit
Installation Certificates for imported Capital Goods. This extension reduces pressure
on businesses, allowing them to focus more on production and export activities.
Further,
a simplified and reduced composition fee structure for extending the Export Obligation
(EO) period has been introduced. This change minimises manual intervention, streamlines
compliance and speeds up service delivery.
Also,
from now all Policy Relaxation Committee (PRC) decisions regarding Export Obligation
extensions and regularisation of exports will be implemented with a levy of uniform
composition fee making it easier to implement through the system.
Benefits for Exporters:
These
updates make it easier for exporters to comply with regulations, reducing the time
and effort required to meet DGFT requirements. By expanding automated rule-based
processes, DGFT aims to reduce human intervention, mitigate risks and improve overall
efficiency in trade facilitation.
Commitment to Modernization and Efficiency:
Since
the announcement of the new Foreign Trade Policy in April 2023, DGFT has been actively
modernising its systems to expand automated rule-based processes. These initiatives
are crucial steps towards fostering a more business-friendly environment and enhancing
India’s competitiveness in the global market. DGFT has already taken efforts to
automate the authorisation issue process, ad-hoc norms fixation process under Advance
Authorisation, export obligation extension, automatic status holder certificate
issue, among others, in recent days. It is planned that in the coming months, more
and more processes will be system driven with minimal or no human intervention to
order to facilitate trade and industry.
[DGFT Public Notice
No. 15 /2024-25 dated 25 July, 2024]
Effect of this Public Notice: With a view to enhance ease of doing
business and reduce the compliance burden, certain provisions of Chapter 5
related to the Export Promotion Capital Goods Scheme of the Handbook of
Procedures, 2023 are amended for EPCG authorizations issued under Foreign Trade
Policy.
Subject:
Amendments in Chapter 5 of the Handbook of Procedures (HBP) 2023, related to Export
Promotion Capital Goods Scheme to reduce 'Compliance Burden ' and enhance 'Ease
of doing Business'.
In
exercise of powers conferred under Paragraphs 1 .03 and 2.04 of the Foreign Trade
Policy, 2023, as amended from time to time, the Director General of Foreign Trade
hereby makes the following amendments in Chapter 5 of the HBP, 2023 with immediate
effect:-
|
S.No. |
Para
No. |
Existing
provision |
Revised
provision |
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|
1. |
5.04(a) |
Authorisation
holder shall produce, within six months from date of completion of import, to
the concerned RA, a certificate from the jurisdictional Customs authority or
an independent Chartered Engineer, at the option of the authorisation holder,
confirming installation of capital goods at factory/premises of authorisation
holder or his supporting manufacturer(s). The RA may allow one time extension
of the said period for producing the certificate by a maximum period of 12
months with a composition fee of Rs. 5000/-. Where the authorisation holder
opts for independent Chartered Engineer’s certificate, he shall send a copy
of the certificate to the jurisdictional Customs Authority for
intimation/record. The authorisation holder shall be permitted to shift
capital goods during the entire export obligation period to other units
mentioned in the IEC and RCMC of the authorisation holder subject to
production of fresh installation certificate to the RA concerned within six
months of the shifting. |
Authorisation
holder shall produce, within 3 years from date of completion of import, to
the concerned RA, a certificate from the jurisdictional Customs authority or
an independent Chartered Engineer, at the option of the authorisation holder,
confirming installation of capital goods/spares at factory/premises of
authorisation holder or his supporting manufacturer(s). The RA may allow
extension of the said period for submission of certificate, upto valid EO period with a payment of a composition fee
of Rs. 10,000/- per year by the authorisation holder opts for independent
Chartered Engineer’s certificate, he shall send a copy of the certificate to
the jurisdictional Customs Authority for intimation/record. The authorisation
holder shall be permitted to shift capital goods during the entire export
obligation period to other units mentioned in the IEC and RCMC of the
authorisation holder subject to production of fresh installation certificate
to the RA concerned within six months of the shifting. |
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|
2. |
5.04(b) |
In
the case of import of spares, the installation certificate shall be submitted
by the Authorisation hold er within a period of three years from the date of
import. |
Deleted |
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|
3. |
5.13(c) |
Request
for extension of Export Obligation period of first block shall be submitted
within 6 months from the date of expiry of first block EO period along with
composition fee of 2% on duty saved amount proportionate to unfulfilled
portion of EO pertaining to the block. RA may consider the request for
extension of block wise EO period, received after 6 months, but within 6
years from date of issue of authorisation, with a late fee of Rs. 10,000/-
per authorisation. Application made beyond 6 years, for extension of
block-wise EO period for regularization purpose, shall also be considered by
RA concerned, with an additional late fee of Rs. 5,000/- for each year per
authorisation. This late fee is in addition to the composition fee that may
be payable on account of shortfall in export obligation. Where EO of the
first block is not fulfilled in terms of para (a) above, except in cases
where the EO prescribed for first block is extended by the RA, the
Authorisation holder shall, within 6 months from the expiry of the block, pay
duties of customs (along with applicable interest as notified by DOR)
proportionate to duty saved amount on total unfulfilled EO of the first
block. |
Request
for extension of Export Obligation period of first block shall be submitted
within 6 months from the date of expiry of first block EO period along with
composition fee as under:
RA
may consider the request for extension of block-wise EO period, received
after 6 months, but within 6 years from date of issue of authorisation, with
composition fee as under:-
Application
made beyond 6 years, for extension of block-wise EO period for regularisation
purpose, shall also be considered by RA concerned, with composition fee as under:-
Application
made beyond 6 years, for extension of block-wise EO period for
regularization purpose, shall also be considered by RA concerned, with
composition fee as under:-
No
refund of earlier paid Composition Fee shall be admissible. Where
EO of the first block is not fulfilled in terms of para (a) above, except in
cases where the EO prescribed for first block is extended by the RA, the
Authorisation holder shall, within 6 months from the expiry of the block, pay
duties of customs (along with applicable interest as notified by DOR)
proportionate to duty saved amount on total unfulfilled EO of the first
block. |
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|
4. |
5.13(e) |
New
provision |
Notwithstanding
sub-para (d) above, sub para (c) above shall also be applicable for
authorisations issued under FTP (2015-20). |
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|
5. |
5.16(b) |
In case
of extension of Export obligation period beyond 6 years, two extensions, from
date of expiry , of one year each may be considered
by RA concerned, on payment of composition fee equal to 2% of proportionate
duty saved amount on unfulfilled export obligation for each year of
extension. However, minimum composition fee shall be Rs. I0,000/-. |
In
case of extension of Export obligation period beyond 6 years, two extensions,
from date of expiry, of one year each or two years in one go at the choice of
authorisation holder, may be considered by RA concerned with composition fee
as under:-
No
refund of earlier paid Composition Fee shall be admissible. |
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|
6. |
5.16(e) |
New
provision |
For
implementation of all PRC decisions involving levy of Composition Fee while
allowing extension in block-wise/EO period and/or regularisation of exports
already made, the applicable Composition Fee shall be as under:-
No
refund of earlier paid Composition Fee shall be admissible. |
[Issued from File No. 18/19/AM-25/ P-5]