E.p.c.g.

Policy relating to EPCG Scheme is given in Chapter 5 of FTP.

An application for grant of an authorisation may be made by Registered Office or Head Office or a Branch Office or Manufacturing Unit of an eligible exporter to RA concerned in ANF 5A along with documents prescribed therein.

para 5.03 of FTP 2015-2020

Nexus Certification
(a) RA concerned shall, on the basis of nexus certificate from an Independent Chartered Engineer (CEC) submitted by the applicant in Appendix 5A, issue EPCG authorisation. Reasonable wastage, if any, anticipated at the time of installation of capital goods will also be certified by the Chartered Engineer in the nexus certificate and the same would be mentioned in the condition sheet of the EPCG authorisation at the time of issue.
(b) RA shall thereafter forward a copy of the EPCG authorisation to the concerned Jurisdictional Central Excise Authority. The wastage so permitted at the time of issuance of authorisation would be allowed to be sold as scrap/waste on payment of applicable duty.

5.04 Certificate of Installation of Capital Goods
(a) Authorization holder shall produce, within six months from date of completion of import, to the concerned RA, a certificate from the jurisdictional Central Excise Authority or an independent Chartered Engineer, at the option of the authorisation holder, confirming installation of capital goods at factory/premises of authorization holder or his supporting manufacturer(s). The RA may extend the said period for producing the certificate by a maximum period of
145
another 12 months. Where a unit registered with Central Excise opts for independent Chartered Engineer’s certificate, the authorisation holder shall send a copy of the certificate to the jurisdictional Central Excise Authority as intimation/record.
(b) In the case of import of spares, the installation certificate shall be submitted by the Authorization holder within a period of three years from the date of import.

PARA 5.05 OF FTP 2015-2020

Port of Registration
EPCG Authorisation shall be issued with a single port of registration as per paragraph 4.37 of HBP, for imports. However, exports can be made from any port specified in paragraph 4.37 of HBP.
PARA 5.06 OF FTP 2015-2020

Import of spares, tools, refractories and catalysts
(a) Applications for procurement of capital goods covered under sub-paragraphs (a) (iii) and (iv) of paragraph 5.01 of FTP shall contain a list of plant/machinery installed in factory/premises of the applicant for which such capital goods are required, duly certified by Chartered Engineer or Jurisdictional Central Excise Authorities.”
(b) In case of import of spares, EPCG authorisation shall not specify list of spares but shall indicate:
(i) Name of plant /machinery for which spares are required.
(ii) Value of duty saved allowed under the authorisation.
(iii) Descripttion of product to be exported and value of export obligation.
(c) Authorisation holder shall maintain a register of stock & consumption of capital goods covered under sub-paragraphs (a) (iii) and (iv) of paragraph 5.01 of FTP imported under the scheme and at the time of final redemption of export obligation, authorization holder shall submit certificate from independent Chartered Engineer confirming their use in the installed capital goods on the basis of such register.

PARA 5.10 Conditions for fulfilment of Export Obligation
In addition to conditions in paragraph 5.04 of FTP, the following conditions shall also be applicable for fulfilment of export obligation:
(a) Name of the supporting manufacturer as well as the exporter shall be indicated on export documents.
(b) EPCG authorisation holder may export either directly or through third party(ies).
(c) In case the Authorization Holder wants to export through a third party, export documents viz., shipping bills / Bill of exports etc. shall indicate name of both authorization holder and supporting manufacturer, if any, along with EPCG authorization number. BRC, GR declaration, export order and invoice should be in the name of third party exporter. The goods exported through third party should be manufactured by the EPCG Authorisation Holder or the supporting manufacturer where the capital goods imported under the authorisation have been installed.

