HANDBOOK


	5.3.1	No Change

	5.3.2	Hqrs. EPCG Committee shall finalise the nexus within two months from the date of issuance of licence failing which the nexus as applied for shall be treated as final. However, where the application for fixation of nexus is rejected on account of non furnishing of documents/ information, the licence holder shall be liable to pay Customs duty together with 15% interest on such goods.

	5.3.3	No Change


EOU/ SEZ Units under EPCG Scheme	5.4	No Change


Indigenous Sourcing of Capital Goods	5.5	No Change

	5.5.1	No Change

	5.5.2	No Change

Benefits To indigenous supplier of Capital Goods	5.5.3	No Change


Leasing of Capital Goods	5.6	No Change


Condition for Fulfilment of Export Obligation	5.7	No Change
	5.7.1	No Change

	5.7.2	No Change


	5.7.3	Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of Policy shall also be counted towards fulfilment of export obligation alongwith the usual benefits available under paragraph 8.3 of the Policy. Royalty payments received in freely convertible currency and foreign exchange received for R& D services shall also be counted for discharge under the EPCG scheme.

	5.7.3.1	The supplies made to the Oil and Gas sector also may be counted towards discharge of export obligation against an EPCG licence provided the licence has been issued on or before 31.3.2000 and no benefit under paragraph 8.3 of the Policy has been claimed on such supplies.

5.7.4

No Change

5.7.5

No Change

5.7.6

In case of export of goods relating to handicraft, handlooms, cottage, tiny sector, agriculture, aqua-culture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and services, the export obligation shall be determined in accordance with paragraph 5.1 of the Policy, but the licence holder shall not be required to maintain the average level of exports as specified in paragraph 5.5(ii) of the Policy. However, the goods imported under EPCG scheme by such sectors shall not be allowed to be transferred for a period of five years from the date of imports even in cases where export obligation has been fulfilled. However, in cases where the service provider wants to discharge to export obligation by export of goods also , he shall have to maintain the average level of foreign exchange earning.


Fulfillment Of Export Obligation	5.8	No Change

5.8.1

In respect of licences, on which the value of duty saved is Rs.100 crore or more, the export obligation shall be fulfilled over a period of 12 years in the following proportion:-

Period from the date of issue of licence	Proportion of total export obligation
Block of 1st to 5^th year	NIL
Block of 6^th to 8^th year	15%
Block of 9th and 10th year	35%
Block of 11th and 12th year	50%


	5.8.2	No Change

	5.8.3	No Change

	5.8.4	No Change


Monitoring of Export Obligation	5.9	No Change


	5.9.1	No Change

Automatic Enhancement upto 10% and Prorata Reduction/ Enhancement in Export Obligation	5.10	If the licence issued under the scheme has actually been utilised for import of a value in excess of 10% of the CIF value of the licence/10% of the duty saved amount, licence shall be deemed to have been enhanced by that proportion. The Customs shall automatically allow the clearance of goods in excess of 10% of the licence value without endorsement by the licensing authority, In such cases, the licence holder shall furnish additional fee to cover the excess CIF value of imports effected subsequently. The export obligation shall automatically stand enhanced proportionately.

	5.10.1	No Change
Extension of Export Obligation Period	5.11	The regional licencing authority, on merits may consider one or more request for extension in export obligation period, including extension for year(s) or a block of year(s), for fulfilment of export obligation subject to the condition that extension of export obligation shall not exceed a total period of one /two year as per relevant Customs notifications from the date of expiry of the export obligation period. The extension in export obligation period shall be subject to such terms and conditions as may be prescribed by the competent authority. Wherever the export obligation period is extended, the licence holder shall be required to maintain average export obligation during the extended period as well.


Export Obligation Shortfall	5.12	The regional licencing authority may also consider condonation of shortfall upto 5% in the export obligation subject to such terms and conditions as may be prescribed by them.

Redemption	5.13		As evidence of fulfillment of export obligation, the licence holder shall furnish the following documents;
			(a)	For Physical Exports:
				A consolidated statement of exports made in the form given in Appendix-9A, duly certified by a Chartered Accountant and bank evidencing exports and realisation in freely convertible currency or statements of exports in the form given in Appendix-9A for individual banks duly certified by a Chartered Accountant.
				However in case of exports made under irrevocable letter of credit and the non realization of export proceeds, a copy of the irrevocable letter of credit may be submitted.
			(b)	For Deemed Exports:
				(i)	Copy of ARO/ Back to Back Inland letter of Credit or Advance Licence for Intermediate Supplies or Supply invoices duly certified by the Bond Office of EOU concerned showing that supplies have been received;
				(ii)	The licencee shall also furnish the evidence of having received the payment through normal banking channel in the form given in Appendix- 22A or a self certified copy of payment certificate issued by the Project authority concerned in the form given in Appendix-12A.
			(c)	For Services rendered:
				Consolidated statement or individual statements (bank/authorised dealer wise) of services rendered in the form given in Appendix-9B, duly certified by a Chartered Accountant and bank/ authorised dealer evidencing foreign exchange earning received through normal banking channel.
		On being satisfied, the licensing authority shall issue a certificate of discharge of export obligation to the EPCG Licence holder and send a copy of the same to the customs authorities with whom BG/LUT has been executed.


Regularisation of Bonafide Default	5.14	No Change

Maintenance of Records	5.15	No Change

Re-Export of Capital Goods Imported Under EPCG Scheme	5.16	No Change

Replacement of Capital Goods	5.16.1	No Change

Penal Action	5.17	No Change

Policy	5.1	No Change

Application Form	5.2	No Change

Consideration of Applications	5.3	No Change