Capital Goods as Notified

8/2/2019 Capital Goods as Notified

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L. EPCG SCHEME:

GENERAL EXEMPTION NO. 38

Exemption to Capital goods, their components and Spares when imported against on EPCG

Licence.

[Notfn. No. 97/04-Cus. dt. 17.9.2004 as amended by 27/05, 46/05, 77/05, 97/05, 43/06,63/07, 72/07, 116/07, 65/08, 125/08,19/09]

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act,

1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest

so to do, hereby exempts goods specified in the Table annexed hereto, from,-

(i) so much of the duty of customs leviable thereon which is specified in the FirstSchedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess of the amount calculated at

the rate of five per cent advalorem , and

(ii) the whole of the additional duty leviable thereon under section 3 of the said

Customs Tariff Act, when specifically claimed by the importer.

2. The exemption under this notification shall be subject to the following conditions,

namely : -

(1) that the goods imported are covered by a valid licence or a valid authorisation issued

under the Export Promotion Capital Goods Scheme in terms of Chapter 5 of the Foreign Trade

Policy permitting import of goods at the rate of five percent duty and the said licence is produced

for debit by the proper officer of customs at the time of clearance:

Provided that for import of spare parts specified at S.No.4 of the said Table, the validity

period of the licence or authorisation shall be deemed to be the period permitted for fulfillment of

the export obligation in full;

(2) that the importer executes a bond in such form and for such sum and with such surety or

security as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner

of Customs binding himself to fulfil export obligation on FOB basis equivalent to eight times the

duty saved on the goods imported as may be specified on the licence or authorisation, or for such

higher sum as may be fixed by the Licensing Authority or Regional Authority, within a period ofeight years from the date of issue of licence or authorisation, in the following proportions, namely

:-

_____________________________________________________________________________________

S.No. Period from the date of issue of licence Proportion of total export obligation

_____________________________________________________________________________________

1 2 3

_____________________________________________________________________________________

1. Block of 1st to 6th year 50%

2. Block of 7th to 8th year 50%

_____________________________________________________________________________________Provided that where the duty saved is not less than Rs.100 crores, or where the licence

or authorisation is issued to units in the agri export zone as may be notified by the licensing

authority or Regional Authority, the export obligation shall be fulfilled within a period of twelve



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years from the date of issue of licence in the following proportions, namely :-

_____________________________________________________________________________________

S.No. Period from the date of licence Proportion of total export obligation

_____________________________________________________________________________________

1 2 3

_____________________________________________________________________________________

1. Block of 1st to 10th year 50%

2. Block of 11th and 12th year 50%

_____________________________________________________________________________________

Provided further that where a sick unit is notified by the Board for Industrial and Financial

Reconstruction or where a rehabilitation scheme is announced by the concerned State Government

in respect of sick unit for its revival, the export obligation may be fulfilled in terms of Paragraph

5.5.1of the Foreign Trade Policy:

Provided also that where the capital goods are imported by agro units and units in tiny

and cottage sector, the export obligation shall be fixed equivalent to 6 times the duty saved on the

goods imported as may be specified on the licence, or for such higher sum as may be fixed by the

licensing authority, within a period of 12 years from the date of issue of the licence.

Providedalso that where the capital goods are imported for technological upgradation,

or by small scale industry units as defined in paragraph 5.1 of the Foreign Trade Policy, as the

case may be, the export obligation shall be fixed equivalent to six times the duty saved on the

goods imported as may be specified on the licence, or for such higher sum as may be fixed by the

Licensing Authority, within a period of eight years from the date of issue of licence;

Providedalso that export obligation of a particular block may be set off against the

excess exports made in the said preceding block;

(3) that if the importer does not claim exemption from the additional duty leviable under

section 3 of the Customs Tariff Act, 1975, the additional duty so paid by him shall not be taken for

computation of the net duty saved for the purpose of fixation of export obligation provided the

Cenvat credit of additional duty paid has not been taken;

(4) that the importer produces within 30 days from the expiry of each block from the date of

issue of licence or authorisation or within such extended period as the Deputy Commissioner of

Customs or Assistant Commissioner of Customs may allow, evidence to the satisfaction of the

Deputy Commissioner of Customs or Assistant Commissioner of Customs showing the extent of

export obligation fulfilled, and where the export obligation of any particular block is not fulfilled

in terms of the preceding condition, the importer shall within three months from the expiry of the

said block pay duties of customs of an equal amount equal to that portion of duties leviable on

the goods, but for the exemption contained herein which bears the same proportion as the

unfulfilled portion of the export obligation bears to the total export obligation together with

interest at the rate of 15per cent per annum from the date of clearance of the goods;

(4A) where the importer fulfils 75% or more of the export obligation as specified in condition

(2) within half of the period specified for export obligation as mentioned in condition (2), his

balance export obligation shall be condoned and he shall be treated to have fulfilled the entire

export obligation.



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(5) that the capital goods imported, assembled or manufactured are installed in the importers

factory or premises and a certificate from the jurisdictional Deputy Commissioner of Central

Excise or Assistant Commissioner of Central Excise, as the case may be, is produced confirming

installation and use of capital goods in the importers factory or premises, within six months from

the date of completion of imports or within such extended period as the Deputy Commissioner of

Customs or Assistant Commissioner of Customs, as the case may be, may allow :

Providedthat if the importer is not registered with central excise or if he is a service provider,

as the case may be, he may produce said certificate of installation and usage issued by an

independent chartered engineer:

Providedfurther that in the case of , -

(i) manufacturer exporter and merchant exporter having supporting manufacturer(s) or

vendor(s);

(ii) import of irrigation equipment for use in contract farming for export of agricultural

products; and

(iii) importer rendering services,

the capital goods may be installed at the factory or premises of such other person whose name

and address are endorsed on the licence referred to in condition (1) and where the bond for full

difference of duty, if necessary, in terms of condition (2), with or without a bank guarantee, as the

case may be, is executed by the importer and such other person binding themselves jointly and

severally to fulfil the export obligation and all other conditions of this notification and to pay dutywith interest at the rate of 15 per cent per annum in case of default;

Providedalso that agro units located in Agri Export Zones or service providers in Agri

export Zones may move the capital goods within the Agri Export Zones under intimation to the

jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise,

as the case may be, subject to the condition that the importer shall maintain accurate record of

such movement.

(6) that the imports and exports undertaken through seaports at Mumbai, Kolkata , Cochin,

Magdalla, Kakinada , Kandla Mangalore, Marmagoa, Chennai, Nhava Sheva, Paradeep , Pipavav,

Sikka , Tuticorin, Visakhapatnam , Dahej , Mundhra, Nagapattinam , Okha , Bedi (including RoziJamnagar), Muldwarka, Porbander, Dharamtar, Vadimar and Haldia (Halida Dock Complex of

Kolkata Port) and Krishnapatnam or through any of the airports at Ahmedabad , Bangalore,

Bhubaneswar, Mumbai, Kolkata, Coimbatore, Delhi, Hyderabad, Jaipur, Chennai, Srinagar,

Trivandrum , Varanasi , Nagpur, Cochin, Rajasansi (Amritsar), Lucknow (Amausi), Indore and

Dabolim (Goa) or through any of the Inland Container Depots at Agra, Bangalore, Coimbatore,

Delhi, Faridabad, Gauhati, Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad,

Nagpur, Pimpri (Pune), Pitampur (Indore ), Surat, Tirupur, Varanasi, Nasik, Rudrapur (Nainital),

Dighi Pune), Vadodara, Daulatabad (Wanjarwadi and Maliwada), Waluj (Aurangabad ), Anaparthy

(Andhra Pradesh), Salem, Malanpur, Singanalur , Jodhpur, Kota, Udaipur, Ahmedabad , Bhiwadi,

Madurai , Bhilwara, Pondicherry, Garhi Harsaru, Bhatinda , Dappar (Dera Bassi), Chheharata

(Amritsar), Karur, Miraj, Rewari , Bhusawal, Jamshedpur, Surajpur, Dadri, Tuticorin, Kundli, Bhadohi,Raipur, Mandideep (District Raisen), Durgapur (Export Promotion Industrial Park), Babarpur and

Loni (District Gaziabad) or through the Land Customs Station at Ranaghat, Singhabad, Raxaul,



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Jogbani, Nautanva (Sonauli), Petrapole, Mahadipur, Nepalganj Road, Dawki, Agartala,

Sutarkhandi,Amritsar Rail Cargo, Attari Road, Hilli, Ghojadanga and Changrabandha or Special

Economic Zone as specified in the notification issued under section 76A of the Customs Act, 1962

(52 of 1962).

Provided that the Commissioner of Customs may by special order or a public notice and

subject to such conditions as may be specified by him, permit import and export through any

other sea-port, airport inland container depot or through a land customs station.

(7) notwithstanding anything contained in condition (4), where the Licensing Authority or

Regional Authority grants extension of block-wise period for any block(s) or overall period of

fulfilment of export obligation upto a period of two years or regularization of shortfall in export

obligation, not exceeding five per cent of such export obligation, the said block-wise period or

overall period of export obligation shall be extended or condoned by the Deputy Commissioner

of Customs or Assistant Commissioner of Customs, as the case may be :

Providedthat in respect of sick unit referred to in the second proviso to condition (2),

extension of overall period of export obligation shall not be allowed.

Provided further that the Regional Authority may grant further extension in the overall

period of export obligation upto a period of further two years if the authorisation holder pays fifty

per cent differential duty on the unfulfilled portion of the export obligation and agrees to fulfill

other conditions as may be specified by the Regional Authority for this purpose.

