Export Promotion Capital Goods Scheme (EPCG) – Re-fixation of Annual Average Export Obligation
No. CLE-HO/POL/CIRCULAR/17-18
November 24, 2017
Members of the Council,
Sub : Export Promotion Capital Goods Scheme (EPCG)
– Re-fixation of Annual Average Export Obligation
Dear Sirs,
As members are aware, EPCG scheme allows import of capital goods for pre-production, production and post production by providing exemption from Basic Customs Duty and IGST, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date.
According to para 5.04 (b) of Foreign Trade Policy, Export Obligation under the EPCG scheme shall be, over and above, the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any.
Para 5.19 of the Hand Book of Procedures of FTP 2015-20 permits re-fixation of Annual Average Export Obligation, in case the export in any sector/product group decline by more than 5%. This implies that the sector/product group that witnessed such decline in 2016-17 as compared to 2015-16, would be entitled for such relief.
The DGFT has now issued Policy Circular No.03/2015-20 dated 21.11.2017 (copy enclosed) notifying the list of products which are eligible to get aforementioned re-fixation of annual export obligation. As far as finished leather, leather products and footwear are concerned, the following products are eligible for re-fixation of annual export obligation under EPCG during 2016-17
| HS Code | Product | Export (Rs) 2015-16 | Export (Rs) 2016-17 | % decline |
|---|---|---|---|---|
| 4107 | Leather further prepared after tanning or crusting, including parchment-dressed leather, of bovine (including buffalo) | 4409.11 | 3734.05 | - 15.31% |
| 4112 | Leather further prepared after tanning or crusting, including parchment-dressed leather, of sheep or lamb | 591.86 | 550.92 | - 6.92% |
| 4113 | Leather further prepared after tanning or crusting, including parchment-dressed leather, of other animals | 1797.20 | 1602.11 | - 10.86% |
| 6401 | Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, etc. | 14.16 | 11.21 | - 20.85% |
| 4302 | Tanned or dressed furskins (including heads, tails, paws and other pieces or cuttings), unassembled, or assembled (without the addition of other materials) other than those of heading 4303 | 4.91 | 1.11 | - 77.42% |
| 4206 | Articles of gut (other than silk-worm gut), of goldbeater’s skin, of bladders or of tendons | 1.51 | 0.22 | - 85.67% |
Members may accordingly approach the local offices of Joint DGFT for re-fixation of annual export obligation under EPCG during 2016-17.
Thanks & regards,
R. Ramesh Kumar
Executive Director