Export Promotion Capital Goods (EPCG)
Table of Contents
- What is EPCG Scheme?
- Applying for EPCG scheme
- Amendment of EPCG Licence
- Import Process under EPCG & Installation Certificate
- Export Obligation under EPCG scheme
- Block-wise Extension under EPCG scheme
- Export Obligation Period extension under EPCG scheme
- Fulfillment of export obligation / Export process under EPCG licence
- Closure of EPCG licence / Export Obligation Discharge Certificate
- Important notifications related to EPCG scheme
What is EPCG Scheme?
EPCG Stands for Export Promotion Capital Goods
The objective of the EPCG scheme is to enhance India’s manufacturing capabilities and improve the quality and quantity of products being exported from India. The scheme mainly benefits Manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service provider(s); and service providers who want to expand their business outside India.
There are various versions of this scheme. The latest version is “Zero Duty EPCG scheme”. The benefit of the scheme is that it enables businesses to import Capital goods without paying any customs duty at the time of import, with a condition that the business adheres to the export obligation condition. Apart from the Customs Duty, even IGST is also exempted under this scheme. The scheme may also be utilized to procure Capital Goods from Indigenous sources. In case of Indigenous Sourcing of Capital Goods the exporter needs to apply for Invalidation, which helps you to get refund of GST paid within 3 to 4 months of the purchase.
Manufacturer exporters with or without supporting manufacturer(s), merchant exporters tied to supporting manufacturer(s) and service provider(s); and service providers can benefit from this scheme.
Capital Goods eligible for EPCG scheme
The following types of capital goods can be imported into India at zero customs duty under the EPCG scheme:
Plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion.
- Packaging machinery and equipment
- Refractories for initial lining
- Refrigeration equipment
- Power generating sets
- Machine tools
- Catalysts for initial charge
- Equipment and instruments for testing, research and development, quality and pollution control.
- Capital goods used in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as those used in services sector.
- Computer software systems
- Spares, moulds, dies, jigs, fixtures
- Catalysts for initial charge plus one subsequent charge
If you require any kind of assistance in preparing the application, feel free to contact our expert team. Contact us
EPCG annual reporting of EO Fulfillment
Authorization holders shall submit to the RA concerned by 30th of June every year, a report on fulfillment of export obligation through online. Such a report shall contain details such as shipping bill / GST invoice number, date of export / supply, description of product exported / supplied and FOB / FOR value of Export / Supply for both specific as well as average export obligation. Any delay in filing such an annual report shall be regularized on payment of Rs. 5000/- late fees for each financial year per authorization.
Automatic Reduction or enhancement of Export Obligation
In excess of the duty saved amount indicated on the authorization by not more than 10%, the authorization shall be deemed to have been enhanced by that proportion. Customs shall automatically allow clearance of such goods without endorsement by RA concerned. The Authorization holder shall furnish additional fee to cover excess imports affected, in terms of duty saved amount, to RA concerned, at the time of application for EODC. Export obligation shall be automatically stand enhance proportionately.
Excess / reduced duty saved amount may be a result of change in Dollar rates from time of application to time of import or due to enhanced / reduced quantity of imports
Maintenance Annual Average Export Obligation
The export obligation is over and above, the average level of export achieved by you as an authorization holder in the preceding three licensing years for the same and similar products within the overall export obligation period including the extended period (if any). Such average would be the arithmetic mean of export performance in the previous three years for the same and similar products. If your company is a new establishment then your Annual average export obligation would be zero.
The excess exports done towards the average export obligation fulfillment of an EPCG authorization during a year can be used to offset any shortfall in the Average EO done in other year(s) of the EO period or the block period as the case may be, provided Average EO imposed is maintained on an overall basis, within the EO period.