In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess of the amount calculated at the rate of five percent ad valoram and from the whole of the additional duty and special additional duty leviable thereon respectively under sections 3 and 3A of the said Customs Tariff Act.

2. The exemption contained in above paragraph, shall be subject to the following conditions, namely :-
 

CUS NTF NO. 65/2004 DATE 22/06/2004)

Provided that where the CIF value of licence is not less than Rs. 100 crores or where the license is issued to Units in the agri export zones as may be notified by the Director General of Foreign Trade in the Ministry of Commerce and Industry, the export obligation shall be fulfilled within a period of 12 years from the date of issue of licence in the following proportions, namely :-

(In condition (2) first proviso has been substituted vide Cus Ntf No.116/2002 Date 28/10/2002)
 

Provided further that where a sick unit notified by the Board for Industrial and Financial Reconstruction (BIFR) is subsequently taken over by another unit for revival, the export obligation may be fulfilled within a period of 12 years from the date of issue of license:

Provided also that the export obligation of particular block may be set off against the excess exports made in the said preceding block (s);

(In condition (2) second proviso has been substituted vide Cus Ntf No.116/2002 Date 28/10/2002)

[Provided further that Export Obligation of a particular block may be set off against the excess exports made in the said preceding blocks ;]

(3) the importer produces within 30 days from the expiry of each block from the date of issue of licence or within such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow, evidence in the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs showing the extent of export obligation fulfilled, and where the export obligation of any particular block is not fulfilled in terms of the preceding condition, the importer shall within three months from the expiry of the said block pay duties of customs of an equal amount equal to that portion of duties leviable on the goods but for the exemption contained here in which bears the same proportion as the unfulfilled portion of the export obligation bears to the total export obligation together with interest at the rate of 15% per annum from the date of clearance of the goods;

(In condition (3) bold figure has been substituted vide Cus Ntf No.113/2002 Date 16/10/2002)

(4) the capital goods imported, assembled or manufactured are installed in the importer’s factory or premises and a certificate from the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or an independent Chartered Engineer, as the case may be, is produced confirming installation and use of capital goods in the importer’s factory or premises, within six months from the date of completion of imports or within such extended period as the said Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow :

Provided that in the case of :
 

(i) manufacturer exporter and merchant exporter having supporting manufacturer(s) or vendors(s),

(ii) import of irrigation equipment for use in contract farming for export of agricultural products, and

(iii) importer rendering services, the capital goods may be installed at the factory or premises of such other person whose name and address are endorsed on the licence referred to in condition (i) and where the bond for full difference of duty, if necessary, in terms of condition (2), with a bank guarantee is executed by the importer and such other person binding themselves jointly and severally to fulfil the export obligation and all other conditions of this notification and to pay duty with interest in case of default;

(5) notwithstanding anything contained in condition (3), where the Licensing Authority grants an extension of block-wise period for any block(s) or overall period of fulfilment of export obligation upto a period of two years or regularization of shortfall in export obligation, not exceeding five per cent of such export obligation, the said block-wise period or overall period of export obligation may be extended and the said shortfall in export obligation be condoned by the Assistant Commissioner of Customs or Deputy Commissioner of Customs :

Provided that in respect of licence holder units affected by the earthquake in the State of Gujarat in the month of January 2001, the Licensing Authority may grant extension in the overall period of export obligation up to one more year:

Provided further that in case of a licence holder unit referred to in the first proviso, having overall export obligation period of 13 years and in case of other licence having export obligation period of 12 years, extension of overall period of export obligation shall not be allowed.

(In condition (5) proviso has been substituted vide CUS NTF NO.44/2003 DATE 21/03/2003)

[OLD Provided that in respect of license having overall export obligation period of 12 years, extension of overall period of export obligation shall not be allowed;]
(In condition (5) proviso has been substituted vide Cus Ntf No.116/2002 Date 28/10/2002)

3. where the goods are found defective or unfit for use, the said goods may be re-exported back to the foreign supplierwithin 3 years form the date of payment of duty on the importation thereof :

Provided that at the time of re-export the goods are identified to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs as the goods which were imported.

4. where the total exports of a sector or product group during the year 2007-08 has declined by more than 5% as compared to the year 2006-07, average export obligation of the licencee for 2007-08 may be reduced proportionate to the reduction in exports of that particular sector or product group during 2007-08 as against 2006-07;

5. In a case of default in export obligation, when the duty on goods is paid to regularise the default, the amount of interest paid by the importer shall not exceed the amount of duty if such regularisation has been dealt in terms of Public Notice of the Government of India in the Ministry of Commerce No. 22 (RE-2013)/2009-2014 dated the 12th August, 2013.

(In the Notification , Paragraph 5 has been inserted Vide CUS NTF NO. 46/2013 DATE 26/09/2013)
 

Explanation :- In this notification,-

(1) “Capital Goods” means any plant, machinery, equipment and accessories required for -

(a) manufacture or production of other goods, including packaging machinery and equipments, refractories, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, and equipment and instruments for testing, research and development, quality and pollution control;

(b) use in manufacturing, mining, agriculture, marine, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and sericulture;

(c) rendering services;

(2) “Export and Import Policy” means the Export and Import Policy 2002-2007 published vide notification of the Government of India in the Ministry of Commerce, No.1/2002-2007, dated the 31st March, 2002;

(3) “Licensing Authority” means the Director General, Foreign Trade appointed under section 6 of the Foreign Trade development and Regulation) Act, 1992 (22 off 1992) or an officer authorised by him to grant a licence under the said Act;

(4) “export obligation”,-
 

(i) in relation to importers other than those rendering services, means export, to a place outside India, of products manufactured with the use of capital goods imported, assembled or manufactured in terms of this notification; Provided that export obligation may also be fulfilled by
1.  
   (a) export of same product capable of being manufactured with the use of said capital goods; or
   
   (b) export of same product manufactured in different units of the licence holder, or
   
   (c) through third party exports made by an exporter or manufacturer on behalf of the licence holder by exporting the same product and in such cases, inter-alia the Shipping bills shall indicate name of both the third party and licence holder; or
   
   (d) making supplies of same products in terms of sub-paras (a) (b) (d) (e) (f) (g) (h) (i) and (j) of paragraph 8.2 of the Export and Import Policy;

(ii) in relation to importers rendering services, means, receiving payments in freely convertible foreign currency for services rendered through the use of such capital goods.

(iii) means, export of goods in terms of the notification of the Government of India in the Ministry of Commerce and Industry (Department of Commerce) No. 28(RE-2003)/2002-2007 dated 28th January, 2004.

(Sub-clause (iii) has been inserted vide DATE 28/01/2004)

(iv) shall be, over and above, the average level of exports achieved by the licencee in the preceding three licencing years for same and similar products.

(Paragraph 4 & in the Explanation, in clause (4), sub-clause (iv) has been inserted vide CUS NTF NO. 65/2008 DATE 09/05/2008)

Sd/-
(Alok Jha)
Under Secy.

F. No. 605/201/2001-DBK

(Please refer Cus Cir No.24/2002 date 6/5/2002 for Changes made in EPCG Scheme vide Exim Policy 2002-07)