hello
This query is : Resolved
21 March 2009
hi
sub: query regarding EPCG scheme
Custom duty on import of capital good (eg. an embroidery machinery) under EPCG scheme is 3%. Now this 3% duty shows the basic custom duty as the import also includes 8% CVD so will the CVD be charged.
Also want to know details regarding EPCG scheme as you can provide regarding cash subsidy.
Waiting for your reply as soon as possible Thanks
Regards
C.A Ankit
sub: query regarding EPCG scheme
Custom duty on import of capital good (eg. an embroidery machinery) under EPCG scheme is 3%. Now this 3% duty shows the basic custom duty as the import also includes 8% CVD so will the CVD be charged.
Also want to know details regarding EPCG scheme as you can provide regarding cash subsidy.
Waiting for your reply as soon as possible Thanks
Regards
C.A Ankit
21 March 2009
Your query is not clear. Please draft it properly.
Regards
Regards
22 March 2009
hi
I just wanted to know about the procedure to obtain EPCG license and the benifits and obligations for it.
Details are required for import of capital good eg. embroidery machinery.
Regards
I just wanted to know about the procedure to obtain EPCG license and the benifits and obligations for it.
Details are required for import of capital good eg. embroidery machinery.
Regards
22 March 2009
EPCG license is issued by DGFT; procedure, form etc. you can find on DGFT web site. Under this lecense you can import capital goods for use in manufacture of export products. You have to fulfill and export obligation of approx 10 times in 10 years (it differs slightly for different classes of persons). Unless until export obligation is fulfilled, the imported capital goods cannot be sold. If you have a valid EPCG license, you can get same capital goods even from doemstic market after invalidation of the license, and excise duty refund can be claimed. The supplier will get all benefits of deemed export.
At the time of import 3% custom duty is payable. No cenvat can be taken of this amount.
With reduction in duty rate (capital goods attarct rates of BCD as low as 5% and max 7.5%), the scheme is loosing its popularity as compliance cost with various procedure eats whatever benefit exporter get.
At the time of import 3% custom duty is payable. No cenvat can be taken of this amount.
With reduction in duty rate (capital goods attarct rates of BCD as low as 5% and max 7.5%), the scheme is loosing its popularity as compliance cost with various procedure eats whatever benefit exporter get.
23 March 2009
thanks for your reply...
The export obligation of 10 times is of tha amount of duty saved or the amount of capitaal good CIF value.
Also information regarding capital subsidy.
The export obligation of 10 times is of tha amount of duty saved or the amount of capitaal good CIF value.
Also information regarding capital subsidy.
27 July 2024
### **EPCG Scheme Overview**
The **EPCG (Export Promotion Capital Goods) Scheme** is designed to facilitate the import of capital goods at a concessional rate of customs duty to promote exports. Here's a detailed breakdown addressing your queries:
#### **1. Customs Duty and CVD Under EPCG Scheme**
- **Basic Customs Duty (BCD)**: Under the EPCG Scheme, the basic customs duty on capital goods is generally reduced. For instance, you mentioned a 3% duty.
- **Countervailing Duty (CVD)**: Typically, the EPCG Scheme aims to reduce the basic customs duty, but **CVD** (Countervailing Duty) and other additional duties may still be applicable. The 8% CVD is often levied on the value of imported goods to counteract the excise duty in the domestic market.
Therefore, while the EPCG Scheme provides for a reduction in the basic customs duty, the **CVD and other applicable duties** might still be charged unless specifically exempted.
#### **2. Procedure to Obtain EPCG License**
1. **Eligibility**:
- The scheme is open to all exporters who fulfill the export criteria.
- You must be an existing exporter or an aspiring exporter intending to export goods/services.
2. **Application Process**:
- **Application**: Apply for the EPCG license through the **Directorate General of Foreign Trade (DGFT)**.
- **Documents**: You need to submit documents such as proof of export performance, business registration documents, and a detailed project report outlining the intended import.
- **Fees**: Pay the requisite application fee.
3. **Issuance**:
- The DGFT will issue the EPCG license once the application is processed and approved.
4. **Import**:
- With the EPCG license, you can import the capital goods at the reduced customs duty rate.
#### **3. Export Obligation**
- The **export obligation** under the EPCG Scheme is generally **10 times** the duty saved. This means if you save customs duty of `X`, you need to export goods worth `10 * X`.
- **CIF Value of Capital Goods**: The export obligation is not based on the CIF value of the capital goods but on the duty saved.
#### **4. Benefits and Obligations**
- **Benefits**:
- **Reduced Duty**: Import capital goods at a lower customs duty rate.
- **Export Flexibility**: Helps in improving the competitiveness of your products by investing in modern technology.
