The EPCG scheme given benefit of saving import duty to against completing targeted export of goods.
Simply is permit import of Capital Goods ,Spare Parts, Accessories at Zero duty with a condition that importer need to export goods of value of six time of duty saved at time of import.
Who can Avails EPCG Scheme:
What is EPCG License Export Obligation
Export obligation for EPCG license can be completed in INR as well as Foreign currency within 6 years from the date of EPCG authorization issued by DGFT . There are two types of Export obligations i.e. Average Export Obligation and specific Export obligation.Example : XYZ Limited imported machine from Japan in year 2015 for value of Rs. 100 Lac and duty saved under EPCG license was Rs. 25 Lac. The EPCG license export obligation shall be Rs. 150 Lac for next 6 Year ( 2015 to 2021 ) ( Rs. 25 Lac x 6 Years )
EPCG EXPORT ObligationAverage Export Obligation :
This obligation has fixed on the basis of last three years export performance of the same product. This Export obligation are maintained in overall period or extended period of EPCG authorization.
Specific Export Obligation :
This obligation are fixed on 6 times of duty saved on import of capital goods and it will be completed in 6 years period from the date of EPCG authorization issued date.
For first 4 year Export obligation will be completed by 50% and Balance 50% will be completed in the year of 5th and 6th.
Extension of Export Obligation period:
The EPCG scheme allows extension of export obligation period on payment of composition fee equal to 2% proportionate duty saved amount on unfulfilled of export obligation. Such extension period can be for maximum period of 2 years.
Exit from Scheme
If EPCG authorization holders fails to fulfill export obligation , then they shall pay custom duty + interest prescribed by Customs authority . In case the EPCG authorization holder is not able to complete the export obligation, he shall pay duty of customs with interest and exit from scheme.
Relaxation of Export obligation
Units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Jammu &Kashmir, specific Export obligation shall be 25% of the Export obligation.