Epcg certificate- hotel industry
This query is : Resolved
27 January 2015
EPCG Certificate- Hotel Industry
Whether allowable? if so what are the export obligations?
Whether allowable? if so what are the export obligations?
28 January 2015
The Export promotion capital goods scheme (EPCG) scheme is administered in India by the Directorate General of Foreign Trade, Ministry of Commerce and Industry. Under this scheme, customs duty is levied on import of capital goods for a hotel in India at a concessional rate of 3%, subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue date. Capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds.The DGFT has also clarified through notification that hotels could import furniture under the export promotion capital goods (EPCG) scheme.
Export Obligation (EO)
*********************
Following conditions shall apply to the fulfillment of the EO:-
(a) EO shall be fulfilled by export of goods manufactured / services rendered by the applicant.
(b) EO under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years.
(c) Upto 50% EO may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm / company, or group company / managed hotel, which has the EPCG authorization. However, EPCG authorizations issued prior to 01.04.2008 will be governed by earlier policy provisions.
(d) However, in such cases, additional export obligation imposed shall be over and above average exports achieved by the unit / company / group company / managed hotel in preceding three years for both the original and the substitute product(s) / service(s).
(e) Shipments under Advance Authorization, DFRC, DFIA, or Drawback scheme, or incentive schemes under Chapter 3 of FTP; would also count for fulfillment of EPCG EO.
(f) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.
(g) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of FTP shall also be counted towards fulfillment of export obligation, alongwith usual benefits available under paragraph 8.3 of FTP.
(h) Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG. Payment received in rupee terms for port handling services, in terms of Chapter 9 of FTP shall also be counted for EO discharge.
(i) EPCG authorization holder shall export either directly or through third party(s). If a merchant exporter is EPCG authorization holder, name of supporting manufacturer shall also be indicated on shipping bills.At the time of export, EPCG authorization number and date shall be endorsed on shipping bills which are proposed to be presented towards discharge of export obligation.
(j) Export proceeds shall be realized in freely convertible currency except for deemed exports. Exports to SEZ units /Supplies to developers/ Co-developers, irrespective of currency of realization would also be counted for discharge of Export Obligation.
(k) The Authorization holder under the EPCG scheme shall fulfill the export obligation over the specified period in the following proportions:
For Zero Duty EPCG Scheme
Period from the date of issue of Authorization
Minimum export obligation to be fulfilled
Block of 1st to 4th
50%
Block of 5th and 6th
50%
For Concessional 3% Duty EPCG Scheme
Period from the date of issue of Authorization
Minimum export obligation to be fulfilled
Block of 1st to 6th year
50%
Block of 7th and 8th year
50%
In respect of Authorizations, on which the value of duty saved is Rs.100 crore or more, the export obligation shall be fulfilled over a period of 12 years (not applicable to zero duty EPCG scheme) in the following proportion:-
Period from the date of issue of Authorisation
Minimum export obligation to be fulfilled
Block of 1st to 10th year
50%
Block of 11th and 12th year
50%
(l) However, the EO of a particular block of year may be set off by the excess exports made in the preceding block year. The Authorization holder would intimate the regional authority on the fulfillment of the export obligation, as well as average exports, within three months of completion of the block, by secured electronic filing using digital signatures.
(m) Where EO of any particular block of years is not fulfilled in terms of the above proportions, except in such cases where the EO prescribed for a particular block of years is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount equal to unfulfilled portion of EO, such Authorization holder shall, within 3 months from the expiry of the block of years, pay duties of customs (alongwith applicable interest as notified by DOR) of an amount equal to that proportion of the duty leviable on the goods which bears the same proportion as the unfulfilled portion of the EO bears to the total EO.
(n) Authorization holder shall submit to RA concerned by 30th April of every year, report on fulfillment of export obligation. RA concerned may issue partial EO fulfilment certificate, provided export performance is proportionately adequate to fulfillment of export obligation.
(o) RA concerned may condone shortfall upto 5% in export obligation arising out of duty saved amount.
