EPCG License fulfillment

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sameer mehta (Querist)
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04 July 2011 I am working for a packaging company engaged in manufacture of monocartons for pharma and other companies. We had taken various EPCG Licenses for which we have to take benefit of DEEMED EXPORT. Please guide as to what all documents are required to be given by the actual exporter to us or vice-versa. Also guide, what if the actual exporter doesnot give us the requisite documents.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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04 July 2011 The following conditions shall apply to the fulfilment of the export obligation :¬
(i) The export obligation shall be fulfilled by the export of goods capable of being manufactured or pro¬duced by the use of the capital goods imported under the scheme.

The export obligation may also be fulfilled by the export of same goods, for which EPCG Authorisation has been obtained, manufactured or produced in different manufacturing units of the Authorisation holder/specified supporting manufacturer (s).
When Capital Goods are imported for pre/ post- production or license is taken for import of spares, the license holder shall fulfill the export obligation by export of products manufactured from the plant / project to which the pre/ post- production capital goods/ spares are related.
The export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products except for categories mentioned in Handbook (Vol.I).

Alternatively, export obligation may also be fulfilled by exports of other goods manufactured or service provided by the same firm/ company or group company which has the EPCG Authorisation.

However, in such cases, the additional export obligation im¬posed under EPCG scheme shall be over and above the average exports achieved by the unit/ company / managed hotel in preceding three years for both the original and the substitute product(s) /service (s) even in cases where the average is exempt for the substitute product (s)/ service (s) as given in sub-para (vi) of paragraph “Condition of Fulfillment of Export Obligation” of this chapter.
The incremental exports to be fulfilled by the Authorisation holder for fulfilling the remaining export obligation can include any combination of exports of the original product/ service and the substitute product (s)/ service (s). The exporter of goods can opt to get the export obligation refixed for the export of services and vice versa.
The Authorisation holder can also opt for the re-fixation of the balance export obligation based on the 8 times of the duty saved amount for the CIF value in proportion to the balance Export obligation under the scheme.

The aforesaid facilities shall only be available to manufacturer exporters/service provider on all the Authorisations where export obligation period including extended export obligation period valid on the date of application. In this regard, exports made only on or after submission of application for alter¬nate item and/ or re-fixation of the export obligation based on duty saved amount will be taken into account for fulfilment of export obligation.

(ii) The export obligation under the scheme shall be, in addition to any other export obligation under¬taken by the importer, except the export obligation for the same product under Advance Authorisation, DFRC, DEPB or Drawback scheme.

(iii) The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA provided the realization is in free foreign exchange.
(iv) Exports shall be physical exports. However, deemed exports as specified in sub-paras (a), (b), (d), (f), (g) & (j) of paragraph “Categories of Supply” of chapter “Deemed Exports” of this book, shall also be counted towards fulfilment of export obligation alongwith the usual benefits available under paragraph “Bebefits for Deemed Exports” of Chapter “Deemed Exports” of this book.
Royalty payments received in freely convertible currency and foreign exchange received for R& D services shall also be counted for discharge under the EPCG scheme. Payment received in rupee terms for the port handling services, in terms of Chapter 9 of the Foreign Trade Policy shall also be counted for export obligation discharge under the Scheme.
Payments received against ‘Counter Sales’ in free foreign exchange through banking channels as per the RBI guidelines shall be counted for fulfillment of export obligation under Para “EPCG for Retail Sector” above.
Provisions for BIFR Units
Any firm/company registered with BIFR or any firm! company acquiring a unit, which is under BIFR shall be allowed EO extension as per the rehabilitation package prepared by the operating agency subject to sub¬sequent approval of BIFR. However, in cases where the rehabilitation package does not specify the EO ex¬tension period, a time period up to 12 years reckoned from the date of issue of Authorisation would be permitted on merits of the case for fulfilment of export obligation.
Similarly, Small Scale units shall also be entitled for similar facility as per the rehabilitation scheme of the concerned State Government. However, in cases where the State rehabilitation scheme does not specify the EO extension period, a time period up to 12 years reckoned from the date of issue of Authorisation would be permitted on merits of the case for fulfilment of export obligation.

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RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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04 July 2011 documents:-

1. Two copies of the application must be submitted unless otherwise mentioned.
2. Each individual page of the application has to be signed by the applicant.
3. a. Part 1 & Part 4 has to be filled in by all applicants. In case of applications submitted electronically, no hard copies of Part 1 may be submitted. However in cases where applications are submitted otherwise, hard copy of Part 1 has to be submitted.

b. Only relevant portions of Part 2 & Part 3 need to be filled in.
4. Application must be accompanied by documents as per details given below:

XV. Statement of Export/Redemption of EPCG Licence
1. a. For Physical Exports:
1. Consolidated statement of exports made or individual statements (bank/authorized dealer wise) in sub section XV duly certified by a Chartered Accountant as per format given in Appendix 26 and bank evidencing exports and realisation in freely convertible. However, in case of exports made under an irrevocable letter of credit or a bill of exchange is unconditionally Avalised/ Co- Accepted/Guaranteed by a bank and the same is confirmed by the exporters bank, realization of export proceeds would not be insisted upon provided the final receipts are in free foreign exchange and a confirmation is given by the Bank in this regard.
b. For Deemed Exports:
1. Copy of ARO/Back to Back Inland letter of Credit or Advance Licence for Intermediate Supplies or Supply invoices or ARE 3 duly certified by the Bond Office of EOU concerned showing that supplies have been received.
2. Evidence of having received the payment through normal banking channel in the form given in Appendix 22B or a self certified copy of payment certificate issued by the Project Authority concerned in the form given in Appendix-22C.
c. For Services rendered:
1. Consolidated statement or individual statements (bank/authorised dealer wise) of services rendered as given in sub section XV duly certified by a Chartered Accountant as per format given in Appendix 26 and bank/authorised dealer evidencing foreign exchange earning received through normal banking channel.
2. Copy of licence showing the date of clearance of the first consignment
3. Customs purpose copy of EPCG Licence
1. At the time of redemption, the licence holder shall also submit certificate from the Independent Chartered Engineer confirming the use of spares so imported under the Scheme in the installed capital goods on the basis of stock & consumption register maintained by licence holder.

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