EPCG

Export Promotion Capital Goods (EPCG) – Direct Import

Export Promotion Capital Goods Scheme (EPCG Scheme) is a type of Duty-Free (Zero Customs Duty) exemption scheme for Import of Capital Goods/Machinery for the manufacture of products meant for Export.

Overview Critical Procedure Import Procedure Export Procedure Closure Suggestion

Stage-I - Definitions / Meanings / Overview

Sl No	Particulars	Meanings / Definitions
1	EPCG Definition	Export Promotion Capital Goods
2	EPCG Purpose	To get Technology & Machinery Import which is not available in India.
3	Benefit	To avail / get Customs Duty Exemption (All Duty Free).
4	Obligation – SEO (Specific Export Obligation)	Require to fulfil Export Obligation (SEO), 6 Times of Actual Duty Saved.
5	Obligation – AEO (Average Export Obligation)	In addition to SEO, require to fulfil / maintain Average Export Obligation (AEO) till SEO fulfilled year.
6	Stipulation - Import	24 Months from EPCG Date.
7	Stipulation - Installation	Require to submit Installation Certificate within 6 months from the date of import.
8	Stipulation - Export	6 years from EPCG Date (50% during 1-4 Years & balance 50% during 5-6 Years)
9	Initial Cost / Financial Implication	Govt Fees for EPCG, Certification Charges for CA, Chartered Engineer, & Consultancy Fee (Service Charges) + 18% GST.
10	Liability	In case of non-fulfilment of Export Obligation (EO) within stipulated time including extended EO period, then require to pay Customs Duty along with applicable Interest to Customs Dept.

Stage-II - Pre-cautionary Measures require to adopt while applying for EPCG

Sl No	Check Points
1	Figure out / identify “Import Item” & “Export Product Nomenclature” duly mentioning Technical Specifications and Model Nos.
2	Classify both Import Item & Export Products at appropriate ITC (HS) Codes before applying for EPCG.
3	Do not mention lengthy “Export Product Descriptions” which may lead to complications while monitoring & final closure of EPCG. Try to avoid to mention pre-fix, suffix, Brand Name & Process Name in Export Product Description.

Stage-III - Import Procedure

1	Register EPCG Authorisation with concerned Customs Authority (Port of Import mentioned on EPCG) by executing General Bond (LUT) in prescribed format on ₹ 100 Stamp Paper duly notarised with or without BG. For BG Exemption, you may contact us.
2	Before filing of Bill of Entry (BE) with Customs, please ensure for the correctness of Import Item Description, ITC (HS) Code, Qty, UOM, CIF Value (FC) on Import Invoice, and other relevant documents which should exactly be as per EPCG Authorisation.
3	Get Import clearance from Customs.
4	Bring the Machinery to your Factory Address mentioned in EPCG.
5	Install Machinery. Arrange Installation Certificate. Submit the same to DGFT & Customs within 6 months from the date of import (BE Date).

Stage-IV - Export Procedure

1	Manufacture Finished Product for Export by using Imported Machinery against EPCG.
2	Execute Exports duly mentioning Export Product, ITC (HS) Code, EPCG No & EPCG Date on Shipping Bill, which should be exactly as per EPCG.

Stage-V - Post Export Procedure

1	Apply for Export Obligation Discharge Certificate (EODC) after completion / fulfilment of Export Obligation.
2	On receipt of EODC, approach Customs Dept for “Bond Cancellation” & “BG Release” (if BG executed).

Our Suggestion

1	Better to use / keep some kind of office tool (Customised Software) to keep Import & Export Accountability atleast for Duty Exemption Schemes (EPCG) wherever sizeable EXIM transactions are taking place.
2	Always better to hire "External Agency" to keep 2nd check of EXIM (Scheme related) transactions and also to validate documents of all EXIM Transactions to avoid last movement rush and complications. We suggest you to keep EXIM Audit option on periodical basis. For EXIM Audit you may contact us.
3	Please reach us to get our expertise which will help you with proper Awareness, Guidance, Understanding & Quality Services to have leak proof mechanism to avoid unwanted financial implication on account of Penalty for late filing of Bill of Entry, Detention Charges & Demurrage Charges.