Question 1

What is the export obligation period under EPCG and what happens if it is missed?

Accepted Answer

Under Para 5.01 of the Foreign Trade Policy 2023, the export obligation under EPCG must be fulfilled within 6 years from the date of issue of the authorisation. If the obligation is not met, customs duty saved along with 15% interest per annum is recoverable under Section 28AA of the Customs Act 1962. Partial fulfilment triggers proportionate redemption under DGFT Public Notice guidelines.

Question 2

What are the duty savings available under an Advance Authorisation and how is the value cap determined?

Accepted Answer

Advance Authorisation under Chapter 4 of FTP 2023 grants exemption from Basic Customs Duty, IGST, and Compensation Cess on inputs imported for physical export. The CIF value of permitted imports is based on SION (Standard Input-Output Norms) notified by DGFT. Where no SION exists, a self-declaration route under Para 4.07 applies, subject to independent CA certification of actual input consumption.

Question 3

Is GST refund available on inputs procured domestically under Advance Authorisation?

Accepted Answer

Yes. Domestic supplies to an Advance Authorisation holder are treated as deemed exports under Section 147 of the CGST Act 2017, read with Rule 89(1)(g) of the CGST Rules 2017. The supplier can claim a refund of IGST paid, or the AA holder can claim refund of tax paid on deemed export supplies, whichever route is chosen under Notification No. 48/2017-CT.

Question 4

What obligation tracking and redemption documents does DGFT require for EPCG closure?

Accepted Answer

Redemption requires submission of shipping bills with LEO (Let Export Order) date, Bank Realisation Certificates (BRCs) or eBRC from EDPMS, and installation certificate from a Chartered Engineer for capital goods. The application is filed on the DGFT portal using ANF-5B along with the EODC (Export Obligation Discharge Certificate) request. The CA certifies exports against the authorisation ledger.

Question 5

Can EPCG authorisations be transferred or the export obligation be fulfilled through third-party exports?

Accepted Answer

EPCG authorisations are not transferable. However, export obligation can be fulfilled through third-party exports under Para 5.13 of FTP 2023, provided the main authorisation holder is named on the shipping bill as the exporter of record. The supporting manufacturer must have a valid IEC under Section 7 of the Foreign Trade (Development and Regulation) Act 1992.

EPCG Scheme & Advance Authorisation

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