Stage-I - Definitions / Meanings / Overview
| Sl No | Particulars | Meanings / Definitions |
| 1 | EPCG Definition | Export Promotion Capital Goods |
| 2 | EPCG Purpose | To purchase or procure Technology & Machinery within 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 Tax Invoice. |
| 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 DGFT 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 | After obtainment of EPCG Authorisation, apply for Invalidation with concerned DGFT Authority (RLA) alongwith execution of General Bond (LUT) in prescribed format on ₹ 100 Stamp Paper duly notarised with or without BG. For BG Exemption, you may contact us. |
| 2 | After obtainment of Invalidation Letter, procure Capital Goods / Machinery from local or Indian Supplier duly endorsing EPCG Authorisation No and Date and Invalidation No and Date on the face of Tax Invoices. |
| 3 | Before generating Tax Invoices, please ensure for the correctness of Item Description, ITC (HS) Code, Qty, UOM, Value on Tax Invoice, and other relevant documents which should exactly be as per EPCG Authorisation. |
| 4 | Bring the Machinery to your Factory Address mentioned in EPCG. |
| 5 | Install Machinery. Arrange Installation Certificate. Submit the same to DGFT within 6 months from the date of Invoice. |
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 DGFT 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. |