Bank Guarantee and Bond cancellation under EPCG Scheme
The EPCG Scheme, or Export Promotion Capital Goods Scheme, is a government mandate intended to promote exports and assist Indian manufacturers in expanding their business operations. This scheme allows duty-free imports of capital goods or machinery used for pre-production, post-production, or manufacturing processes.
Several complex procedures are involved in this scheme, ranging from applying for a license to redeeming a license at DGFT. Let us take you through bond and Bank Guarantee cancellation stages.
Bond cancellation under EPCG Scheme and why is it necessary to cancel a Bond?
The EPCG Scheme imposes an export requirement on producers equal to six times the amount of duty savings in six years. Manufacturers must provide a Bond and Bank Guarantee with authority specifying the obligation of duty saved.
The Bond includes information on the export requirement, the deadline for fulfilling the obligation, and the penalties/recovery for failing to meet the export objective. The execution of the Bond must be at the Port to clear the duty-free capital goods or machinery from customs.
Unless and until the cancellation process at Customs culminates, the Bond will stay active and will not cancel on its own.
Bond cancellation can commence after submitting an Export Obligation Discharge Certificate (EODC) issued by DGFT to customs. Bond cancellation is an essential step to avoid incurring hefty penalties or recovery charges and requires the submission of other papers in addition to the EODC certificate.
Necessary documentation to submit EODC at DGFT:
The following are the documents required to apply for license redemption:
• Redemption Letter or EODC letter
• Redemption application i.e ANF-5B.
• Copy of the installation certificate.
• Copy of EPCG license.
• Shipping bills and e-BRC copies.
Step wise procedure of Bond cancellation under EPCG Scheme
To obtain an EODC Certificate, you must submit the documentation specified above to the Customs officer who completed the Bond execution. Officers at customs begin the license redemption process after the document verification finalizes and the authority is satisfied.
They document in their books the essential entries for the Export Obligation. After that, the license terminates, and the license holders receive a letter from customs regarding bond cancellation. The bank guarantee obtained at the license acquisition returns to the bank. The bank will credit the amount of the bank guarantee margin withheld when the license holder acquires the bank guarantee.
How will Enrich Professional Services assist in obtaining EODC and assisting you?
Enrich Professional Services is the leading consultant, particularly in DGFT-related topics. We have specialist experience in the sector and will walk you through the complicated procedure of license redemption. For many years, we have dealt with DGFT issues with export promotion schemes such as RoDTEP, MEIS, SEIS, Advance License, EPCG, DFIA, AEO certification, Star Export House certification, Duty Drawback, and IGST Refund, among others.
We are the best EPCG advance license consultants in Hyderabad and around India. As the leading consultants in Hyderabad, several firms have contacted us to take advantage of duty-free imports of capital goods under the EPCG scheme.
We are EPCG closure consultants that help keep tensions at bay by carrying out all appropriate bond cancellation activities.
Among the services we’ll provide you at Enrich Professional Services are:
- We help you contact DGFT for the EODC.
- BG/Bond Cancellation under EPCG paperwork is prepared for you with expert assistance.
- Fill out all the necessary paperwork at customs to request a cancellation.
- Defend the client’s interests by attending a personal hearing in customs.
- Maintain contact with the custom until the Bond cancels.
Get in touch with our expert EPCG EODC Consultants to prevent making mistakes and paying additional recovery/penalties to authorities. Our team of professionals is ready to tackle your problems.
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