Notfns. No.8/98 to No. 10/98, all dated 23.04.98. - Customs - 031/98

Circular No. 31/98-Customs dated 5/5/1998 F.No. 605/55/98-DBK (Pt.I) Government of India Ministry of Finance Department of Revenue, New Delhi Subject: Changes in EPCG and Duty Exemption Schemes as introduced by revised edition of the Exim Policy 1997-2002 published on 13.4.98 Ministry of Commerce have published a revised Export Import Policy for the period 1997-2002 on 13.4.98. The changes in the Exim Policy take effect from 13.4.98. As a result the Export Promotion Capital Goods Scheme (EPCG Scheme) and Duty Exemption Scheme in the revised Exim Policy have under gone changes. In order to give effect to these changes, Notification Nos. 8/98-Cus, 9/98-Cus and 10/98-Cus all dated 23.4.98 have been issued by the Department of Revenue. Notification Nos. 8/98-Cus and 9/98-Cus have been issued to give effect to the changes made in the EPCG Scheme and Notification No. 10/98-Cus. has been issued to give effect to the changes made in the Duty Exemption Scheme which are as follows. 2. Changes made in the EPCG Scheme 2.1 Import of Jigs, Fixtures, Dies and Moulds Import of jigs, fixtures, dies and moulds has been allowed as part of Capital Goods under EPCG Scheme upto a limit of 20% of the overall value of the EPCG Licence. The Entry S.No. 4 of the table to Notification Nos. 110/95-Cus and 111/95-Cus. both dated 5.6.95, and 28/97-Cus and 29/97-Cus. both dated 1.4.97 have been amended to include this provision. Entry S. Nos. 1 to 4 of the table to Notification No. 8/98-Cus. 23.4.98 incorporate this amendment. 2.2 Local Supplies to power, oil and gas including refinery to qualify as exports In terms of para 10.2 (g) of the revised Exim Policy, supply of goods made to power, oil and gas sectors including refineries qualify as deemed exports. The definition of the export obligation as incorporated in the Explanation to Notifications No. 28/97-Cus. and 29/97-Cus. has been amended to include para 10.2 (g) within its purview meaning that the supplies made to these sectors would henceforth qualify as exports for the purpose of fulfilling the export obligation under the EPCG Scheme. Entries S. Nos. 5 of the table to Notification No. 8/97-Cus. and para 3 of Notification No. 9/98-Cus. provide for this amendment. 2.3 Reduction in threshold limit under zero duty EPCG Scheme In terms of para 6.2 of the revised Exim Policy, the threshold limit of Rs. 20 crores or Rs. 5 cores as provided under the zero duty EPCG Scheme has been lowered to Rs. 1 crore for certain sectors and Rs. 10 lakhs for software sector. For products of electronics, food processing garments, leather, sport goods, gem jewellery, agriculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture sectors, the threshold limit has been reduced to Rs. 1 crore; similarly, for products of software sector, the threshold limit has been reduced to Rs. 10 lakhs. The export obligation (E.O) on FOB basis for these sectors has been fixed at six times the CIF value of the imported capital goods or five times the CIF value of imported capital goods on NFE basis. The E.O for the licences issued after 13.4.98 for these sectors shall be discharged within a period of 6 years, and the proportion of the total export obligation for the block of first and second years, third and fourth years and fifth sixth years for such licences shall respectively be 15%, 35% and 50%. Paras 1 and 2 of the Notification No. 9/98-Cus. provide for this amendment in Notification No. 29/97-Cus. dated 1.4.97. 2.4 automatic revalidation of zero duty EPCG licences In terms of para 6.3(b) of the revised EXIM Policy, licences issued under Zero Duty EPCG Scheme and which are utilised for the import of C.G. for a value in excess of or lees than 10% of the CIF value of the licences shall be deemed to automatically revalidated and the export obligation for such import licences shall be enhanced or reduced as per the actual utilisation of the licences. The Bond or BG shall be discharged only after the revised, i.e. enhanced or reduced, E.O. has been fulfilled. Para 2 of the Notification No. 9/98-Cus. incorporates this amendment in condition No. 5 of the Notification No. 29/97-Cus. dated 1.4.97. 3. Changes made in Duty Exemption Scheme Import of Mandatory Spares In terms of the revised EXIM Policy, import of mandatory spares under DEEC Scheme is allowed upto 10% of the value of the import licence. Entries S.Nos. 1 and 2 of the table to Notification No. 10/98-Cus. dated 23.4.98 has amended the Explanation clause (iv)(b) of Notification No. 10/98-Cus. dated 23.4.98 has amended the Explanation clause (iv)(b) of Notification No. 30/97-Cus. dated 1.4.97 and Explanation clause (ii) (b) of Notification No. 31/97-Cus. dated 1.4.97 so as to provide for this amendment. 4. Requirement of filing of Bond/ Bank Guarantee In the revised EXIM Policy issued on 13.4.98, Para 6.10 which provided for filing of bond and/ or bank guarantee under EPCG Scheme has been deleted. Similarly, para 7.15(b) of the revised Handbook of Procedure (Vol.I) which provided for filing of bond and / or bank guarantee under duty exemption scheme has also been deleted. As a result, an impression is created that hence forth no bond or bank guarantee would be required to be filed under EPCG and Duty Exemption Scheme which is not correct. In this regard attention in invited to Board's Circular No. 45/96-Cus. dated 28.8.96 (F.No. 605/75 (A) / 95- DBK) and clarification issued vide Circular No. 38/97-Cus, dt 19.9.97 providing for the revised norms for execution of bond and bank guarantee under EPCG Scheme and Duty Exemption Scheme. It is clarified that the requirement of filing the bond or bank guarantee shall continue to be in force in terms of conditions of relevant notification read with Board's Circular No. 45/96-Cus. and clarification vide Circular No. 33/97-Cus. dt. 19.9.97. 5. Copies of the Notification Nos. 8/98-Cus, 9/88-Cus and 10/98-Cus. all dated 23.4.98 are enclosed 1 . 6. Customs House should issue suitable standing orders/ departmental orders for the information of the field staff and Trade/ Public Notices for the information of the Trade and forward copies of the same to Joint Secretary (Drawback) Sd/- (Sunil Kumar) Director (DBK)