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Average export obligation under epcg (Custom)

This query is : Resolved
Raman Ranjan
Das
( Author )
15 October 2012
Dear Experts,
We have not fulfilled average export obligation for a EPCG licence taken on May
2005. please tell the way out.
RAMESH KUMAR
VERMA
( Expert )
15 October 2012
Refer to DGFT Circular (No. 28/2007 dated 22.01.2008) says that if, say, three EPCG
licences are issued in 2007-08 with previous three years annual average exports of
Rs 20 crore, and duty saved happen to be Rs 1 crore, Rs 1.5 crore and Rs 2 crore,
besides the requirement of maintaining annual average, the additional export
obligation against the first licence will be Rs 8 crore, the previous additional export
obligation against the second licence will be Rs 12 crore and for the third licence
previous additional export obligation will be Rs 20 crore plus additional export
obligation of Rs 16 crore. It appears that the circular is not correctly worded and
that in respect of the second licence, the correct position would be to impose
previous additional export obligation of Rs 8 crore plus additional export
obligation of Rs 12 crore.
The circular says that fulfilment of additional exports obligation against the first
licence shall also subsume previous export obligation of the second and subsequent
licences to that extent. For example, if the licence holder fulfils an average export of
Rs 20 crore annually and additional export obligation of Rs 8 crore, it will subsume
the previous additional export obligation imposed on the second and subsequent
licences to the extent of Rs 8 crore. The previous export obligation on the second
licence shall stand fulfilled and previous export obligation on the third licence shall
stand reduced to Rs 12 crore.
It still amounts to the earlier position that exports against a shipping bill could either
be counted for maintaining annual average or for discharge of export obligation
against any one EPCG licence. However, the circular says that after redemption of an
EPCG licence, the exports made against such licences shall be added to arrive at the
average of the preceding three licensing years. This provision might bring in some
relief.
Para 5.7.4 of HB indicates that the explanatory note will apply for all previous EPCG
licences, which have not been redeemed. The DGFT should clarify the procedures to
re-fix the additional export obligation and annual average exports for unredeemed
licences already issued.
Regards,
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