Exemption to Capital goods, their components and Spares when imported against on EPCG Licence - 097/2004 - Customs -Tariff

Exemption to Capital goods, their components and Spares when imported against on EPCG Licence. Notification No. 97/04-Cus. dt. 17.9.2004 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,- (i) 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 per cent ad-valorem , and (ii) the whole of the additional duty leviable thereon 16 [ under sub-sections (1), (3) and (5) of section 3 ] of the said Customs Tariff Act, when specifically claimed by the importer. 2. The exemption under this notification shall be subject to the following conditions, namely : - (1) that the goods imported are covered by a valid licence or a valid authorization issued under the Export Promotion Capital Goods Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at the rate of five percent duty and the said licence or authorisation is produced for debit by the proper officer of customs at the time of clearance: Provided that for import of spare parts specified at S.No.4 of the said Table, the validity period of the licence or authorisation shall be deemed to be the period permitted for fulfillment of the export obligation in full; (2) that the importer executes a bond in such form and for such sum and with such surety or security as mayd be specified by the Deputy Commissioner of Customs or Assistant Commissioner of Customs binding himself to fulfil export obligation on FOB basis equivalent to eight times the uty saved on the goods imported as may be specified on the licence or authorisation, or for such higher sum as may be fixed by the Licensing Authority or Regional Authority, within a period of eight years from the date of issue of licence or authorisation, in the following proportions, namely :- S.No. Period from the date of issue of licence or authorisation Proportion of total export obligation 1 2 3 1. Block of 1st to 6th year 50% 2. Block of 7th to 8th year 50% Provided that where the duty saved is not less than ₹ 100 crores, or where the licence or authorisation is issued to units in the agri export zone as may be notified by the Licensing Authority or Regional Authority, the export obligation shall be fulfilled within a period of twelve years from the date of issue of licence or authorisation in the following proportions, namely :- S.No. Period from the date of licence or authorisation Proportion of total export obligation 1 2 3 1. Block of 1st to 10th year 50% 2. Block of 11th and 12th year 50% Provided further that where a sick unit is notified by the Board for Industrial and Financial Reconstruction or where a rehabilitation scheme is announced by the concerned State Government in respect of sick unit for its revival, the export obligation may be fulfilled in terms of Paragraph 5.5.1of the Foreign Trade Policy: Provided also that where the capital goods are imported by agro units and units in tiny and cottage sector , the export obligation shall be fixed equivalent to 6 times the duty saved on the goods imported as may be specified on the licence or authorisation, or for such higher sum as may be fixed by the Licensing Authority or Regional Authority, within a period of 12 years from the date of issue of the licence or authorisation. (For the words imported by agro units , the words imported by agro units and units in tiny and cottage sector has been substituted vide Notification No. 72/2007 dated 21/5/2007) Provided also that where the capital goods are imported for technological upgradation, or by small scale industry units as defined in paragraph 5.1 of the Foreign Trade Policy, as the case may be, the export obligation shall be fixed equivalent to six times the duty saved on the goods imported as may be specified on the licence or authorisation, or for such higher sum as may be fixed by the Licensing Authority or Regional Authority, within a period of eight years from the date of issue licence or authorisation; Provided also that export obligation of a particular block may be set off against the excess exports made in the said preceding block; (3) that if the importer does not claim exemption from the additional duty leviable 17 [ under sub-sections (1), (3) and (5) of section 3 ] of the Customs Tariff Act, 1975, the additional duty so paid by him shall not be taken for computation of the net duty saved for the purpose of fixation of export obligation provided the Cenvat credit of additional duty paid has not been taken; (4) that the importer produces within 30 days from the expiry of each block from the date of issue of licence or authorisation or within such extended period as the Deputy Commissioner of Customs or Assistant Commissioner of Customs may allow, evidence to the satisfaction of the Deputy Commissioner of Customs or Assistant 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 herein 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 15 per cent per annum from the date of clearance of the goods; (4A) where the importer fulfils 75% or more of the export obligation as specified in condition (2) within half of the period specified for export obligation as mentioned in condition (2), his balance export obligation shall be condoned and he shall be treated to have fulfilled the entire export obligation. (5) 18 [ that the capital goods imported, assembled or manufactured are installed in the importer s factory or premises and a certificate from the Assistant Commissioner of Customs or Deputy Commissioner of Customs having jurisdiction over the importer s factory or premises, as the case may be, is produced confirming installation and use of the 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 at the port of registration may allow ] Provided that if the importer is not registered with central excise or if he is a service provider, as the case may be, he may produce said certificate of installation and usage issued by an independent chartered engineer: Provided further that in the case of , - (i) manufacturer exporter and merchant exporter having supporting manufacturer(s) or vendor(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 (1) and where the bond for full difference of duty, if necessary, in terms of condition (2), with or without a bank guarantee, as the case may be, 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 at the rate of 15 per cent per annum in case of default; Provided also that agro units located in Agri Export Zones or service providers in Agri export Zones may move the capital goods within the Agri Export Zones under intimation to the 19 [ jurisdictional Deputy Commissioner of Customs or Assistant Commissioner of Customs], as the case may be, subject to the condition that the importer shall maintain accurate record of such movement. (6) that the imports and exports undertaken through seaports at Mumbai, Kolkata, Cochin, Magdalla, Kakinada, Kandla Mangalore, Marmagoa, Chennai, Nhava Sheva, Paradeep, Pipavav, Sikka, Tuticorin, Visakhapatnam, Dahej, Mundhra, Nagapattinam, Okha, Bedi (including Rozi Jamnagar), Muldwarka, Porbander, Dharamatar, Vadinar Haldia (Haldia Dock complex of Kolkata port) 4 [ Krishnapatnam 6 [ 12 [Ennore (Tamil Nadu), Karaikal (Union territory of Puducherry) and Kattupalli (Tamil Nadu)] ]] or through any of the airports at Ahmedabad, Bangalore, Bhubaneswar, Mumbai, Kolkata, Coimbatore, Delhi, Hyderabad, Jaipur, Chennai, Srinagar, Trivandrum, Varanasi, Nagpur, Cochin, Rajasansi (Amritsar), Lucknow (Amausi), 11 [ Indore, 14 [Dabolim (Goa), Visakhapatnam and Calicut]] or through any of the Inland Container Depots at Agra, Bangalore, Coimbatore, Delhi, Faridabad, Gauhati, Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad, Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur (Nainital), Dighi Pune), Vadodara, Daulatabad (Wanjarwadi and Maliwada), 7 [ Waluj (Aurangabad) , Talegoan(District Pune), Dhannad Rau (District Indore), Kheda (Pithampur, District Dhar) 8 [ Patli (Gurgaon), Irugur Village (Tamil Nadu), Thudiyalur (Tamil Nadu), Chettipalayam (Tamil Nadu) 5 [ Veerapandi (Tamil Nadu) 9 [ Marripalem Village in Taluk of Edlapadu, District Guntur 10 [ Tondiarpet (TNPM), Chennai and Irungattukottai, SIPCOT Industrial Park, Kattrambakkam Village, Sriperumbudur Taluk, Kanchipuram District, Tamil Nadu ]]]]] Anaparthy (Andhra Pradesh), Salem, Malanpur, Singanalur , Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry, Garhi Harsaru, Bhatinda, Dappar (Dera Bassi), Chheharata (Amritsar), Karur, Miraj, Rewari, Bhusawal, Jamshedpur, Surajpur, Dadri, Tuticorin, Kundli, Bhadohi, Raipur, Mandideep (District: Raisen), Durgapur (Export Promotion Industrial Park), 15 [Babarpur, Loni (District Ghaziabad) and Melapakkam Village (Arakkonam Taluk, Vellore District)] or through the Land Customs Station at Ranaghat, Singhabad, Raxaul, Jogbani, Nautanva (Sonauli), Petrapole, Mahadipur, Nepalganj Road, Dawki, Agartala, Sutarkhandi, Amritsar Rail Cargo and Attari Road , Hilli, Ghojadanga and Changrabandha or Special Economic Zone as specified in the notification issued under section 76A of the Customs Act, 1962 (52 of 1962). Provided that the Commissioner of Customs may by special order or a public notice and subject to such conditions as may be specified by him, permit import and export through any other sea-port, airport inland container depot or through a land customs station. (7) notwithstanding anything contained in condition (4), where the Licensing Authority or Regional Authority grants 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 shall be extended or condoned by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be : Provided that in respect of sick unit referred to in the second proviso to condition (2), extension of overall period of export obligation shall not be allowed. Provided further that the Regional Authority may grant further extension in the overall period of export obligation upto a period of further two years if the authorisation holder pays fifty per cent differential duty on the unfulfilled portion of the export obligation and agrees to fulfill other conditions as may be specified by the Regional Authority for this purpose. 3. Where the goods specified in the said Table are found defective or unfit for use, the said goods may be re-exported back to the foreign supplier within 3 years from 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 Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, as the goods which were imported. TABLE S.No. Description of goods 1 2 1. Capital goods for pre-production, production and post production including second hand capital goods. 2. Capital goods in SKD/CKD conditions to be assembled into capital goods by the importer. 1 3. Omitted 2 4. spare parts of goods specified at S.Nos.1 and 2 as actually imported and required for maintenance of capital goods so imported, assembled or manufactured 3 5. Spare parts for the existing plant and machinery of the licence or authorisation holder. 4. Waiver of Export Obligation may be considered where, because of force majeure or other unforeseen circumstance/reasons, exporter is unable to fulfill export obligation. A Committee comprising representative(s) of Department of Commerce and Department of Revenue under Directorate General of Foreign Trade shall consider such requests. Decision of this Committee shall be notified by Department of Revenue for implementation. 5. Where the total exports of a sector or product group during the year 2007-08 has declined by more than 5% as compared to the year 2006-07, the average export obligation of the licencee for 2007-08 may be reduced proportionate to the reduction in exports of that particular sector/product group during 2007-08 as against 2006-07. 13 [6. In a case of default in export obligation, when the duty on goods is paid to regularise the default, the amount of interest paid by the importer shall not exceed the amount of duty if such regularisation has been dealt in terms of Public Notice of the Government of India in the Ministry of Commerce No. 22 (RE-2013)/2009-2014 dated the 12 th August, 2013. ] 20 [ 7. In a case of default in export obligation, when the duty on goods is paid to regularise the default in terms of Public Notice of the Government of India, Ministry of Commerce and Industry No. 02/2023, dated the 1st April, 2023, the amount of interest to be paid by the importer shall be payable as specified in the said public notice dated the 1st April, 2023. ] Explanation - For the purposes of this notification,- (1) Capital goods has the same meaning as assigned to it in Paragraph of 9.12 of the Foreign Trade Policy; (2) Foreign Trade Policy means the Foreign Trade Policy 2004-2009 published vide notification of the Government of India in the Ministry of Commerce and Industry, No. 1/2004 dated the 31st August, 2004 as amended from time to time; (3) Licensing Authority or Regional Authority means the Director General of Foreign Trade appointed under section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorized by him to grant a licence or authorisation under the said Act; (4) export obligation , - (i) in relation to importers other than those rendering services, means exports 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 products capable of being manufactured with the use of said capital goods; or (b) export of same products manufactured in different units of the licence or authorisation holder; or (c) through third party exports made by an exporter or manufacturer on behalf of the licence or authorisation holder by exporting the same product and in such cases, inter-alia the shipping bills shall indicate name of both the third party and the licence or authorisation holder; or (d) making supplies of manufactured product in terms of paragraph 5.4 of the Foreign Trade Policy; or (e) export of other