EPCG LICENSE, Central Excise

[P.V. MANIKANTAN]

Sir

I need to be clarified on the below on purchase products by using EPCG license :-

We are a MACHINE manufacturer and Our Customer is insisting us to supply the machine on EPCG License basis.

They states that, " ED and Cess would be extra at 10.30% or as applicable at the time of dispatch.As the supply is against EPCG License, Excise Duty draw back can be claimed by our Company directly based on copy of EPCG license, validation letter in favor of indigenous supplier, full payment certificate etc as per the standard format. Excise Duty is therefore NIL as procurement is against EPCG license processed by our Customer. Hence our Customer need not pay Excise Duty while dispatch of equipment and claiming the payment by our Company ".

My question is :-

1) Whether the comments from our Supplier on Excise duty part is correct ? Is it possible, Our Customer need not to pay excise duty ?

2) Whether it is possible to buy products from Indigenous suppliers by using EPCG license ?

3) If, what is the procedure ?

4) Whether ED can be claimed by us if using EPCG license ?

Your immediate reply in this regard is highly helpful to me

Thanking You,

P.V.Manikantan

Posts / Replies

[Pradeep Khatri]

Dear P V Manikantan,

Capital Goods can be procured against invalidation letter. Even, if you pay Central Excise Duty, then, you or your customer may claim the refund of Terminal Excise Duty after following the prescribed procedure in HBP Vol 1 read with Chapter 5 of the FTP 2009-2014.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[P.V. MANIKANTAN]

Sir

Kindly update on the said queries

P.V.Manikantan

[P.V. MANIKANTAN]

Dear Sir

Pl recall the discussion we had today and kindly provide details on below said queries.

For your easy ref , Our Customer statement is given herewith :-

"ED and Cess would be extra at 10.30% or as applicable at the time of dispatch. As the supply is against EPCG License, Excise Duty draw back can be claimed by OUR COMPANY directly based on copy of EPCG license, validation letter in favor of indigenous supplier, full payment certificate etc as per the standard format. Excise Duty is therefore NIL as procurement is against EPCG license processed by Our Customer. Hence Our Customer need not pay Excise Duty while dispatch of equipment and claiming the payment by OUR COMPANY".

1. Our Domestic Customer wants to buy product from us on EPCG license. Is it possible for domestic sales ?
2. If doing EPCG license, do we have to produce all our purchase details to the Customer ?
3. Who will produce the EPCG license ? Revathi OR our Customer ? If Customer, whether they will produce the original to us ?
4. What is meantby Validation letter in favor of Indigenous Supplier ?
5. What is meantby Full payment Certificate ?
6. Can we use the same EPCG license to get NIL DUTY from our Suppliers ? Is it required ?
7. Whether ED is to be mentioned in our Sales Invoice ?
8. If we not need to mention ED in our Invoice , How can we claim ED amount mentioned in our Supplier Invoices ?
9. What are the documents to be produced by our Customer ?
10. Do we get seal from Excise dept for not mentioning ED in our sale invoices ?

Kindly give your feedback on the above by Today itself ,Sir

　

With warm regards,

P.V.Manikantan

[Pradeep Khatri]

1. Our Domestic Customer wants to buy product from us on EPCG license. Is it possible for domestic sales ?Yes you can.
2. If doing EPCG license, do we have to produce all our purchase details to the Customer ? No, this is not required.
3. Who will produce the EPCG license ? Revathi OR our Customer ? If Customer, whether they will produce the original to us ? Your customer would get the EPCG license from DGFT.
4. What is meant by Validation letter in favor of Indigenous Supplier ? Kindly Check para 5.5 of the HBP Vol.1 in this regard.
5. What is meantby Full payment Certificate ? That the Customer has paid the full payment against the invoice raised by the supplier and there is no deduction on any account.
6. Can we use the same EPCG license to get NIL DUTY from our Suppliers ? Is it required ? You would require invalidation letter from RA of DGFT.
7. Whether ED is to be mentioned in our Sales Invoice ? Yes.
8. If we not need to mention ED in our Invoice , How can we claim ED amount mentioned in our Supplier Invoices ? You or your customer would have to seek the refund of Terminal Excise Duty on submission of NOC from either party.
9. What are the documents to be produced by our Customer ? The Copy of the Invalidation letter.
10. Do we get seal from Excise dept for not mentioning ED in our sale invoices ? You would have to pay the Central Excise Duty.

Regards

Team YAGAY and SUN (Management and Indirect Tax Consultants)

[P.V. MANIKANTAN]

Sir

We are going to supply a machine to our Customer on Deemed export basis. Customer will produce parts by using our machine and export the same to various countries. Pl confirm the below since we are going to do dispatch on DEEMED EXPORT basis

Whether the below said Documents required for DEEMED EXPORT

1. Purchase Order copy from Customer - YES / NO

2. Copy of Customer's Customer Purchase order - YES / NO

3. Copy of Customer Invoice, Packing List ,Shipping bill, Bill of Lading - YES / NO

4. Copy of Customer's Bank Realization certificate- YES / NO

5. Copy of EPCG Licence issued to Customer with Annexure details.- YES / NO

6. What are the documents available in Annexure ?

6. Copy of EPCG Licence Registration Details- YES / NO

7. Original Invalidation letter issued by JDGFT - YES / NO

8. Original Disclaimer certificate from Customer- YES / NO

9. Copy of Customer Performa Invoice.- YES / NO

10.Is it possible to import materials under Advance License for Deemed export- YES / NO

11 .Copy of Shipping bill mentioned in Advance Authorization License -YES / NO

12. Whether customer has to submit their Export documents like their shipping bill copy etc. to us for realization of Advance License -YES / NO

13. Whether they have to mention our Advance license nos in their Invoice , Shipping bill etc.,

12. Is it possible to claim Excise duty of Domestic Suppliers, since it is deemed export ?

13. What is the Advance license validity period ?

14. Is it possible to extend Advance license validity period ?

15. If Our Customer do not follow the above once the Deemed export is made, Is there any consequences applicable to us ? Or How the Government will react in this case ?

Awaiting your earliest reply in this regard

Thanking You,

P.V.Manikantan

[Pradeep Khatri]

Dear P V Manikantan,

We suggest that you should go through the Chapter 4 of the FTP 2009-2014 read with HBP. Vol.1 and FT (DR) Act in this regard. By going through the above you would find out all replies to your queries.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)