Export Promotion Capital Goods Scheme :
New capital goods including software systems may be imported under the Export Promotion Capital Goods Scheme. Capital goods including jigs, fixtures, dies, moulds and spares may be imported at 5% Customs duty subject to an export obligation equivalent to 5 times CIF value of capital goods on FOB basis or 4 times the CIF value of capital goods on NFE basis to be fulfilled over a period of 8 years reckoned from the date of issuance of licence.
For the purpose of calculating NFE (Net Foreign Exchange) earned on exports, the value of all the licences including the value of 2.5 times of the DEPB credit earned / granted and the value of duty free gold / silver / platinum taken from nominated agency or from foreign supplier shall be deducted from the FOB value exports made by the person. However, EPCG licences and the value of licences surrendered during the validity of licence shall not be deducted. Further, it has been clarified that imports effected by 100% EOUs / Units in EPZ against LOP / LOI are imports against a licence and accordingly the CIF value of these imports has to be deducted from the f.o.b value of the exports for the purpose of calculation of NFE.
The persons eligible to import capital goods under this scheme are manufacturer exporters with or without supporting manufacturers /vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.
If the licence issued under the scheme has actually been utilized for import of a value in excess of or less than 10% of the CIF value of the licence, licence will be deemed to have been enhanced / reduced by that proportion. Export obligation shall accordingly be enhanced / reduced as per the actual utilization of the licence.
Import of capital goods shall be subject to actual user condition till the export obligation is completed. The licence holder under this scheme shall fulfill the export obligation over the specified period.
However, the export obligation of a particular block of year may be set off by the excess exports made in the preceding block of the year.
A person may apply for an EPCG licence to import the capital goods in dis-assembled / un-assembled condition to be assembled into capital goods by the importer or components of such capital goods required for assembling or manufacture of capital goods by the importer.
A person holding an EPCG licence may if need be, source the capital goods from a domestic manufacturer instead of importing them. In such a case, the domestic manufacturer supplying capital goods to EPCG licence holder shall be eligible for deemed export benefits.
An application for grant of an EPCG licence shall be made. Before clearance of capital goods through customs, the importer shall execute a bond in such form and for such sum and with such surety or security as may be specified by the Assistant or Deputy Commissioner of Customs binding himself to fulfill specified export obligation.
The licence holder shall submit a yearly report on the progress made in fulfillment of export obligation, duly certified by a Chartered Accountant/ Cost & Works Accountants, to the concerned licensing authority.
On being satisfied that the export obligations have been fulfilled, the licensing authority shall issue a certificate of discharge of export obligation to the EPCG licence holder and send a copy of the same to the customs authorities with whom BG / LUT has been executed.
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