goods manufactured by the importer; (ii) in relation to importers rendering services, means, receiving payments in freely convertible foreign currency for services rendered through the use of capital goods : Provided that in respect of units holding licence or authorisation both as manufacturer exporter and service provider, the export obligation may be fulfilled either by export of products specified in sub-clause (i) or by receiving payments in freely convertible foreign currency for services rendered through the use of such capital goods. Provided further that in respect of Group Company as defined in paragraph 9.28 of the Foreign Trade policy where licence or authorisation has been issued to any one of such Group Company, the export obligation may also be fulfilled by export of manufactured goods by any other company(s) belonging to such Group Company: Provided also that in respect of service providers in the Port Handling sector, the export obligation may be fulfilled by earning service charges in Indian rupees which are otherwise considered as free foreign exchange by the Reserve Bank of India: Provided also that in respect for hotels the export obligation may also be fulfilled by Managed Hotels as defined in paragraph 9.36 of the Foreign Trade Policy. (iii) shall be, over and above, the average level of exports achieved by the licencee in the preceding three licencing years for same and similar products. -------------------------------------- Notes:- (As amended by Notification No. 27/05, 46/05, 77/05, 97/05, 43/06 , 63/2007 dated 4/5/2007, 72/2007 dated 21/5/207, 116/2007 Cus. Dated 30/11/2007 and 65/2008 Cus dated 9/5/2008 , 125/2008 Cus dated 21/11/2008 , 19/2009 Customs dated 24/2/2009 ) 1. (S. No.3 has been omitted vide Notification No. 72/2007 dated 21/5/2007 before it was read as:- Components of capital goods required for assembly or manufacture of capital goods by the importer.) 2. (The above S.No. has been substituted, vide Notification No. 72/2007 dated 21/5/2007 before it was read as:- Spare parts of goods specified at Serial Nos.1, 2 and 3 as actually imported and required for maintenance of capital goods so imported, assembled, or manufactured.) 3. (The words including consumables has been omitted, vide Notification No. 72/2007 dated 21/5/2007) 4. Substituted vide Notification No. 93/2010 - Customs, Dated 14/09/2010 , before it was read as:- and Krishnapatnam 5. Substituted vide Notification No. 40 /2011 - Customs, Dated 19/05/2011 before it was read as:- and Veerapandi(Tamil Nadu) 6. Substituted vide Notification No. 37/2012-CUSTOMS, Dated 24/05/2012 , before it was read as:- and Ennore (Tamil Nadu) 7. notification no. 123/2009 Customs dated 10/11/2009 ], before it was read as:- Waluj (Aurangabad) 8. Substituted vide Notification No. 93/2010 - Customs, Dated 14/09/2010 , before it was read as:- and Patli (Gurgaon) 9. Substituted vide Notification No. 40/2012-CUSTOMS, Dated 14/06/2012 , before it was read as:- and Marripalem Village in Taluk of Edlapadu, District Guntur 10. Substituted vide Notification No. 50/2012-Customs, dated 10/09/2012 , before it was read as:- and Tondiarpet (TNPM), Chennai 11. Substituted vide Notification No. 4/ 2013 - Customs, dated 14/02/2013 before it was read as:- Indore and Dabolim (Goa) . 12. Substituted vide Notification No. 20/2013 - Customs dated 3/04/2013 , before it was read as Ennore (Tamil Nadu) and Karaikal (Union territory of Puducherry) . 13. Inserted vide Notification No. 46/2013-Customs dated September 26, 2013. 14. Substituted vide Not. 05/2015 - Dated 20-2-2015 before it was read as, Dabolim (Goa) and Visakhapatnam 15. Substituted vide Not. 05/2015 - Dated 20-2-2015 before it was read as, Babarpur and Loni (District Ghaziabad) 16. Substituted vide Not. 26/2017 - Dated 29-6-2017 , 1st day of July, 2017 , before it was read as. under section 3 17. Substituted vide Not. 26/2017 - Dated 29-6-2017 , 1st day of July, 2017 , before it was read as. under section 3 18. Substituted vide Not. 26/2017 - Dated 29-6-2017 , 1st day of July, 2017 , before it was read as. that the capital goods imported, assembled or manufactured are installed in the importer's factory or premises and a certificate from the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, 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 Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may allow : 19. Substituted vide Not. 26/2017 - Dated 29-6-2017 , 1st day of July, 2017 , before it was read as. jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise 20. Inserted vide Notification No. 32/2023-Customs dated 26-04-2023