Circular No. 85/2000-Cus

27th October, 2000.

F.NO. 605/39/99-DBK

Government of India

Ministry of Finance

Department of Revenue

Subject : EPCG Scheme – Notification No. 29/97-Cus – capital goods for marine/textile/chemical sectors – zero duty benefit – classification issued

 Attention is invited to paragraph 1(i) and condition 5 of para 2 of Notification No. 29/97-Customs dated 1.4.1997 issued under Zero duty EPCG Scheme. In terms of para 1(i) to the notification, inter-alia CVD exemption is exemption is extended to capital goods for marine sector. In terms of condition(5) of para 2 of the notification, it is specified that zero duty benefit would be available if the minimum value of imported capital goods is not less than Rs. 20 crore. The first proviso to condition (5) of para 2 of the said notification further provides that, inter-alia in respect of textile and chemical sectors the normal threshold limit of Rs. 20 crores gets reduced to Rs. 1 crore. For the purpose of this notification, the definition of capital goods is given in Explanation (1) to the notification and sub-clauses (d) (e) and (f) of clause (i) therof further define capital goods for marine, textile an chemical sectors respectively.

2.   Doubts have been expressed whether on account of the definition of capital goods for marine, textile and chemical sectors as given in sub-clauses (d), (e) and (f) of clause (i) to Explanation (1) to notification No. 29/97-Cus., dated 1.4.1997, benefit of the notification would be available to all machinery required by the aforesaid 3 sectors or it would be available only to machinery specified in Annexures II, III and IV of the said notification even if the total value of imported machinery exceeds Rs. 20 crores.

3.  The issue has been examined in the Board. It is clarified that the intention behind specifying machinery required for marine sector in Annexure II of Notification No. 29/97-Customs was to ensure that for marine sector CVD exemption is extended only to the machinery specified in Annexure II. Similarly, for textile and chemical sectors, the intention behind specifying the list of machinery in Annexure III and IV respectively was to ensure that the lower threshold limit of Rs. 1 crore is extended only to the machinery specified in the said two Annexures. In other words, for marine, textile and chemical sectors, zero duty benefit under said notification would continue to be available to all other machinery not specified in the said Annexures so long as the total CIF value of imported machinery is not less than Rs. 20 crores. This intention of the Government is clear on a collective reading of para 1(i), condition (5) of Para 2 and Explanation (1) to notification No. 29.97-Cus.

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