Regularization of Bonafide Default and Exit from EPCG Scheme
Posted On July 18, 2022
Exporters can import capital goods at zero duty under the EPCG plan in exchange for a six-year export obligation (EO) worth six times the duty saved. At least 50 percent of the EO must be completed during the first four years.
The regulations allowing the exporter to apply for an EO period extension for the first block and the final six-year period, subject to payment of prescribed composition fees, required the exporter to do so within a specific period. Many exporters who had missed the deadline to ask for an extension had to visit the EPCG committee at the DGFT headquarters for a qualified exemption.
They will no longer be required to do so and can request an extension at any time by paying the required composition fees.
Regularization of Bonafide default and Exit from EPCG scheme: –
EPCG authorization holder has to fulfill 100% of Specific export obligations and Average export obligations within the time or extended time. Further, they have to submit their EODC / Redemption application to the concerned RA.
If the EPCG authorization holder fails to fulfill the export obligation, they should pay the customs duty charge along with the appropriate amount of interest to Customs authorities. There will be an option of furnishing valid duty credit scrips for authorization holder for payment of customs duty component issued under chapter 3 or chapter 5 of FTP.
In partial fulfillment of the export obligation under the scheme, they should pay the proportionate duty saved amount along with the appropriate amount of interest to Customs authorities. Authorization holders can also pay duty and interest suo-motu on the basis of self /own calculation as per the procedure specified in paragraph 4.50 of HBP of FTP.
After paying application duties and interest to Customs, the license holder has to approach DGFT by submitting the Challan copies to regularize the EPCG license. DGFT officials will verify the application and will issue a duty paid regularization letter. Then the license stands redeemed and closed.
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Sudheer Varma Vegesna