F. No. 605/39/99-DBK

Circular No. 58/99-Cus
dated 30/8/1999

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, New Delhi

Subject : Permission to re-export capital goods imported at concessional / zero rate of duty under EPCG Scheme.

    It has come to the notice of the Board that capital goods imported & cleared under EPCG Scheme at concessional / zero rate of duty were later on permitted re-export by Customs without recovery of duty on merits. Such re-export was inter-alia allowed on the ground that the imported machinery wa defective/damaged & needed replacement.

2.  Whereas there may not be objection to permit import of replacement machinery under EPCG Scheme with added export obligation etc., the permission granted by Customs for re-export of the machinery without recovery of customs duty on merits is incorrect. This is because there is no provision in the EPCG Customs Notifications which permits re-export of capital goods imported under it. In other words if, for any reason, the EPCG operator wants to re-export the capital goods imported under EPCG Scheme at concessional / zero rate of duty, the importer has to first pay full customs duty on merits on the Capital Goods @ in force on the date of import. At the time of re-export, he can claim drawback under Section 74 of Customs Act, 62 read with Notification No. 19/65-Cus. dated 6.2.1965.

3.  Action for recovery of customs duty on merits should, therefore, be initiated in all cases where the re-export of capital goods imported under EPCG Scheme at concessional / zero rate of duty has been allowed without payment of duty on merits and compliance reported to Board.

4.  Suitable public notice for information of the trade & standing orders for the guidance of staff may be issued.

Sd/-
(Sunil Kumar)
Director (DBK)

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