Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Subject: EPCG/Duty Exemption Schemes — exemption notifications explained
In the Exim Policy 2000-2001 announced on 31.3.2000, interalia 5% Duty EPCG Scheme and few other Duty Exemption Schemes have been introduced. In order to operationalise these export promotion schemes, the Department of Revenue have issued Customs Notification Nos. 47/2000 and 48/2000 both dated 25th April, 2000, 49/2000, 50/2000 and 51/2000 all dated 27th April, 2000 and 52/2000 dated 28.4.2000. Salient features of these schemes are as follows.
5% Duty EPCG Schemes
Under this Scheme import of capital goods is allowed at 5% Basic Customs Duty subject to the Licence holder undertaking to export resultant product equal to 5 times the CIF value of the imported goods on FOB basis in 8 years time. Block-wise fulfilment of export obligation for each of the 4 blocks of 2 years remains same as in the case of Zero Duty EPCG Scheme (Vide Notification No. 29/97). Additional duty of Customs (CVD) is fully exempted. The Scheme is applicable to manufacture exporters as well as service providers. However, DGFT would issue 5% Duty EPCG Licence only to those service providers to whom EPCG Licence under 10% duty/Zero Duty EPCG Scheme were issued earlier. No list of equipments is attached to the notification. However, import of only those equipments would be permitted which are required by service providers for rendering services. Import of consumer items like carpets, crockery, marble, chandeliers etc. shall not be allowed. For the purpose of allowing imports to service providers, the list of equipments appended to Customs Notification No. 29/97 can be used as a reference. (Notification No. 49/2000 dated 24.4.2000 refers.)
In addition, relocation of machinery imported under 10% duty 5% duty/Zero duty EPCG Schemes into the factory/premises of:
have been permitted provided the name and address of such other persons are endorsed on the licence”
In this regard earlier DOR Circular Nos. 5/97 dated 14.3.97, 31/98 dated 5.5.98 and 32/98 dated 5.5.98 may also be referred.
BG exemption to status holders under 15% Duty EPCG Scheme
In terms of para 3.1 (a) of DOR Circular No. 45/96, All status holders have been granted full exemptoin from BG under 15% duty scheme. Similarly, in terms of para 3.1 (c) $ (d) other manufacturer exporters & service providers have been granted 50% BG exemption under 15% Duty EPCG Scheme. It is clarified that the same provision specified in paras 3.1 (a), (c) & (d) shall be applicable for 10% and 5% duty EPCG Schemes. In other words, a status holder would enjoy full BG exemption under 5% duty EPCG Scheme. The other provisions of BG exemption specified in DOR Circular No. 38/97-Cus. Dated 19.9.97 (corporate guarantee) & 71/98-Cus. Dated 15.9.98 (manufacturer exporter0 shall also be applicable.
Duty Exemption Scheme
Advance Licence for Physical Exports
This Scheme is similar to actual user Advance Licence Scheme vide Customs Notification No. 30/97. Customs Notification No. 51/2000 dated 27.4.2000 refers. Goods imported against the Advance Licence would be fully exemption from all customs duties.
Advance Licence for Deemed Exports
Advance Licences would be issued for deemed exporters to permit import of materials which are required in the manufacture of final products to be supplied to specified products in India. This Scheme replaces the earlier Special Imprest Licence Scheme (Vide Customs Notification No. 36/97). Customs Notification No. 50/2000 dated 27.4.2000 refers.
Duty Free Replenishment Certificate Scheme (DFRC)
In order to permit of inputs used in the manufacture of resultant export products, DFRC licences would be issued on post export basis. The Scheme would be applicable to export products which has Standard Input-Output Norms (SION) specified in Handbook of Procedure, Vol.II. Customs Notification No. 48/2000 dated 25.4.2000 and Circular No. 33/2000 dated 2.5.2000 refers.
Re-export of defective goods imported under DEEC and EPCG Schemes.
In terms of Customs Notification No. 52/2000 dated re-export of goods which are found defective or unfit for use and which were imported under DEEC and EPCG Schemes, has been permitted back to the foreign suppliers in bonafide cases. This clause has also been incorporated in 5% Duty EPCG Scheme Customs Notification No. 49/2000 dated 27.4.2000. This would enable exporters operating under DEEC and EPCG Schemes to re-export defective goods in bonafide cases. This Circular rescinds Board’s Circular No. 58/99-Cus dated 30.8.99.
Renaming of Annual Advance Licence Scheme
On account of change of name of Annual Advance Licence Scheme to (Advance Licence for annual Requirement), amendment Notification No. 47/2000-Cus. Dated 25.4.2000 has been issued.
2. Copies of Custom Notifications and Circular are being sent separately:
3. Standing Orders/Departmental orders for the information and guidance of the field staff and trade/public notices for the trade may be issued and copies of the same may be forwarded to the Joint Secretary (Drawback).