- **Obligations**:
- **Export Obligation Compliance**: You must fulfill the export obligation within the prescribed time limit (usually 6 years).
- **Production and Export**: Maintain records of production and exports to demonstrate compliance with the scheme's conditions.
- **Documentation**: Proper documentation and reporting to DGFT are required to show compliance.
#### **5. Capital Subsidy**
- **Capital Subsidy**: The EPCG Scheme itself does not provide direct cash subsidies. Instead, it offers duty benefits on imports. However, there might be other schemes and programs under the Government of India that provide capital subsidies or financial assistance.
- **Additional Schemes**: Check with the DGFT or the relevant government department for any other schemes that might offer capital subsidies.
### **Summary of Key Points**
- **CVD and Other Duties**: Under the EPCG Scheme, the basic customs duty is reduced, but CVD and other additional duties like Special Additional Duty (SAD) may still be applicable.
- **EPCG License**: Apply through DGFT, provide necessary documents, and pay fees.
- **Export Obligation**: 10 times the duty saved.
- **Benefits**: Reduced customs duty, increased export competitiveness.
- **Obligations**: Fulfill export obligation, maintain records.
For detailed guidance and current updates, it's always good to consult the latest notifications from DGFT or a professional consultant specializing in foreign trade regulations.
The **EPCG (Export Promotion Capital Goods) Scheme** is designed to facilitate the import of capital goods at a concessional rate of customs duty to promote exports. Here's a detailed breakdown addressing your queries:
#### **1. Customs Duty and CVD Under EPCG Scheme**
- **Basic Customs Duty (BCD)**: Under the EPCG Scheme, the basic customs duty on capital goods is generally reduced. For instance, you mentioned a 3% duty.
- **Countervailing Duty (CVD)**: Typically, the EPCG Scheme aims to reduce the basic customs duty, but **CVD** (Countervailing Duty) and other additional duties may still be applicable. The 8% CVD is often levied on the value of imported goods to counteract the excise duty in the domestic market.
Therefore, while the EPCG Scheme provides for a reduction in the basic customs duty, the **CVD and other applicable duties** might still be charged unless specifically exempted.
#### **2. Procedure to Obtain EPCG License**
1. **Eligibility**:
- The scheme is open to all exporters who fulfill the export criteria.
- You must be an existing exporter or an aspiring exporter intending to export goods/services.
2. **Application Process**:
- **Application**: Apply for the EPCG license through the **Directorate General of Foreign Trade (DGFT)**.
- **Documents**: You need to submit documents such as proof of export performance, business registration documents, and a detailed project report outlining the intended import.
- **Fees**: Pay the requisite application fee.
3. **Issuance**:
- The DGFT will issue the EPCG license once the application is processed and approved.
4. **Import**:
- With the EPCG license, you can import the capital goods at the reduced customs duty rate.
#### **3. Export Obligation**
- The **export obligation** under the EPCG Scheme is generally **10 times** the duty saved. This means if you save customs duty of `X`, you need to export goods worth `10 * X`.
- **CIF Value of Capital Goods**: The export obligation is not based on the CIF value of the capital goods but on the duty saved.
#### **4. Benefits and Obligations**
- **Benefits**:
- **Reduced Duty**: Import capital goods at a lower customs duty rate.
- **Export Flexibility**: Helps in improving the competitiveness of your products by investing in modern technology.
- **Obligations**:
- **Export Obligation Compliance**: You must fulfill the export obligation within the prescribed time limit (usually 6 years).
- **Production and Export**: Maintain records of production and exports to demonstrate compliance with the scheme's conditions.
- **Documentation**: Proper documentation and reporting to DGFT are required to show compliance.
#### **5. Capital Subsidy**
- **Capital Subsidy**: The EPCG Scheme itself does not provide direct cash subsidies. Instead, it offers duty benefits on imports. However, there might be other schemes and programs under the Government of India that provide capital subsidies or financial assistance.
- **Additional Schemes**: Check with the DGFT or the relevant government department for any other schemes that might offer capital subsidies.
### **Summary of Key Points**
- **CVD and Other Duties**: Under the EPCG Scheme, the basic customs duty is reduced, but CVD and other additional duties like Special Additional Duty (SAD) may still be applicable.
- **EPCG License**: Apply through DGFT, provide necessary documents, and pay fees.
- **Export Obligation**: 10 times the duty saved.
- **Benefits**: Reduced customs duty, increased export competitiveness.
- **Obligations**: Fulfill export obligation, maintain records.
For detailed guidance and current updates, it's always good to consult the latest notifications from DGFT or a professional consultant specializing in foreign trade regulations.
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