(d) The EPCG authorization holder shall submit the following additional documents for discharge of EO through third party (ies):
(i) A copy of agreement entered into between the authorization holder and the ultimate exporter undertaking to export the goods manufactured by the authorization holder/supporting manufacturer for fulfilment of the export obligation against the EPCG authorization in question.
(ii) Proof of having despatched the goods from authorization Holder’s factory premises to the ultimate exporter/port of export viz. (a) ARE-1 Certificate issued by Central Excise with due authentication by the Customs verifying the exports along with the shipping bill number, date and EPCG authorization number (b) Invoice duly incorporating the relevant EPCG authorization number & date at the time of dispatch.
(iii) Lorry Receipt (LR) /Logistical evidence for transportation of goods from the premises of the authorization holder to the third party/port of export.
(iv) An undertaking from the 3rd party on a stamp paper, declaring that the products exported for fulfillment of EO by them on behalf of the license holder as per details given in the statement of exports, were manufactured by the license holder.
(v) Financial evidence for having received proceeds through normal banking channel from third party exporter’s account to the authorization holder’s account towards such third party supplies.

(vi) Disclaimer certificate from third party that they shall not use such proceeds towards EO fulfillment of any EPCG authorization (s) obtained by them.

PARA 5.11 OF FTP 2015-2020

Realization of Export proceeds
Export proceeds shall be realized in freely convertible currency except for deemed exports. Exports to SEZ units /Supplies to developers/ co-developers irrespective of currency of realization, would also be counted for discharge of Export Obligation. Realization in case of supplies to SEZ units shall be from foreign currency account of the SEZ unit.
5.12 Calculation of Average Export Obligation
While calculating Average Export Obligation, exports counted/being counted for fulfilling specific EO against EPCG Authorisations within valid EO Period (whether original or extended) that have been made in the preceding 3 years will not be taken into account.

PARA 5.13 OF FTP 2015-2020

Exemption from maintenance of average export obligation
(a) In case of export of goods relating to the following the EPCG authorisation holder shall not be required to maintain average export obligation:
(i) Handicrafts,
(ii) Handlooms,
(iii) Cottage & Tiny sector,
(iv) Agriculture,
(v) Aqua-culture (including Fisheries), Pisciculture,
(vi) Animal husbandry,
(vii) Floriculture & Horticulture,
(viii) Poultry,
(ix) Viticulture,
(x) Sericulture,
(xi) Carpets,
(xii) Coir, and
(xiii) Jute

(b) However, this exemption from maintenance of average export obligation shall not be allowed for import of fishing trawlers, boats, ships and other similar items.
(c) Goods, excepting tools imported under EPCG scheme by sectors specified in sub-paragraph (a) above, shall not be allowed to be transferred for a period of five years from date of imports even in cases where export obligation has been fulfilled.

PARA 5.14 OF FTP 2015-2020

Block-wise Fulfilment of EO
(a) The Authorisation holder under the EPCG scheme shall, while maintaining the average export obligation, fulfill the specific export obligation over the prescribed block period in the following proportions:
Period from the date of issue of Authorisation
Minimum export obligation to be fulfilled
Block of 1st to 4th year
50%
Block of 5th and 6th year
Balance EO
(b) The Authorisation holder would intimate the Regional Authority on the fulfilment of the export obligation, as well as average exports, within three months of completion of the block, by secured electronic filing using digital signatures.
(c) Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block.

(d) (i) Authorisations issued from 1st April, 2002 upto 31st August, 2004 shall be governed by provisions of paragraph 5.8 of HBP Vol. 1 (RE-02) as amended from time to time.
(ii) Authorisations issued from 1st September, 2004 upto 17th April, 2013 shall be governed by provisions of paragraph 5.8 of HBP Vol. 1 (RE-12) as amended till 17.04.2013.
(iii) Authorisations issued from 18th April, 2013 till issue of Notification of FTP 2015-20 shall be governed by provisions of paragraph 5.8 of HBP Vol. 1 as amended through PN No. 1 dated 18.04.2013.

PARA 5.15 OF FTP 2015-2020

Monitoring of Export Obligation
Authorisation holder shall submit to RA concerned by 30th April of every year, report on fulfilment of export obligation by secured electronic filing using digital signatures. RA concerned may issue partial EO fulfilment certificate, provided export performance is proportionately adequate for fulfilment of export obligation.