Circular No.ES/437/2018-19 March 30, 2019
To: Members of the Council
Sub.: EPCG Scheme - Applicability of amendment to para 5.10 (c) of Hand Book of Procedures 2015-20 (Mid-Terms Review)
We would like to inform you that O/o DGFT has issued Policy Circular No. 22/2015-20 dated 29th March, 2019 regarding applicability of para 5.10 (c) under HBP 2015-20 on third party exports.
According to Para 5.10 (c) relating to Conditions for fulfilment of Export Obligation under Hand Book of Procedures 2015-20 (updated as on 5.12.2017) states that
“In case the Authorization Holder wants to export through a third party, export documents viz., shipping bills / Bill of exports etc. shall indicate name of both authorization holder and supporting manufacturer, if any, along with EPCG authorization number. BRC, GR declaration, export order and invoice should be in the name of third party exporter. The goods exported through third party should be manufactured by the EPCG Authorisation Holder or the supporting manufacturer where the capital goods imported under the authorisation have been installed. Proceeds realised through normal banking channel from third party exporter’s account to the authorisation holder’s account on account of such exports only shall be counted towards fulfilment of export obligation.”
(Please note that the text in bold is an amendment incorporated in the Mid-Term Review).
Now, DGFT has examined the matter in consultation with the Department of Revenue and clarified the following:-
Amendment to the Para 5.10 (c ) of HBP 2015-20 shall be applicable to third party exports made on or after 5th December, 2017.
Third party exports made prior to 5th December, 2017 will be governed by the provisions of the relevant policy/ procedure.
Accordingly, in case of third party exports, an authorisation holder can count till 4th December, 2017 the full realized value of the shipping bill towards fulfilment of export obligation subject to counting of exports only once towards the EPCG obligation and maintenance of Average Export Obligation.
All the shipment made from 5th December, 2017 onwards will be counted towards Export Obligation only for the actual payment realized through the normal banking channel from the third party exporter’s account to the authorisation holder’s account.
Members may kindly make a note of the above clarification regarding third party exports.