Circular No. 46/2004-Cus.
26th July, 2004 .
F.NO.607/10/2004-DBK
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Sub : Monitoring of Export Obligation under EPCG Scheme – regarding.
Kind attention is invited to Para 2.4 of DOR Circular No.24/2002-Cus. dated 6.5.2002 wherein inter-alia it has been laid down that normally redemption of Bond/BG filed under EPCG Scheme by the Licence holder shall be allowed by Customs on the basis of EO Discharge Certificate issued by DGFT authorities and in cases of doubts Customs may refer the matter to DGFT for corrective action. In this regard specific directions have also been issued from time to time to individual custom houses when it was brought to the notice of the Board that Customs is not accepting such EO Discharge Certificates.
2. It has come to the notice of Board that in some cases, despite issue of EO Discharge Certificate by the DGFT authorities, Customs has issued show cause notices to the licence holder questioning the value of imported capital goods/quantum of export obligation. Later, when the Commissioner increased the CIF value of imported capital goods by issue of an adjudication order, CESTAT struck down Commissioner’s order on the ground that such unilateral action by customs was bad in law.
3.In respect of import of capital goods under EPCG Scheme, there is linkage between the CIF value of imported capital goods and the quantum of export obligation fixed against the EPCG Licence by DGFT authorities. Hence, if Customs have any doubts about valuation of imported capital goods in relation to addition of the element of any other charges in value, then before initiating any precipitative action, the jurisdictionaI Commissioner of Customs should bring this to the notice of Board which will take up the matter with concerned DGFT authorities so that necessary corrective action, if any, is taken simultaneously by Customs and DGFT. There is already a Committee set up for this purpose in which CBEC is also represented. This is also because DGFT will have to simultaneously increase the CIF value of the EPCG Licence and also the quantum of export obligation specified therein. Unilateral action by Customs in such cases may ultimately help the EPCG licence holder to escape the clutches of law because under EPCG Scheme both Customs and DGFT authorities have important roles to play.
4. It is, therefore, reiterated that in all cases pertaining to EPCG Scheme where Customs have doubts about valuation, quantum of EO etc., the jurisdictional Commissioners of Customs scrupulously follow the instructions contained in DOR Circular No.24/2002.
5. Suitable Public Notice for Trade and Standing Order for the guidance of customs field formations may be issued.
6. Receipt of this Circular may please be acknowledged.
R.K. Talajia
Officer on special duty (DBK)
