CHAPTER-5

EXPORT PROMOTION CAPITAL GOODS SCHEME

EPCG Scheme

5.1

The scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of Authorisation.

In the case of agro units, import of capital goods at 5% Customs duty shall be allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved (on capital goods imported under the Scheme) over a period of 12 years from the date of issue of Authorisation.

However for SSI units, import of capital goods at 5% Customs duty shall be allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved (on capital goods imported under the Scheme) over a period of 8 years from the date of issue of Authorisation provided the landed CIF value of such imported Capital Goods under the Scheme does not exceed Rs Twenty Five Lakhs and the total investment in plant and machinery after such imports does not exceed the SSI limit.

However, in respect of EPCG Authorisations with a duty saved of Rs.100 crore or more, the same export obligation, as the case may be shall be required to be fulfilled over a period of 12 years.

In case CVD is paid in cash on imports under EPCG, the incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated.

The capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds. EPCG Authorisation may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the Authorisation holder.

Second hand capital goods without any restriction on age may also be imported under the EPCG scheme.

However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning/operating golf resorts subject to the condition that :

(i) the total foreign exchange earning from the hotel, travel & tourism and golf tourism sectors in the current and preceding three licensing years is Rs 1.5 crores or more.

(ii) the ‘duty saved’ amount on all EPCG Authorisations issued in a licensing year for import of motor cars, sports utility vehicles/all purpose vehicles shall not exceed 50% of the average foreign exchange earnings from the hotel, travel & tourism and golf tourism sectors in the preceding three licensing years.

(iii) the vehicles imported under this scheme shall be registered either as a tourist vehicle or shall have an appropriate registration specific to a particular state enabling the vehicle to be used for tourist purpose. A copy of the Registration certificate should be submitted to the concerned Licensing Authority as a confirmation of the vehicle having been imported and capital good installed.

However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc. cannot be imported under the EPCG Scheme.

(Above sub paragraphs after the sub paragraph "Second hand capital goods without any restriction on age may also be imported under the EPCG scheme" has been amended vide NTF.NO. 11/2006, DT. 14/06/2006)

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However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning/operating golf resorts whose total foreign exchange earning from the hotel, travel & tourism and golf tourism sectors in the current and preceding three licensing years is Rs 1.5 crores or more. The ‘duty saved’ amount on all EPCG Authorisations issued in a licensing year for import of motor cars, sports utility vehicles/all purpose vehicles shall not exceed 50% of the average foreign exchange earnings from the hotel, travel & tourism and golf tourism sectors in the preceding three licensing years. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc. cannot be imported under the EPCG Scheme. ]

Import of Restricted items of imports mentioned under ITC(HS) shall only be allowed to be imported under the Scheme after approval from the Import Licensing Committee.