AMNESTY SCHEME FOR ONE TIME SETTLEMENT OF DEFAULT IN EXPORT OBLIGATION

[Mr. M. GOVINDARAJAN]

Export obligation

Export obligation means obligation to export product or products covered by Authorization or permission, in terms of quantity, value or both, as may be prescribed or specified by Regional Competent Authority.

The objective of the Export Promotion Capital Goods Scheme (‘EPCG’ for short) is to facilitate import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness.  Import under EPCG Scheme shall be subject to an Export Obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorization.

The following conditions are to be fulfilled to the fulfillment of Export Obligation-

• Export obligation shall be fulfilled through export of goods manufactured by using capital goods under EPCG or service rendered by using capital goods imported under EPCG.
• Export proceeds shall be realized in free foreign currency except for deemed exports.
• Export can be direct or through third party.  Export documents should specify his name.
• Exports to SEZ unit/developer/co-developer will be considered for discharge of export obligation of EPCG authorization, irrespective of whether payment is received in rupees of foreign currency.
• Specified deemed exports are permissible to fulfill export obligation.
• Supply of ITA-I to DTA under foreign exchange receipt is eligible.
• Minimum 50% of export obligation shall be fulfilled in first 4 years and balance 50% in remaining 2 years.  The report should be submitted within 3 months from the end of the block.
• If there is a ban on export, there will be automatic extension of export obligation.
• Shortfall in export obligation up to 5% is condonable. 

If export obligation is not fulfilled or partially fulfilled customs duty with interest is payable proportionate to export obligation not fulfilled.  Customs duty can be paid through duty credit scripts.  If duty and interest is not paid penal action under Foreign Trade (Development and Regulation) Act and Rules can be initiated.    Customs can adjudicate cases if export obligation is not fulfilled.  It is not necessary to wait till entire period of export obligation.

Amnesty scheme

The Government revised the Foreign Trade Policy on 01.04.2023. 

The Director General of Foreign Trade (‘DGFT’ for short) framed a scheme called as ‘Amnesty Scheme for one time settlement of default in export obligation under Advance Authorization holders and Export Promotion Capital Goods (‘EPCG’ for short) scheme.

Eligibility

The following are covered under the amnesty scheme-

• The Authorizations issued under Advance Authorization Scheme (all variants) and EPCG Scheme (all variants) issued under Foreign Trade Policy, 2004 - 2009 till 31.03.2015.
• For Authorizations issued under Advance Authorization Scheme (all variants) and EPCG Scheme (all variants) issued under Foreign Trade Policy, 2004 - 2009 and limited to that authorizations whose export obligation period was valid up to 12.08.2013.

If duty along with the applicable interest has already been deposited in full the case will not be eligible for this scheme.

The cases under investigation or the cases adjudicated for involving fraud, mis-declaration or unauthorized diversion of material and/or capital goods will be excluded from this scheme.

The Scheme

The default in export obligation can be regularized by the eligible authorization holders by paying all customs duty that were exempted in proportion to unfulfilled export obligation and interest @ 100% of such duties exempted.  No interest is payable on the portion of additional customs duty and special additional customs duty.

If the default is partial the authorization holder is to apply to the Regional Authority of DGFT to know the details of default and apply for ‘Export Obligation Discharge Certificate’.  The required documents are to be enclosed with the application.  The DGFT on receipt of the application from the authorization holder will analyze his case and inform the details of default on which the Customs duty and interest is payable.  Then the authorization holder has to pay the customs duty and interest as informed by the DGFT with the jurisdictional Customs Authority and submitted the proof of payment to the Regional Authority of DGFT. 

If the entire authorization is under default the applicant can pay the customs duty and interest with the jurisdictional Customs Authority and submit the proof of payment to the Regional Authority.

Procedure

All those authorization holders who are interested to avail the scheme shall register themselves in website - https://dgft.gov.in. on or before 30.06.2023.

• Application for AA/EPCG discharge/closure shall be filed online by logging onto the DGFT Website and navigating to Services → Advance Authorization/DFIA → Closure of Advance Authorization. For EPCG please navigate to Services → EPCG Closure of EPCG.
•  The applicant shall select the checkbox for 'Amnesty scheme for one-time settlement of default in export obligation' and proceed to file application for closure against the concerned EPCG or AA authorization as per the online proforma.
• The applicant, as per their calculations, shall indicate the duty and interest values to be paid under the 'Redemption Matrix' tab and submit their application online.  On receipt of online application, the RA concerned shall examine and confirm the shortfall through an online letter.
• Applicant shall make the required payment of duty and interest to the Jurisdictional Customs Authority and provide the proof of payment in response to the said letter online.
• Based on the evidence of payments and other relevant documents prescribed, concerned RA may examine and consider granting Export Obligation Discharge Certificate (EODC) online.

The Regional Authorities will process any such applications within 3 working days.  The Help Manual on DGFT Website → Learn → Application Help & FAQs → Advance Authorization Closure Help document or EPCG Help Document may be referred for further guidance.  The concerned Regional Authority may be approached or any of the following Helpdesk channels may be used-

• Raise a service request ticket through the DGFT Helpdesk service
• Send an email to DGFT Helpdesk at [email protected]
• Call the Toll-free DGFT Helpdesk numbers.

Amnesty for adjudicated cases

Even the cases which have already been adjudicated and pending adjudication, either originally or in appeal, can also be regularized under this amnesty scheme.  If the case is adjudicated or pending adjudication the firms will produce a copy of the closure letter from the concerned Regional Authority to the Adjudicating Authority.  In case appeal has been filed the closure letter is to be submitted to the Appellate Authority.  On submission of the closure letter the Adjudicating Authority/Appellate Authority will decide and inform the same to the appellant and to the concerned Regional Authority.

Payment

The payment of customs duty and interest shall be completed with the jurisdictional Customs Authority by 30.09.2023.

CENVAT credit

The CENVAT Credit or refund shall not be allowed on duties paid under this scheme.  The applicant, applying for this scheme, is to give an undertaking that they will not file any application any CENVAT credit or refund of any duty paid under this scheme before any authority and/or before any Court of law.