Subject: Rationalization of procedures in handling exporters obligations under EPCG authorizations

OFFICE OF THE COMMISSIONER OF CUSTOMS (NS-IV) JAWAHARLAL NEHRU CUSTOM HOUSE, NHAVA SHEVA,
TALUKA URAN DIST. RAIGAD, MAHARASHTRA - 400 707.

F. No. S/12-Gen- 38/2015-16 AM(X) Pt-I Date:25.11.2016

STANDING ORDER NO.70 / 2016

Subject: Rationalization of procedures in handling exporters obligations under EPCG

authorizations -reg.

Attention of all officers and concerned staff is invited to the Board’s Instruction vide F. No.605/71/2015-DBK dated 14.10.2016 on the above mentioned subject.

2. As a part of further rationalizing procedures and avoiding duplication of work based on feedback on outcomes of applying extant procedures, taking into account the conditions prescribed in the Foreign Trade Policy and Customs notifications, the Board reviewed certain aspects of the directions given to field formations in Circular No. 5/2010-Cus, Instruction No. 609/119/2010-DBK dated 18.01.2011 and Circular No. 14/2015-Cus insofar as they relate to EPCG scheme. The details are given in succeeding paragraphs.

3. At present the correctness of the installation certificates issued by Chartered Engineers are to be verified on random basis in at least 5% cases through the Central Excise Division. The Board has decided that this verification be restricted to 5% cases.

4A. In the Circular of 2010 it was prescribed that first block EO (export obligation) should be verified in detail and if it has been found satisfactory then EODC issued at end of second block should be accepted without further verification.

d that first block EO (export obligation) should be verified in detail and if it has been found satisfactory then EODC issued at end of second block should be accepted without further verification. The Instruction of 2011 confirmed that this is to be implemented; however, for past cases where exporter had not come forward for first block verification but had submitted the EODC, the EODC may be accepted subject to random verification of at least 5% of EODCs issued in such past cases. It further directed that the Customs check, in detail, at least 5% EODCs. In this connection, it was noted that not meeting the block-wise EO attracts composition fees or payment of duty with interest and this find mention in HBP and is also referred in Customs notifications.

4B. On consultation, the DGFT has informed that the provisions of para 5.14 of HBP 2015-20 that provides “5.14(c)HBP: Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block”, and the similar provisions in previous FTP/HBP 2009-14 and 2004-09 are strictly followed by

rest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block”, and the similar provisions in previous FTP/HBP 2009-14 and 2004-09 are strictly followed by Regional Authorities before issuing EODC/redemption/closure letters; and also that cases of condoning / delay in fulfillment of block-wise EO are considered by Regional Authorities only

when exporter has obtained relaxation in terms of DGFT’s powers under the FTP. The DGFT has also advised its Regional Authorities to ensure that these provisions are strictly followed in respect of all unredeemed EPCG authorization issued during the FTP 2004-09, 2009-14 and 2015-20.

4C. In the light of this, Board has decided that Customs authorities need not replicate the verification of export obligation of the first block that is being conducted by Regional Authorities and that the EODCs received under EPCG Scheme in terms of FTP/HBP 2004-09, 2009-14 and 2015-20 be normally accepted without further verification, except in 5% cases where they be verified in detail before acceptance.

5. The foregoing aspects remain subject to detailed verification of EODC when there is such a need suggested by specific intelligence. Further, if Regional Authorities endorse verification of shipping bills/other documents on an EODC, such verification shall be carried out. Moreover, it remains mandatory to verify genuineness of non-EDI shipping bills/bills of export on which an EODC may be based.

6. The guidelines issued in the past on the subject have been modified to the above extent.

ndatory to verify genuineness of non-EDI shipping bills/bills of export on which an EODC may be based.

6. The guidelines issued in the past on the subject have been modified to the above extent. It should be noted that monitoring of progress of block-wise EO fulfilment is to continue and as clarified in CBEC Circular No. 14/2015-Cus, the field formations can view the EPCG authorization-wise all India export details in EDI.

7. It has been instructed that the Commissioners will ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Accordingly, Additional Commissioner / Joint Commissioner in charge of EPCG Monitoring Cell has been made responsible to identify “transparent selection criteria” and ensure intimation to exporters as prescribed. Credibility and transparency has been brought into the Bond cancellation process which would be speedier. The exporter would not be asked to routinely produce information that can be sourced from the Customs EDI system. Accordingly, following selection criteria has been identified as of now, as mentioned below. Any revision/ modifications in selection criteria would also be informed from time to time.

(i). Cases in which even though the EODC is issued by the DGFT, the Installation Certificate have been not submitted by the party.

(ii).

criteria would also be informed from time to time.

(i). Cases in which even though the EODC is issued by the DGFT, the Installation Certificate have been not submitted by the party.

(ii). Cases in which licensee has fulfilled export obligation by means of third party/indirect export.

(iii). Quantum of duty saved amount.

(iv). Cases in which any specific intelligence is received from any investigating agency/other sources. (v). Cases where original licence is issued to one entity where EODC is submitted by other entity (successor/merged entity due to change in ownership etc.)

8. The above instructions are brought to the notice of all the Officers, concerned staff and field formations for information, guidance and strict compliance.

9. Difficulties faced, if any, in implementation of the Standing Order may be brought to the notice of Additional/Joint Commissioner, EPCG Monitoring Cell, JNCH.

(SUBHASH A GRAWAL) Commissioner of Customs NS (IV), JNCH

Copy To:-

1. The Chief Commissioner of Customs, Mumbai Zone II.
2. The Pr. Commissioner of Customs NS I
3. The Commissioners of Customs, NS-Gen, II, III, IV & V
4. All the Additional/Joint Commissioners of Customs, NS-Gen, I, II, III, IV & V
5. All the Dy. /Assistant Commissioners of Customs, NS-Gen, II, IV
6. Notice Board and website.