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The Central Government exempts specified capital goods and related items from customs duties and taxes when imported under a valid Export Promotion Capital Goods authorization. Importers must register the authorization at the port of import, execute a bond with surety or security, and fulfill an export obligation equivalent to six times the duty saved within six years. Importers must install the imported capital goods in their factory or premises and produce a confirmation certificate within six months from the completion of imports.
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[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRYOF FINANCE (DEPARTMENT OF REVENUE)
NOTIFICATION No. 26/2023 - Customs
New Delhi, the 1st April, 2023.
G.S.R. …….(E) .- 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 1 annexed hereto, from, -
(i) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act); and
(ii) the whole of the additional duty leviable thereon under sub-sections (1), (3) and (5) of section 3 of the Customs Tariff Act, when specifically claimed by the importer;
(iii) the whole of integrated tax and the goods and services tax compensation cess leviable thereon under sub- sections (7) and (9) of section 3 of the Customs Tariff Act.
(1) that the goods imported are covered by a valid authorisation issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at zero customs duty.
(2) that the authorisation is registered at the port of import specified in the said authorisation and the goods, which are specified in the Table 1 annexed hereto, are imported within validity of the said authorisation and the said authorisation is produced for debit by the proper officer of customs at the time of clearance:
Provided that the catalyst for one subsequent charge shall be allowed, under the authorisation in which plant, machinery or equipment and catalyst for initial charge have been imported, except in cases where the Regional Authority issues a separate authorisation for catalyst for one subsequent charge after the plant, machinery or equipment and catalyst for initial charge have already been imported.
(3) that the goods imported shall not be disposed of or transferred by sale or lease or any other manner till export obligation is complete.
(4) that the importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner of Customs binding himself to comply with all the conditions of this notification as well as to fulfill export obligation on Free on Board (FOB) basis equivalent to six times the duty saved on the goods imported as may be specified on the authorisation, or for such higher sum as may be fixed or endorsed by the Regional Authority in terms of Para 5.15 of the Handbook of
| Procedures, within a period of six years from the date of issue of Authorisation, in the following proportions, namely |
|---|
| S. No. | Period from the date of issue of Authorisation | Minimum export obligation to be fulfilled |
|---|---|---|
| (1) | (2) | (3) |
| 1. | Block of 1st to 4th year | 50% |
| 2. | Block of 5th and 6th year | Balance EO: |
Provided that in case the authorisation is issued to a Common Service Provider (CSP), it shall execute the bond with bank guarantee and the bank guarantee shall be equivalent to 100 per cent. of the duty foregone, and the bank guarantee shall be given by CSP or by anyone of the users or a combination thereof, at the option of the CSP:
Provided further that the export obligation shall be 75 per cent. of the normal export obligation specified above when fulfilled by export of following green technology products, namely, Solar Energy Generating Systems and parts or Equipments thereof, Wind Energy Generating Systems and parts or equipment thereof, LED lights of various kind, Vapour Absorption Chillers, Waste Heat Boiler, Waste Heat Recovery Units, Unfired Heat Recovery Steam Generators, Water Treatment Plants, Battery Electric Vehicles (BEV) [other than Hybrid Electric Vehicles (HEVs) and Plug-in Hybrid Electric Vehicle (PHEV)] of all types, Vertical Farming equipment, Wastewater Treatment and Recycling, Rainwater harvesting system and Rainwater Filters, and Green Hydrogen:
Provided also that for units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu and Kashmir and Ladakh, the export obligation shall be 25 per cent. of the normal export obligation specified above:
Provided also that where a unit holding Export Promotion Capital Goods authorisation and have been admitted under provisions of the Insolvency and Bankruptcy Code, 2016 [31 of 2016] for commencement of insolvency proceedings and in respect of whom the resolution plan has been approved under section 31 of Insolvency and Bankruptcy Code, 2016 by Adjudicating Authority shall be permitted to relief, concessions and waivers in accordance with the resolution plan approved or finalized by Adjudicating Authority or Appellate Authorities as the case may be.
(5) that if the importer does not claim exemption from the additional duty leviable under sub-sections (1), (3), (5), (7) and (9) of section 3 of the Customs Tariff Act, 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 Input Tax Credit of additional duty paid has not been taken.
(6) that the importer, including a CSP, produces within thirty days from the expiry of each block from the date of issue of 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 sub-para (4) of para 2, the importer shall within three months from the expiry of the said block pay duties of customs equal to an amount which bears the same proportion to the duties leviable on the goods, but for the exemption contained herein, which the unfulfilled portion of the export obligation bears to the total export obligation, together with interest at the rate of fifteen per cent. per annum from the date of clearance of the goods.
(7) that where the importer fulfills 75 per cent. or more of the export obligation as specified in condition (4) [over and above 100 per cent. of the average export obligation] within half of the period specified for export obligation as mentioned in sub-para (4) of para 2, his balance export obligation shall be condoned and he shall be treated to have fulfilled the entire export obligation:
Provided that the benefit of reduced export obligation in terms of second and third provisos of sub-para (4) of para 2 above is not availed.
(8) that the capital goods imported, assembled or manufactured, are installed and put to use, after their import, in the importer's factory or premises and a certificate from Deputy Commissioner of Customs or Assistant Commissioner of Customs having jurisdiction over importer’s factory or premises or from an independent Chartered Engineer, is produced within a period of six months from the date of completion of imports before the Deputy Commissioner of Customs or Assistant Commissioner of Customs at the port of import confirming such installation and use of the capital goods in the importer's factory or premises:
