EPCG Scheme at 3% in FTP 2009-2014
[Customs
Notification No. 103 dated 11th September 2009]
In exercise of the powers conferred by sub-section (1) of section 25 of
the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that
it is necessary in the public interest so to do, hereby exempts goods specified
in the Table annexed hereto, from,-
(i) so much of the duty of
customs
leviable thereon which is specified in
the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess
of the amount calculated at the rate of three percent
ad-valorem, and
(ii) the
whole of the additional duty leviable thereon under
section 3 of the said Customs Tariff Act, when specifically claimed by the
importer.
2. The exemption under this
notification shall be subject to the following conditions, namely
:-
(1) that
the goods imported are covered by a valid authorization issued under the Export
Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Foreigen Trade Policy permitting import of goods at the
rate of three percent duty and the said authorization is produced
for debit by the proper officer of customs at the time of clearance :
Provided that for import of spare parts specified at Sr.No.4 of the said
Table, the validity period of the authorization shall be deemed to be the period permitted for fulfillment of the export
obligation in full:
Provided further that the import of motor cars, sports utility vehicles
or all purpose vehicles shall be allowed only to hotels, travel agents, tour
operators or tour transport operators and companies owning or operating golf
resorts, subject to the condition that,-
(i) the
total foreign exchange earning from hotel, travel and tourism and golf tourism
sectors in current and preceding three licensing years is rupees one crore
fifty lakhs or more;
(ii) the duty saved amount on
all EPCG authorizations issued in a licensing year for import of motor cars,
sports utility vehicles or all purpose vehicles shall not exceed 50% of average
foreign exchange earnings from hotel, travel and tourism and golf tourism
sectors in preceding three licensing years; and
(iii) the
vehicles imported shall be so registered that the vehicle is used for tourist
purpose only and a copy of the registration certificate shall be submitted to
the concerned Customs authorities as a confirmation of import of vehicle within
six months from the date of import:
Provided also that the benefit of import of capital
goods at concessional duty under this notification for creation of modern
infrastructure shall be extended only to such retailers who have a minimum area
of 1000 square metres.
(2) that
the goods imported shall not be disposed of or transferred by sale or lease or
any other manner till export obligation is completed.
(3) that the importer executes a
bond in such form and for such sum and with such surety or security as may be
specified by the Deputy Commissioner of Customs or Assistant Commissioner of
Customs binding himself to comply with all the conditions of this notification
as well as to fulfill export obligation on FOB basis equivalent to eight times
the duty saved on the goods imported as may be specified on the authorization,
or for such higher sum as may be fixed or endorsed by the Licensing
Authority or Regional Authority in terms of Para 5.10 of the Handbook of
Procedures Vol I, issued under para 2.4 of the
Foreign Trade Policy, within a period of eight years from the date of issue of
Authorization, in the following proportions, namely:-
|
S.No. |
Period from the date of issue
of Authorization |
Proportion of total export
obligation |
|
(1) |
(2) |
(3) |
|
1. |
Block of 1st to 6th year |
50% |
|
2. |
Block of 7th to 8th year |
50% |
Provided that where the duty saved is not less than rupees one hundred crores, or where the authorization is issued to units in
the agri export zone as may be notified by the licensing authority or Regional
Authority, the export obligation shall be fulfilled within a period of twelve
years from the date of issue of authorization in the following proportions, namely :-
|
S.No. |
Period from the date of issue
of Authorization |
Proportion of total export
obligation |
|
(1) |
(2) |
(3) |
|
1. |
Block of 1st to 10th year |
50% |
|
2. |
Block of 11th to 12th year |
50% |
Provided further that where a sick unit is notified by the Board for
Industrial and Financial Reconstruction(BIFR) or where
a rehabilitation scheme is announced by the concerned State Government in
respect of sick unit for its revival, the export obligation
may be
fulfilled within time period allowed by the Licensing Authority or Regional
Authority as per the rehabilitation package prepared by the operating agency
and approved by BIFR or rehabilitation department of State Government . In
cases where the time period is not specified in the rehabilitation package, the
export obligation may be fulfilled within the time
period allowed by the Licensing Authority or Regional Authority which shall not
exceed twelve years.
Provided also that where the capital goods are imported by agro units
and units in tiny and cottage sector, the export obligation shall be fixed
equivalent to six times the duty saved on the goods imported as may be
specified on the authrization, or for such higher sum
as may be fixed by the licensing authority, within a period of twelve years
from the date of issue of the authorization :
Provided also that where the capital goods are imported for
technological upgradation as per conditions specified
in Para 5.8 of the Foreign Trade Policy or by
small scale industry units as defined in paragraph 5.2 of the Foreign Trade
Policy, as the case may be, the export obligation shall be fixed equivalent to
six times the duty saved on the goods imported as may be specified on the
authorization, or for such higher sum as may be fixed by the Licensing
Authority or Regional Authority, within a period of eight years
from the date of issue of authorization subject to the further condition that in
the case of Small Scale Industry (SSI) units the landed Cost Insurance Freight
(CIF) value of such imported capital goods under the scheme shall not exceed
rupees fifty lakhs and total investment in plant and machinery after such
imports shall not exceed the SSI limit :
Provided also that spares (including refurbished or reconditioned
spares), moulds, dies, jigs, fixtures, tools, refractory for initial lining and
catalyst for initial charge, for the existing plant and machinery (imported
earlier, under EPCG or otherwise), shall be allowed to be imported under the
EPCG scheme subject to an export obligation equivalent to 50% of the normal
export obligation specified above, to be fulfilled in 8 years reckoned from the
date of issue of the Authorization, subject to the condition that the CIF value
of import of the said spares etc. shall be limited to 10% of the CIF value of
the plant and machinery imported under the EPCG authorization or 10% of the
book value of the plant and machinery imported earlier otherwise than under
EPCG Scheme, as the case may be.
Provided also that export obligation of a particular block may be set
off against the excess exports made in the said preceding block(s);
(4) that if the importer does not
claim exemption from the additional duty leviable
under section 3 of the Customs Tariff Act, 1975, the additional duty so paid by
him shall not be taken for computation of the net duty saved for the purpose of
fixation of export obligation provided the Cenvat
credit of additional duty paid has not been taken;
(5) that the importer produces
within 30 days from the expiry of each block from the date of issue of
authorization or within such extended period as the Deputy Commissioner of
Customs or Assistant Commissioner of Customs may allow, evidence to the
satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of
Customs showing the extent of export obligation fulfilled, and where the export
obligation of any particular block is not fulfilled in terms of the preceding condition,
the importer shall within three months from the expiry of the said block pay
duties of customs equal to an amount which bears the same proportion to the
duties leviable on the goods, but for the exemption
contained herein, which the unfulfilled portion of the export obligation bears
to the total export obligation, together with interest at the rate of 15% per
annum from the date of clearance of the goods;
(6) where the importer fulfills
75% or more of the export obligation as specified in condition (3)
(over and
above 100% of the average export obligation) within half of the period
specified for export obligation as mentioned in condition (3),
his
balance export obligation shall be condoned and he shall be treated to have
fulfilled the entire export obligation;
(7) that the capital goods
imported, assembled or manufactured are installed in the importer’s factory or
premises and a certificate from the jurisdictional Deputy Commissioner of
Central Excise or Assistant Commissioner of Central Excise,
as the
case may be, is produced confirming installation and use of capital goods in
the importer’s factory or premises, within six months from the date of
completion of imports or within such extended period as the Deputy Commissioner
of Customs or Assistant Commissioner of Customs, as the case may be, may allow
:
Provided that in case of import of spares, the installation certificate
shall be produced within three years from the date of import
:
Provided further that if the importer is not
registered with central excise or if he is a service provider, as the case may
be, he may produce the said certificate of installation and usage issued by an
independent Chartered Engineer :
Provided further that in the case of,-
(i) manufacturer exporter and merchant exporter having
supporting manufacturer(s) or vendor(s);
(ii) import
of irrigation equipment for use in contract farming for export of agricultural
products; and
(iii) importer
rendering services;
the capital goods may be installed at the factory or premises of such
other person whose name and address are endorsed on the authorization
referred
