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CUSTOMS CIRCULAR No.24/2002 dated 6.5.2002
Sub:-Changes made in Advance License, DFRC, DEPB and EPCG Schemes vide Exim
Policy 2002-07 – reg.
Exim Policy for the year 2002-2007 has been announced on
31.3.2002 by Hon’ble Commerce and Industry Minister. Changes have been carried
out in the subject schemes on the demand of trade and in order to remove certain
procedural bottlenecks being faced by the trade. Details of changes effected in
each scheme are as follows.
2.1
Advance License Scheme
Advance License scheme is contained in chapter – 4 and paras 4.1 &
4.1.1 to 4.1.14 of the Exim Policy. In terms of para 4.1.1 of the exim policy
advance licence can be issued for permitting duty free import of inputs to be
utilized in the export products after making normal allowance for wastage. The
Scheme also permit duty free import of fuel, oil, energy, catalyst etc. which
are consumed during the manufacturing process. Duty Free Import of mandatory
spares upto 10% of the CIF Value of licence is also permitted as earlier.
Advance licence can be issued for physical export, intermediate supplies and
deemed exports. Annual Advance Licence Scheme has however, been discontinued.
Both Advance License and the materials imported against it are subject to actual
user condition even after fulfillment of export obligation. One departure made
in the new Advance License Scheme is to abolish DEEC Book. Advance license
issued under the new Scheme on pre-export basis (i.e. to say where import takes
place before, fulfillment of export obligation) would inter-alia contain
description,value and quantity of materials permitted against it and value and
quantity of export obligation to be fulfilled; advance license issued on
post-export basis (i.e. to say after fulfillment of export obligation) would in
addition also contain details of exports made against the licence. In respect of
Advance Licences issued on post-export basis, in doubtful cases, or where
investigations have been launched by Customs or other Agencies, Customs may
require DGFT authorities to cause verification of the details of exports having
actually taken place. E.O. Discharge Certificate by DGFT authorities would be
issued on the basis of export documents and bank realization certificate in
terms of Para 4.25 of the Handbook of Procedure, Vol.I. Redemption of Bond/BG
filed against Advance License with the Customs would normally be allowed on the
basis EO Discharge Certificate issued by the DGFT authorities. However, in
doubtful cases, or where investigations have been launched by Customs or other
Agencies, Customs may requires DGFT authorities to cause further verification.
Other procedural requirements of the Advance License Scheme outlined in earlier Circulars issued from time to time shall continue to be followed with the above modifications.
Customs Notification Nos. 43/2002-Cus. Dated
19.4.2002 & 47/2002 – Customs dated 22.4.2002 have been issued to operationalise
this Scheme.
2.2 DFRC Scheme
DFRC Scheme was first announced in Exim Policy 2000 – 2001 with effect from
1.4.2000 DFRC Scheme has been continued in Exim Policy 2002 – 07 with some minor
changes. The earlier DFRCScheme announced in 2000-01 Exim Policy required that
for the purpose of allowing DFRC benefit to imported inputs used in the
resultant export product, the quality, technical characteristics and
specifications of the inputs under import should be the same as those used in
the resultant export product. For this purpose the quality, technical
characteristics and specifications of each input used in the resultant export
product were required to be specified on the shipping bill and at the time of
import Customs was required to co-relate it with the input under import so as to
allow DFRC benefit to those inputs which were of the same quality, technical
characteristic and specifications. Under the new DFRC scheme such co-relation of
quality, technical characteristic and specifications has been done away except
in the case of items were which are listed in para 4.31 of the Hand book of
procedure volume 1 as amended by DGFT/ Notice No. 4/2002-07 dated 1.4.2002. In
respect of such items customs shall continue to ascertain the quality, technical
characteristics and specifications of the inputs under import with reference to
the quality, technical characteristics and specification of the inputs used in
the export product as declared on the shipping bill. Quantity of each input
shall be permitted in the DFRC license in terms of SION for the relevant export
product as earlier. License issued under DFRC scheme are freely transferable as
earlier.
Other procedural requirements of DFRC Scheme as specified in DOR’s earlier Circular Nos. 33/2000-Cus. dated 2.5.2000, 42/2000-Cus. dated 2.5.2000 and 59/2000-Cus. dated 11.5.2000 shall continue to be followed with the aforesaid modifications.
