Import of giant wheel

This query is : Resolved

Liju (Querist)
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09 January 2013 Is there any notification saying that the customs duty on import of equipments(giant wheel) for domestic use as capital assets,which is paid for in forex, will get any exemption by applying for EPCG?
What is EPCG scheme?
The company has not any foerx income.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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15 January 2013 KNNDLY NOTED THAT :

The eligible persons who desire to operate under the EPCG Scheme should make an application in the form given in Appendix 10 A of the Hand Book alongwith documents prescribed therein too the Director General of foreign Trade (DGFT) or to the regional Licensing authorities along with necessary information/documents to obtain an Import licence. Licences are issued, under this scheme by the director general of foreign trade or his regional officers depending upon the value of the licence subject to execution of legal undertaking and bank guarantee by them undertaking among other things to fulfill their export obligation within the specified period. The import licences issued under this scheme shall be deemed to be valid for the goods already shipped/ arrived provided, the customs duty has not been paid for the goods have not been cleared from the customs.

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SALIENT FEATURES OF E. P. C. G. SCHEME

POLICY

Export Promotion Capital Goods Scheme for the period 2009-2014 (updated as on 23.08.2010) has been announced in the Foreign Trade Policy. This Scheme allows the import of New & Secondhand Capital Goods, as well as computer software systems at concessional rate of Custom Duty by undertaking export obligation by the Exporters.

A) ZERO DUTY EPCG Scheme

Government has announced Zero Duty EPCG Scheme for certain product groups. This Scheme will be in force till 31.03.2012.

This Scheme is applicable to Sectors of :

1) Engineering. 2) Electronic Product 3) Basic Chemicals & Pharmaceuticals

4) Apparel & Textiles 5) Plastic 6) Handcraft 7) Chemical & Allied Products

8) Leather & Leather Products 9) Paper & Paperboard and articles thereot 10) Ceramic Products

11) Refactories 12) Glass & Glass ware 13) Rubber & articles thereot

14) Plywood & allied products 15) Marine Products 16) Sports goods & toys.

0% Duty Export Obligation on Duty Saved Amount 6 times in 6 Years.

FLEXIBILITY IN IMPORT OF SPARES

There is a flexibility to import Spares, Moulds, Dies, Jigs, Fixtures & Tools etc. at 50% E.O. than regular export obligation, subject to the condition that CIF value of the above should not increase more than 10% CIF value of import machinery and 10% of indigenous machinery (Book value.)

REQUIREMENT OF SPARES MORE THAN ABOVE FLEXIBILITY

If the above value is not sufficient for import of Spares, manufacturer can apply for their regular requirement of spares as per regular EPCG licence provisions.

B) 3% Duty EPCG Scheme

This Scheme is for all products other than those in ‘0’ Duty Scheme.

3.0% of CIF Value* 8 Times 8 Years

SSI Unit – Upto CIF Value Rs. 50 Lakhs 6 Times 8 Years

Agro Unit / Cottage or Tiny Sector 6 Times 12 Years

If duty saved is more than Rs. 100 Crores E:0. Period 12 Years

FAST TRACK EXPORTER

Authorisations issued on or after 01.04.2001 and in cases where the exporter has fulfilled 75% or more of Export Obligation (including average level of exports) in half or less than half the original Export Obligation period, the remaining Export Obligation shall be condoned and the case will be redeemed.

EPCG SCHEME FOR RETAILERS

Keeping in mind the concept of chain of retail shops and shopping malls becoming more and more popular in India, the government has recently introduced new scheme for import of Capital Goods. The benefit is confined to retailers having a minimum area of 1000 Sq. mtrs. for each location. The retailer falling under this category can avail the benefits under the EPCG scheme for import of Capital Goods at concessional rate of duty i.e. 3.09%.

Under this scheme Capital Goods such as Computer Systems, Air Condi-tioner Units, Security Systems, Furniture and Fixtures, Office Automation Systems, Systems required for establishing retail shops etc. can be imported.

EPCG SCHEME FOR SERVICE EXPORTS AS PER LIST OF APPENDIX-10.

Service Sector like Hotel, Travel Agent, Tour Operators, Tour Transport Operators and companies owning / operating golf resorts can also can apply under EPCG scheme. Under the said category Motor Cars, Sport Utility Vehicles and all purpose vehicles can also be imported under EPCG Scheme. To avail this benefit the applicants have earned foreign exchange of not less than Rs. 1.5 Crores during preceding 3 years.

BENEFITS OF PROJECT IMPORT-CUM-EPCG

An EPCG Authorisation can also be issued for import of Capital Goods under scheme for Project Import. Export Obligation would be 8 times of duty saved. Duty saved would be calculated by calculating in difference between effective duty under aforesaid customs notification and conces-sional duty under the EPCG.

IMPORT OF SPARES

There is a provision for import of Spares required for maintenance of existing plant and machinery imported earlier under EPCG or otherwise. The manufacturer can import Spares (including refurbished, reconditioned spares, tools, refractories, catalysts).

APPLICATION STAGE

1.1 Manufacturer & Merchant Exporter tied up with the supporting manufacturer and Service Providers are also eligible for EPCG Scheme.
1.2 New as well as Secondhand Capital Goods (without any age restriction) including Tools, Jigs, Spares, Fixtures, Dies, Moulds can be imported.
1.3 Spares can be imported subsequently but within the Export Obligation period i.e. it is not necessary to import spares along with the machine.
1.4 The Export Obligation shall be over and above the average level of exports of the same and similar products in the preceding 3 years (except for categories like handicraft, handloom, cottage, tiny sector, agriculture, aqua-culture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture) i.e. Average Export Obligation is not applicable.

IMPORT STAGE

2.1 A person holding an EPCG Authorisation may source Capital Goods from domestic manufacturers. (Excise is refundable)
2.2 Indigenous Manufacturer supplying under the scheme can import components/raw materials required for the manufacture of the capital goods without payment of any duty under DES Scheme.
2.3 There is a flexibility to utilize the import authorisation value in excess upto 10% or more or less than 10% of the duty saved amount of the Authorisation. Export Obligation shall be amended pro-rata basis as per the actual utilization of the authorisation. Such request can be made after utilization of EPCG Authorisation.
2.4 Import of Capital Goods under lease arrangement is permitted under the scheme.

EXPORT STAGE

3.1 The period for fulfillment of the Export Obligation shall be reckoned from the date of issue of authorisation.
3.2 The E.O. will be accepted against Physical Exports (including export to SEZ) / Deemed Exports.
3.3 There is a provision for Extension of Export Obligation Period (Kindly consult us).

EPCG Authorisation Holder can also opt for Technological upgradation of existing Capital Goods imported under EPCG Scheme.

If the Capital Goods imported under the EPCG Scheme are found defective or otherwise unfit for use they can be re-exported to the foreign buyer within 3 years from the date of payment of duty with the permission of the Regional Authority / Customs Authority. In this situation the E. O. would be re-fixed.

Under this scheme, if required, the Transfer of Capital Goods would be permitted within the group companies under intimation to R. A. and jurisdictional Central Excise Authority.

Import of Capital Goods shall be subject to A.U. Condition till the Export Obligation is completed. After obtaining Redemption Memo / Closure Memo from Jt. DGFT & Customs, it can be sold or transferred. However, the service sector handicraft, handloom, cottage and tiny sector etc. even after completion of E. O. the capital goods cannot be transfer or sold up to 5 years from the date of import.