Fixation of export obligation for decline in exports

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Fixation of export obligation for decline in exports during 2013-14


February 19,2015


All Members of the Council

Dear Member,

As you are aware, the Zero duty EPCG scheme (notified under Chapter 5 of Foreign Trade Policy) allows import of capital goods for preproduction, production and post production (including CKD/SKD thereof as well as computer software systems) at Zero Customs duty, 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.

As per para 5.5 (b) of Foreign Trade Policy, the Export Obligation (EO) under EPCG Scheme �shall be, over and above, the average level of exports achieved by the exporter in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any;. Such average would be the arithmetic mean of export performance in the last three years for the same and similar products provided that Premier Trading House (PTH) shall have option of fixing average level of exports based on arithmetic mean of export performance in the last five years instead of three years.�

Para 5.11.2 of the Hand Book of Procedure Volume 1 (HBP v1) 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 for the sector/product group that witnessed such decline in 2013-14 as compared to 2012-13, would be entitled for such relief.

The DGFT has now issued a Policy Circular No.16 (RE2013)/2009-14 dated 19th January 2015 notifying the list of such product groups showing the percentage decline in exports during 2013-14 as compared to 2012-13 which are eligible for re-fixation of the annual average export obligation for EPCG Authorizations for the year 2013-14. As far as the leather sector is concerned, the following products alone (which have shown decline in exports of more than 5%) have been included.

HS CodeProductValue of export (INR)Decline (%)
4105 Tanned/Crust skins of Bovine (including buffalo) or equine animals, without hair on, whether or not split, but not further prepared 3440544500171-85.46%
4301Raw furskins (including heads, tails, paws and other pieces or cuttings, suitable for furriers use) other than raw hides and skins or heading 4101, 4102 or 4103 2201238 985997-55.21%
4304Artificial fur and articles thereof 2447969 1350726-44.82%
4115Composition leather with a basis of leather or leather fiber, in slabs, sheets or strip, whether or not in rolls ; parings and other waste of leather or of composition leather, not suitable for the manufacture of leather articles ; leather dust, powder and flour 2773312618637357 -32.80%
4102 Raw skins of sheep or lambs (fresh or salted, dried, limed, pickled or otherwise preserved, but not tanned, parchment � dressed or further prepared), whether or not with wool on or split � other than those excluded by note (1) (c) to Chapter 41 6014125 4737745 -21.22%
4206Articles of gut 53207762 11550453-78.29%
Members may please note the above

Thanks & regards,

R.Ramesh Kumar, IAS
Executive Director

Policy Circular