to in condition (1) and also on the shipping bills
and where
the bond for full difference of duty, if necessary, in terms of condition (3)
with or
without a bank guarantee, as the case may be, is executed by the importer and
such other person binding themselves jointly and severally to fulfill the
export obligation and all other conditions of this notification and to pay duty
with interest at the rate of 15% per annum in case of default :
Provided also that agro units located in Agri Export Zones or service
providers in Agri export Zones may move the capital goods within the Agri
Export Zones under intimation to the jurisdictional Deputy Commissioner of
Central Excise or Assistant Commissioner of Central Excise, as the case may be,
subject to the condition that the importer shall maintain accurate record of
such movement;
(8) that the imports and exports
are undertaken through sea ports at Bedi (including Rozi-Jamnagar), Chennai, Cochin, Dahej,
Dharamtar,Haldia (Haldia
Dock complex of Kolkata port) Kakinada, Kandla, Kolkata, Krishnapatnam,
Magdalla, Mangalore, Marmagoa,
Muldwarka, Mumbai, Mundhra,Nagapattinam,
Nhava Sheva, Okha, Paradeep, Pipavav, Porbander, Sikka, Tuticorin, Visakhapatnam
and Vadinar or through any of the airports at
Ahmedabad, Bangalore, Bhubaneswar, Chennai, Cochin, Coimbatore, Dabolim (Goa), Delhi, Hyderabad, Indore, Jaipur, Kolkata,
Lucknow (Amausi), Mumbai, Nagpur, Rajasansi
(Amritsar), Srinagar, Trivandrum and Varanasi or through any of the Inland
Container Depots at Agra, Ahmedabad, Anaparthy
(Andhra Pradesh), Babarpur, Bangalore, Bhadohi, Bhatinda, Bhilwara, Bhiwadi, Bhusawal, Chheharata (Amritsar),
Coimbatore, Dadri, Dappar (Dera Bassi), Daulatabad
(Wanjarwadi and Maliwada),
Delhi, Dighi (Pune),
Durgapur (Export Promotion Industrial Park), Faridabad, Garhi
Harsaru, Gauhati, Guntur,
Hyderabad, Jaipur, Jallandhar, Jamshedpur, Jodhpur,
Kanpur, Karur, Kota, Kundli,
Loni (District Ghaziabad), Ludhiana, Madurai, Malanpur, Mandideep (District Raisen), Miraj, Moradabad,
Nagpur, Nasik, Pimpri (Pune),
Pitampur (Indore), Pondicherry, Raipur, Rewari, Rudrapur(Nainital), Salem, Singanalur, Surat, Surajpur, Tirupur, Tuticorin, Udaipur, Vadodara, Varanasi, , Waluj
(Aurangabad) or through the Land Customs Station at Agartala,
Amritsar Rail Cargo, Attari Road, Changrabandha,
Dawki, Ghojadanga, Hilli, Jogbani, Mahadipur, Nepalganj Road, Nautanva (Sonauli), Petrapole, Ranaghat, Raxaul, Singhabad and Sutarkhandi or a Special Economic Zone notified under
section 4 of the Special Economic Zones Act, 2005 (28 of 2005):
Provided that the Commissioner of Customs may, by special order or a
public notice and subject to such conditions as may be specified by him, permit
import and export through any other sea-port, airport, inland
container depot or through a land customs station within his jurisdiction.
(9) notwithstanding anything
contained in condition (5) above, where the Licensing
Authority or Regional Authority grants extension of block-wise period for any
block(s) or overall period of fulfilment of export
obligation upto a period of two years or
regularization of shortfall in export obligation, not exceeding five percent of
such export obligation, the said block-wise period or overall period of export
obligation shall be extended or condoned by the Deputy Commissioner of Customs
or Assistant Commissioner of Customs, as the case may be :
Provided that in respect of sick units referred to in the second proviso
to condition (3), extension of overall period of
export obligation shall not be allowed :
Provided further that the Regional Authority may grant further extension
in the overall period of export obligation upto a
period of further two years if the authorization holder pays fifty percent
differential duty on the unfulfilled portion of export obligation and agrees to
fulfill other conditions as may be specified by the Regional Authority for this
purpose;
3. Where the goods specified in
the said Table are found defective or unfit for use, the said goods may be
re-exported back to the foreign supplier within three years from the date of
payment of duty on the importation thereof:
Provided that at the time of re-export, the goods are identified to the
satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of
Customs, as the case may be, to be the same as the goods which were imported.
Explanation – For the purpose of this notification,-
1. “Capital goods” has the same
meaning as assigned to it in Paragraph 9.12 of the Foreign Trade Policy;
2. “Export obligation”, -
(1) means
obligation on the importer to export to a place outside India, goods
manufactured or capable of being manufactured or services rendered by the use
of capital goods imported in terms of this notification. The export obligation
shall be over and above the average level of exports achieved by the importer
in the preceding three licensing years for the same and similar products within
the overall export obligation period including the extended period, if any.
Such average shall be the arithmetic mean of export performance in the last 3
years for the same and similar products.
