Duty Exemption for Capital Goods: EPCG, Moowr
Home> Duty Exemption for Capital Goods: EPCG, Moowr

EPCG -Export Promotion Capital Goods Scheme, is an advantageous scheme for procurement of Capital Goods, by businesses who plan to export in future. It saves substantial amounts of import duty, subject to Export Obligations. Duty thus saved can be used to factor in the costing of export products.

    • The scheme allows import of New capital goods (including CKD/SKD thereof and spares, jigs, fixtures, dies and moulds) at NIL Customs duty as against the normal total of 27.1%, thus providing a total duty saved of import value. This is subject to an Export Obligation (EO) equivalent to 6 times of duty saved, to be fulfilled over a period of 6 years reckoned from the date of issuance of license. For large projects, units in North East, SSI etc. there are more relaxed norms of EO.
    • The scheme covers manufacturer exporters with or without supporting manufacturer(s) / vendor(s), merchant exporters tied to supporting manufacturer(s) and Service Providers.
    • Actual user conditions: Import of capital goods are subject to Actual User condition till the export obligation is completed.
    • Export obligation: The export obligation needs to be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme. Deemed Exports like supplies to Mega Power Projects, Projects funded by IBRD/IDA/ADB etc, EOUs etc. can also be utilized to fulfill the EO
    • Indigenous Sourcing: A person holding an EPCG license may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG license holders shall be eligible for refund of GST paid by him. In addition the indigenous supplier can import his own raw material duty free and other benefits which can be discussed

Role of Andees Team

It is very important to note in the above process, that foresight and experience can play a big role in not only getting an optimum license issued, but also in monitoring the export obligation and documentation at each point. Further in case of delay in exports, timely actions can save a lot of problems and liability in future. Finally a proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, taking into account other EPCG, and also other schemes, compliances etc.

Andees has been assisting clients for the whole process of EPCG for the last more than 20 years. Sound knowledge of Policy & Procedures along with a very qualified and experienced team, Andees has handled hundreds of complicated matters related to EPCG, saving thousands of crores for clients that are MNCs, Indian Corporates, or PSUs. While proper planning during the entire life cycle has helped smooth operations, several complicated matters even at the last stage have been saved by Andees team from substantial liabilities.

The scheme is quite beneficial to Manufacturer exporters as they can import their CG without basic customs duty and IGST. The manufacturers can use the capital goods not only for export but also for domestic manufacturing, provided the Export Obligations are met in time.

Tied with the supporting manufacturers can also utilize the scheme for concessional duty import of Capital Goods to be installed at the supporting manufacturers.

EPCG can be taken for the projects where exports of goods or services can be envisaged by the use of the project or alternative products. EPCG can be taken along with Project Import scheme in case of new Projects.

Various service providers/exporters can take EPCG route to reduce their Capital Cost. Service Providers like Hotels, Tour Operators, Taxi Operators, Construction Companies, Logistics companies can utilize the scheme to import/procure from domestic market, their capital goods at a substantially reduced costs. The EO can be fulfilled by Forex Earnings through providing services, like that of Foreign Guests staying in the hotel, medical tourism etc.

Certain other sectors like BPO, Port Projects etc. can also utilize EPCG scheme to their advantage.

© 2019 Andees Consultant. All Rights Reserved.

error: Content is protected !!