CAPITAL GOODS SUPPLY UNDER DEEMED EXPORTS

Hi Prashant,

Your query concerns supply of capital goods under deemed exports involving Advance License and EPCG schemeunder the Foreign Trade Policy (FTP) 2015-20, specifically Chapter 8, Para 8.2 (c). Let me clarify the key points and documentation requirements:

Understanding the Transaction:

• Supplier: Supplying capital goods under Advance License as a deemed export (i.e., supply without physical export but treated as export under FTP for export obligation fulfillment).

• Buyer/Customer: Purchasing capital goods under EPCG License (Export Promotion Capital Goods scheme) and supplying it to you.

• No shipping bill is generated since goods are not physically exported.

Key FTP Provisions (Chapter 8 Para 8.2(c)):

• Deemed exports under Advance License allow import of capital goods without paying customs duty if these are supplied to an Advance License holder or under EPCG.

• The Advance License holder fulfills export obligation by supplying these goods to the EPCG holder or other specified entities.

Your Questions:

1. Is BRC (Bank Realization Certificate) or EODC (Export Obligation Discharge Certificate) required?

• Since it’s a deemed export transaction, no physical export or shipment happens, hence no BRC is generated.

• The Advance License holder should obtain EODC from DGFT confirming fulfillment of export obligation through deemed export supply.

2. Documents to submit to DGFT for closure:

To get the EODC (closure certificate) from DGFT for Advance License under deemed exports:

• Copy of invoice for capital goods supplied to EPCG holder.

• Deemed Export Declaration Form from the EPCG holder confirming receipt and usage.

• Proof of receipt of goods (e.g., delivery challan, acknowledgment).

• Bank realization documents are not applicable as no foreign exchange is involved.

• License copy and other relevant documents.

• Application to DGFT to close Advance License by submitting above documents.

Summary Table:

Additional Tips:

• Ensure proper invoicing and documentation to show transaction qualifies as deemed export.

• Keep detailed records as DGFT and Customs may ask for verification.

• Coordinate with EPCG holder to get necessary declarations.