Provided that upto 50% of the export
obligation may also be fulfilled by export of other good(s) manufactured or
service(s) provided by the importer or his group company or managed hotel,
which has the EPCG authorization subject to the condition that in such cases,
additional export obligation imposed shall be over and above the average
exports achieved by the importer or his group company or managed hotel in
preceding three years for both the original and the substitute product(s) /
service(s) :
Provided further that in case of export of goods relating to handicraft,
handlooms, cottage, tiny sector, agriculture, animal husbandry, floriculture,
horticulture, pisciculture, viticulture, poultry and
sericulture, the importer shall not be required to maintain the average level
of exports :
Provided further that in case of export of goods
relating to aquaculture(including fisheries), the importer shall not be
required to maintain the average level of exports subject to the condition that
EPCG authorization has been obtained for goods other than fishing trawlers,
boats, ships and other similar items.
Provided also that the goods, excepting tools, imported under this
notification by the aforesaid sectors, shall not be allowed to be transferred
for a period of five years from the date of imports even in cases where export
obligation has been fulfilled. Transfer of capital goods would, however, be
permitted within the group companies, after fulfillment of export obligation
but before five years from the date of imports, under intimation to Regional
Authority and jurisdictional Central Excise Authority :
Provided also that exports made to former USSR, or to such countries as
notified by Director General of Foreign Trade as on 31.3.08, shall not be
counted for fixing the average level of exports :
Provided also that exports against only such
shipping bills which mention the EPCG authorization No. and date shall be
counted for the discharge of the export obligation;
(2) shall
be fulfilled through physical exports and the export proceeds shall be realized
in freely convertible currency. However the following categories of supplies, shall also be counted towards fulfillment of
export obligation:
(a) deemed
exports, namely:
(i) supply of goods against Advance
Authorization/Advance Authorization for Annual Requirement/ Duty Free Import
Authorization (DFIA);
(ii) supply
of goods to Export Oriented Units (EOUs) or Software Technology Parks (STPs) or
Electronics Hardware Technology Parks (EHTPs) or Bio-Technology Parks (BTPs);
(iii) supply of goods to projects
financed by multilateral or bilateral agencies or Funds as notified by
Department of Economic Affairs (DEA), Ministry of Finance (MOF) under
International Competitive Bidding (ICB) in accordance with procedures of those
agencies or Funds, where legal agreements provide for tender evaluation without
including customs duty; supply and installation of goods and equipments (single
responsibility of turnkey contracts) to projects financed by multilateral or
bilateral agencies or Funds as notified by DEA, MOF under ICB, in accordance
with procedures of those agencies/Funds, where bids may have been invited and
evaluated on the basis of Delivery Duty Paid (DDP) prices for goods
manufactured abroad;
(iv) supply
of goods to any project or purpose in respect of which the Ministry of Finance,
by a notification, permits import of such goods at zero customs duty and the
supply is made under ICB procedure;
(v) supply
of goods to power projects and refineries not covered in (iv) above under ICB
procedure;
(vi) Supply of goods
to nuclear power projects through competitive bidding as opposed to ICB;
(b) Supply of ITA-1 items to
Domestic Tariff Area, provided realization is in free foreign exchange;
(c) Royalty payments received in
freely convertible currency and foreign exchange received for Research &
Development (R&D) services; and
(d) Payments received in rupee
terms for port handling services in terms of chapter 9 of the Foreign Trade
Policy.
3. “Foreign
Trade Policy” means the Foreign Trade Policy 2009-2014 published in the gazette
of India, Part II, Section 3, Sub-section (ii) vide notification of the
Government of India in the Ministry of Commerce and Industry, No.1/2009-2014
dated the 27th August, 2009 as amended from time to time;
4. “Licensing Authority or
Regional Authority” means the Director General of Foreign Trade appointed under
section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of
1992) or an officer authorized by him to grant an authorization under the said
Act;
5.
“Manufacture” has the same meaning
as defined in clause (f) of section 2 of the Central Excise Act, 1944 (1 of
1944).
|
Table |
|
|
S.No. |
Description of goods |
|
(1) |
(2) |
|
1. |
Capital goods for
pre-production, production and post production including second hand capital
goods.
|
|
2. |
Capital goods in Semi Knocked
Down (SKD) / Completely Knocked Down (CKD) conditions to be assembled into
capital goods by the importer. |
|
3. |
Spare parts of CIF value upto 10% of the CIF value of goods specified at Serial Nos.1
and 2 as actually imported and required for maintenance of capital goods so
imported, assembled, or manufactured. |
|
4. |
Spare parts of CIF value upto 10% of the book value of the existing plant and
machinery of the authorization holder. |
|
5. |
Motor cars, sports utility
vehicles/all purpose vehicles. |
[F. No.605/58/2009-DBK]