Customs Notification No. 46/2002-Cus. dated
22.4.2002 has been issued to operationalise this Scheme.
2.3 DEPB Scheme
DEPB Scheme has been continued in the Exim Policy 2002-07 for some
more time. Under the new DEPB Scheme, DEPB scrips would be issued only on
post-export basis (i.e. to say on completion of exports) as pre/export DEPB
Scheme has already been discontinued. The provisions of DEPB Scheme are
contained in Para 4.3 and 4.3.1 to 4.3.5 of the Exim Policy. One significant
change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim Policy
even excise duty paid in cash
on inputs used in the manufacture of export product shall be eligible for brand
rate of drawback as per rules framed by Department of Revenue which the earlier
DEPB Scheme did not permit. Since the exemption from SAD is now incorporated in
DEPB Customs notification itself, henceforth the element of SAD shall also be
debited in the DEPB scrip.
The Schedule of DEPB rates are contained in a separate book issued vide DGFT Public Notice No. 2/2002-07 dated 31.3.2002. In the preamble of the said Schedule general instructions for DEPB rates are specified and Sr. No.1 of the said general instructions specify that DEPB benefit shall not be applicable if the exports have taken place in terms of any sub-serials nos. of said Sr. No.1. General Instructions contained in Sr. Nos. 2 to 12 should also be carefully gone through before processing/permitting any export under DEPB Scheme. DEPB Scrips are freely transferable as earlier.
Other procedural requirements of DEPB Scheme, as outlined in DOR Circular No. 10/97-Cus. dated 17.4.97 and subsequent DOR Circulars issued from time to time under DEPB Scheme shall continue to be followed with the above modifications. Verification of DEPB Scrips shall continue to be done by Customs. However, in doubtful cases, or where investigations have been launched by Customs or other Agencies, Customs may require DGFT to take suitable corrective action.
Customs Notification No. 45/2002-Cus. dated
22.4.02 has been issued to operationalise this Scheme.
2.4 EPCG Scheme
EPCG Scheme is contained in Chapter 5 of the Exim Policy 2002-07. 5%
of Duty EPCG Scheme, which was hitherto in operation, has been continued with
some changes. Whereas the normal EO period of EPCG License of value not
exceeding Rs. 100 crores has been maintained at 8 years, in respect of licenses
of value Rs. 100 crores or more, a longer EO period of 12 years has been
prescribed. The four blocks in respect of such EPCG licence would comprise of
1st Block - 0-5 years
2nd Block - 6-8 years
3rd Block - 9-10 years
4th Block - 11-12 years
The new EPCG Scheme also permits granting extension of block-wise EO period more
that once during the total EO period by competent authority. In addition, in
respect of EPCG License having total EO period of 8 years, the Scheme also
permits extension of overall EO period up to a total period of 2 years by
competent authority. The provision regarding recovery of differential duty and
interest in the event of non fulfillment of block-wise EO period for 2
consecutive blocks has also been
done away with. Para 5.5 of the Exim Policy also permits fulfillment of export
obligation under EPCG Scheme by Export of goods capable of being manufactured
from the capital goods imported under EPCG Scheme. Similarly, export obligation
under the Scheme is also allowed to be fulfilled by export of same goods (for
which EPCG license is obtained), manufactured or produced in different
manufacturing units of the license holder.
It is reiterated that redemption of Bond/ BG against license (with Customs) issued under EPCG Scheme should normally be allowed on the basis of EO Discharge Certificate issued by DGFT authorities. However in doubtful cases or where investigations have been launched by Customs or other Agencies, Customs may require DGFT to take suitable corrective action.
Other procedural requirements of EPCG Schemes as outlined in DOR Circular Nos.39/2000-Cus. dated 11.05.2000, 80/2000-Cus. dated 22.09.2000 and earlier DOR Circulars shall continue to be followed with the aforesaid modifications.
Customs Notification Nos. 44/2002-Cus dated
19.04.2002 has been issued to operationalise this Scheme.
3. Corresponding trade notice and standing orders may be issued for guidance of
staff and trade.
4. Receipt of this Circular may please be acknowledged.
Sd/-
(R.K. Talajia)
Senior Technical Officer (DBK)
F.No.605/201/2001-DBK
Government of India, Ministry of Finance, Department of Revenue, New Delhi