Reduced EO for North East Region
For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, Specific EO shall be 25% of the stipulated EO as applicable. There shall be no change in average EO i.e. EO under the scheme shall be, over and above, the average level of exports achieved by the exporter in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any
Export Obligation (EO)
*********************
Following conditions shall apply to the fulfillment of the EO:-
(a) EO shall be fulfilled by export of goods manufactured / services rendered by the applicant.
(b) EO under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years.
(c) Upto 50% EO may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm / company, or group company / managed hotel, which has the EPCG authorization. However, EPCG authorizations issued prior to 01.04.2008 will be governed by earlier policy provisions.
(d) However, in such cases, additional export obligation imposed shall be over and above average exports achieved by the unit / company / group company / managed hotel in preceding three years for both the original and the substitute product(s) / service(s).
(e) Shipments under Advance Authorization, DFRC, DFIA, or Drawback scheme, or incentive schemes under Chapter 3 of FTP; would also count for fulfillment of EPCG EO.
(f) EO can also be fulfilled by the supply of ITA-I items to DTA, provided realization is in free foreign exchange.
(g) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of FTP shall also be counted towards fulfillment of export obligation, alongwith usual benefits available under paragraph 8.3 of FTP.
(h) Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge under EPCG. Payment received in rupee terms for port handling services, in terms of Chapter 9 of FTP shall also be counted for EO discharge.
(i) EPCG authorization holder shall export either directly or through third party(s). If a merchant exporter is EPCG authorization holder, name of supporting manufacturer shall also be indicated on shipping bills.At the time of export, EPCG authorization number and date shall be endorsed on shipping bills which are proposed to be presented towards discharge of export obligation.
(j) Export proceeds shall be realized in freely convertible currency except for deemed exports. Exports to SEZ units /Supplies to developers/ Co-developers, irrespective of currency of realization would also be counted for discharge of Export Obligation.
(k) The Authorization holder under the EPCG scheme shall fulfill the export obligation over the specified period in the following proportions:
For Zero Duty EPCG Scheme
Period from the date of issue of Authorization
Minimum export obligation to be fulfilled
Block of 1st to 4th
50%
Block of 5th and 6th
50%
For Concessional 3% Duty EPCG Scheme
Period from the date of issue of Authorization
Minimum export obligation to be fulfilled
Block of 1st to 6th year
50%
Block of 7th and 8th year
50%
In respect of Authorizations, on which the value of duty saved is Rs.100 crore or more, the export obligation shall be fulfilled over a period of 12 years (not applicable to zero duty EPCG scheme) in the following proportion:-
Period from the date of issue of Authorisation
Minimum export obligation to be fulfilled
Block of 1st to 10th year
50%
Block of 11th and 12th year
50%
(l) However, the EO of a particular block of year may be set off by the excess exports made in the preceding block year. The Authorization holder would intimate the regional authority on the fulfillment of the export obligation, as well as average exports, within three months of completion of the block, by secured electronic filing using digital signatures.
(m) Where EO of any particular block of years is not fulfilled in terms of the above proportions, except in such cases where the EO prescribed for a particular block of years is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount equal to unfulfilled portion of EO, such Authorization holder shall, within 3 months from the expiry of the block of years, pay duties of customs (alongwith applicable interest as notified by DOR) of an amount equal to that proportion of the duty leviable on the goods which bears the same proportion as the unfulfilled portion of the EO bears to the total EO.
(n) Authorization holder shall submit to RA concerned by 30th April of every year, report on fulfillment of export obligation. RA concerned may issue partial EO fulfilment certificate, provided export performance is proportionately adequate to fulfillment of export obligation.
(o) RA concerned may condone shortfall upto 5% in export obligation arising out of duty saved amount.
Reduced EO for North East Region
For units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, Specific EO shall be 25% of the stipulated EO as applicable. There shall be no change in average EO i.e. EO under the scheme shall be, over and above, the average level of exports achieved by the exporter in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any
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