3. Where the goods specified in the said Table are found defective or unfit for use, the said

goods may be re-exported back to the foreign supplier within 3 years from the date of payment ofduty on the importation thereof:

Providedthat at the time of re-export, the goods are identified to the satisfaction of the

Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, as

the goods which were imported.

TABLE

_____________________________________________________________________________________

S.No. Description of goods

_____________________________________________________________________________________

1 2

_____________________________________________________________________________________

1. Capital goods for pre-production, production and post production including second

hand capital goods.

2. Capital goods in SKD/CKD conditions to be assembled into capital goods by the

importer.

3. Omitted

4. Spare parts of goods specified at Serial Nos.1 and 2 as actually imported and required for

maintenance of capital goods so imported, assembled, or manufactured.

5. Spare parts for the existing plant and machinery of the licence holder.

_____________________________________________________________________________________

4. Waiver of Export Obligation may be considered where, because of force majeure or other

unforeseen circumstances/reasons, exporter is unable to fulfill export obligation. Such



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requests shall be considered by a Committee comprising representative(s) of Department

of Commerce and Department of Revenue under Directorate General of Foreign Trade.

Decision of this Committee shall be notified by Department of Revenue for

implementation.

5. where the total exports of a sector or product group during the year 2007-08 has declined

by more than 5% as compared to the year 2006-07, the average export obligation of the

licencee for 2007-08 may be reduced proportionate to the reduction in exports of that

particular sector /product group during 2007-08 as against 2006-07;

Explanation For the purposes of this notification,-

(1) Capital goods has the same meaning as assigned to it in Paragraph of 9.12 of the

Foreign Trade Policy;

(2) Foreign Trade Policy means the Foreign Trade Policy 2004-2009 published vide

notification of the Government of India in the Ministry of Commerce and Industry, No. 1/2004

dated the 31st August, 2004 as amended from time to time;

(3) Licensing Authority or Regional Authority means the Director General of Foreign

Trade appointed under section 6 of the Foreign Trade (Development and Regulation) Act, 1992

(22 of 1992) or an officer authorized by him to grant a licence or authorisation under the said Act;

(4) export obligation, -

( i ) in relation to importers other than those rendering services, means exports to a place

outside India, of products manufactured with the use of capital goods imported, assembled or

manufactured in terms of this notification :

Providedthat export obligation may also be fulfilled by,-

(a) export of same products capable of being manufactured with the use of said

capital goods; or

(b) export of same products manufactured in different units of the licence holder;

or

(c) through third party exports made by an exporter or manufacturer on behalf of

the licence holder by exporting the same product and in such cases, inter- alia

the shipping bills shall indicate name of both the third party and the licence

holder; or

(d) making supplies of manufactured product in terms of paragraph 5.4 of the

Foreign Trade Policy; or

(e) export of other goods manufactured by the importer;

(ii) in relation to importers rendering services, means, receiving payments in freely convertible

foreign currency for services rendered through the use of capital goods :



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Provided that in respect of units holding licence or authorisation both as manufacturer

exporter and service provider, the export obligation may be fulfilled either by export of products

specified in sub-clause ( i ) or by receiving payments in freely convertible foreign currency for

services rendered through the use of such capital goods.

Provided further that in respect of Group Company as defined in paragraph 9.28 of the

Foreign Trade policy where licence has been issued to any one of such Group Company, the

export obligation may also be fulfilled by export of manufactured goods by any other company(s)

belonging to such Group Company:

Providedalso that in respect of service providers in the Port Handling sector, the export

obligation may be fulfilled by earning service charges in Indian rupees which are otherwise

considered as free foreign exchange by the Reserve Bank of India:

Providedalso that in respect for hotels the export obligation may also be fulfilled by

Managed Hotels as defined in paragraph 9.36 of the Foreign Trade Policy.

(iii) shall be, over and above, the average level of exports achieved by the licencee in the

preceding three licencing years for same and similar products


Concessional duty of 5% on Capital goods, components and spares imported under the EPCG

Scheme - EXIM Policy 2002-07 - duty saved criteria

[Notfn. No. 55 /03-Cus. dt. 1.4.2003 as amended by Notfn. Nos. 84/03, 97/03, 134/03, 140/03, 29/04, 63/04, 46/05, 77/05, 97/05, 41/06, 63/07, 116/07, 65/08, 125/08,19/09].



so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty

of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act,

1975 (51of 1975) as is in excess of the amount calculated at the rate of five percent advalorem

and from the whole of the additional duty andspecial additional duty leviable thereon respectively

under sections 3 and 3A of the said Customs Tariff Act.

