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CUSTOMS NOTIFICATION No. 44/2002 Dated 19th April, 2002
Customs Exemption Notification for EPCG Licences

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 :-

(1) the goods imported are covered by a valid licence issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Export and Import Policy permitting import of goods at the rate of five per cent duty and the said licence is produced for debit by the proper officer of the customs at the time of clearance; Provided that for the import of spare parts, the validity period of the licence shall be deemed to be the period permitted for fulfilment of the export obligation in full;

(2) the importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs bindings himself to fulfil export obligation equivalent to five times the CIF value of the goods imported on FOB basis, as specified in the licence, or for such higher sum as may be fixed by the licensing authority, within a period of eight years from the date of issue of licence, in the following proportions, namely :-

Provided that where the CIF value of licence is not less than Rs. 100 crores, the export obligation shall be fulfilled within a period of 12 years from the date of issue of licence in the following proportions, namely :-

 

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 24% per annum from the date of clearance of the goods;

(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 where the CIF value of licence is not less than Rs. 100 crores extension of overall period of export obligation shall not be allowed;

3. where the goods are found defective or unfit for use, the said goods may be re-exported back to the foreign supplier
within 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.

TABLE

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
(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.
 

Sd/-
(Alok Jha)
Under Secy.
F. No. 605/201/2001-DBK
Issued by:
Ministry of Finance
Department of Revenue
New Delhi.