EPCG, Advance license

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srikanth

srikanth (Querist)
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17 September 2010 Can anyone share the EPCG,advance license concepts.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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17 September 2010 EPCG is a special type of incentive given to the EPCG license holder. Capital goods imported under EPCG Scheme are subject to actual user condition and the same cannot be transferred /sold till the fulfillment of export obligation specified in the license. In order to ensure that the capital goods imported under EPCG Scheme, the license holder is required to produce certificate from the jurisdictional Central Excise Authority (CEA) or Chartered Engineer (CE) confirming installation of such capital goods in the declared premises. Under Export Promotion Capital Goods (EPCG) scheme, a license holder can import capital goods such as plant, machinery, equipment, components and spare parts of the machinery at concessional rate of customs duty of 5% and without CVD and special duty.

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For Manufacturers
The scheme is quite beneficial to Manufacturer exporters as they can import their CG at a substantial discount. Especially for those manufacturers whose final product is not excisable or is exempt from excise duty (like those in Uttaranchal) since they cannot take the CENVAT credit of the CVD paid on imports and Excise Duty paid in Domestic markets.
Merchant Exporters tied with the supporting manufacturers can also utilize the scheme for concessional duty import of Capital Goods to be installed at the supporting manufacturers.
For Projects
EPCG can be taken for the full projects where exports of goods or services can be envisaged by the use of the project or alternative products. This can be taken for Captive Power units also. EPCG can be taken along with Project Import scheme in case of new Projects.

For Service Provider
Various service providers/exporters can take EPCG route to reduce their Capital Cost. Service Providers like Hotels, Hospitals, Tour Operators, Taxi Operators, Construction Companies, Logistics companies can utilize the scheme to import/procure from domestic market, their capital goods at a substantially reduced costs. The EO can be fulfilled by Forex Earnings through providing services, like that of Foreign Guests staying in the hotel, medical tourism etc.

For Others
Certain other sectors like Retail Sector in the country, Port Projects etc. can also utilize EPCG scheme to their advantage.

For more info:- http://exim.indiamart.com/indian-exim-policy/epcg.html
http://dgft.gov.in

http://www.infodriveindia.com/exim/Guides/How-To-Import/Ch_12_Import_Incentives_under_Special_Schemes.aspx#Export_Promotion_Capital_Goods_Scheme_(EPCG)

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Advance License
An advance licence is granted for the import of inputs without payment of basic customs duty. Such licences shall be issued in accordance with the policy and procedure in force on the date of issue of the licence and shall be subject to the fulfillment of a time-bound export obligation, and value addition as maybe specified. Advance licences maybe either value based or quantity based.
As per the latest amendments to the EXIM Policy, the facility of Back to Back Inland Letter of Credit has been introduced, to enable an Advance Licence holder to source his inputs from domestic suppliers.
Value based advance license :-
Under a value based advance licence, any of the inputs specified in the licence maybe imported within the total CIF value indicated for those inputs, except inputs specified as sensitive items.
Under a value based advance licence, both the quantity and the FOB value of the exports to be achieved shall be specified. It shall be obligatory on the part of the licence holder to achieve both the quantity and FOB value of the exports specified in the licence.
Amendments to the Advance License Scheme
The Advance License Scheme has been expanded and liberalised with the amendments made to the EXIM Policy, announced on 31st March 1995.
• Cenvat credit can be taken on inputs which go into the manufacture of export products, under the Advance License Scheme.
• Expansion of the concept of Advance Intermediate License, which hitherto was only quantity based to value based.
• Advance licenses can now be transferred after the export obligation has been fulfilled, and the bank guarantee or LUT redeemed.
• Drawbacks are permitted in respect of duty paid materials, which are imported or indigenous.
• Import of mandatory spares upto 5% of the CIF value of the license is now allowed.
• The list of sensitive items has been pruned. Flexibility has also been granted to the exporter for using the unutilized CIF value of sensitive items for importing non-sensitive items.
On the 1st of March, 1995, the Engineering Products Export (Replenishment of Iron and Steel Intermediates) scheme was announced as an alternative to the International Price Reimbursement Scheme, which was withdrawn in April 1994. Under the new scheme, primary steel producers would be able to import intermediates like coal and fuel, using advance licences, and then provide steel to engineering exporters at international prices.

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Documents required for registration of advance license:

1. Original license with all annexures and forwarding letter with self attested copy of importer exporter code

2. Covering letter addressed to the deputy commissioner of customs, requesting for registration at relevant ports and authorising to CHA present the documents on importers behalf

3. Bond under notification (updated) duly attested by the notary and signature/s attested by the bank. With self attested photo address proof of both witnesses (photo address proof like driving license, voter’s id, passport.

4. Bank guarantee if party does not have export house/star export house /super star export house or turnover certificate attested by the range excise authorities.

5. Self attested copy of complete application submitted to DGFT for the issuance of relevant license.

6. Calculation sheet/schedule attached with bond.

7. Self declaration on Rs. 50 stamp paper attested by notary about non-penalisation by customs for non-compliance with export obligations with respect to the licenses issued earlier.

8. Self attested copy of company’s memorandum/partnership deed .in case of Pvt. Ltd./Ltd Co., company board resolution authorising the signatory for executing the relevant documents.

for more info:- dgft.gov.in
www.infodrive
REGARDS,
Ramesh verma

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