2. The exemption under this notification shall be subject to the following conditions namely:-

(1) that the goods imported are covered by a valid licence issued under the Export Promotion

CapitalGoods (EPCG) Scheme in terms of Chapter 5 of the Export and Import Policy permitting

import of goods at the rate of five percent duty and the said licence is produced for debit by the

proper officer of customs at the time of clearance:

Provided that for import of spare parts specified at Sr.No.4 of the said Table, the validity

period of the licence shall be deemed to be the period permitted for fulfilment of the export

obligation in full;

(2) that the importer executes a bond in such form and for such sum and with such surety orsecurity as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner

of Customs binding himself to fulfil export obligation on FOB basis equivalent to eight times the

duty saved on the goodsimported as may be specified on the licence, or for such higher sum as



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may be fixed by the Licensing Authority, within a period of eight years from the date of issue of

licence, in the following proportions, namely:-

_______________________________________________________________________________________S.No. Period from the date of issue of licence Proportion of total export obligation_______________________________________________________________________________________

1 2 3

_______________________________________________________________________________________

1. Block of 1st and 2nd year Nil

2. Block of 3rd and 4th year 15%



_______________________________________________________________________________________

Provided that where the duty saved is not less than Rs.100 crores, or where the licence is issuedto units in the agri export zone as may be notified by the licensing authority, the export obligation

shall be fulfilled with in a period oftwelve years from the date of issue of licence in the following

proportions, namely:-

_______________________________________________________________________________________

S.No. Period from the date of licence Proportion of total export obligation

_______________________________________________________________________________________

1 2 3

_______________________________________________________________________________________

1. Block of 1st, 2nd, 3rd, 4th and 5th year Nil

2. Block of 6th, 7th and 8th year 15%

3. Block of 9th and 10th year 35%4. Block of 11th and 12th year 50%

_______________________________________________________________________________________

Provided further that where a sick unit is notified by the Board for Industrial and Financial

Reconstruction or where a rehabilitation scheme is announced by the concerned State Government

in respect of sick unit for its revival, the export obligation may be fulfilled in terms of Paragraphs

5.5.1 of the Export and Import Policy.

Provided also that export obligation of a particular block may be set off against the excess exports

made in the said preceding block(s);

(3) that the importer produces within 30 days from the expiry of each block from the date ofissue of licence or within such extended period as the Deputy Commissioner of Customs or

Assistant Commissioner of Customs may allow, evidence to the satisfaction of the Deputy

Commissioner of Customs or Assistant Commissioner of Customs showing the extent of export

obligation fulfilled , and where the export obligation of any particular block is not fulfilled in terms

of the preceding condition, the importer shall within three months from the expiry of the said

block pay duties of customs of an equal amount equal to that portion of duties leviable on the

goods but for the exemption contained herein which bears the same proportion as the unfulfilled

portion of the export obligation bears to the total export obligation together with interest at the

rate of15% per annum from the date of clearance of the goods;

(4) that the capital goods imported, assembled or manufactured are installed in the importersfactory or premises and a certificate from the jurisdictional Deputy Commissioner of Central

Excise or Assistant Commissioner of Central Excise as the case may be, is produced confirming



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installation and use of capital goods in the importers factory or premises, within six months from

the date of completion of imports or within such extended period as the said Deputy Commissioner

of Customs or Assistant Commissioner of Customs may allow:

Provided that in the case of ,-

(i) manufacturer exporter and merchant exporter having supporting manufacturer (s) or

vendor(s);


products; and

(iii) importer rendering services;

the capital goods may be installed at the factory or premises of such other person whose

name and address are endorsed on the licence referred to in condition (1) and where thebond for full difference of duty, if necessary, in terms of condition (2) , with a bank

guarantee is executed by the importer and such other person binding themselves jointly

and severally to fulfil the export obligation and all other conditions of this notification

and to pay duty with interest at the rate of 15% per annum in case of default;

(5) that the imports and exports are undertaken through sea ports at Mumbai, Kolkata, Cochin,

Magdalla, Kakinada, Kandla, Mangalore, Marmagoa, Madras, Nhava Sheva, Paradeep, Pipavav,

Sikka, Tuticorin, Visakhapatnam, Dahej, Mundhra, Nagapattinam, Okha, Bedi (including Rozi-Jamnagar), Muldwarka, Porbander, Dharamtar, Vadimar and Haldia (Halida Dock Complex of

Kolkata Port) and Krishnapatnam or through any of the airports at Ahmedabad, Bangalore,

Bhubaneswar, Mumbai, Kolkata, Coimbatore, Delhi, Hyderabad, Jaipur, Madras, Srinagar,Trivandrum, Varanasi, Nagpur, Cochin, Rajasansi (Amritsar), Lucknow (Amausi), Indore and

Dabolim (Goa) or through any of the Inland Container Depots at Agra, Bangalore, Coimbatore,

Delhi, Faridabad, Gauhati, Guntur, Hyderabad, Jaipur, Jallandhar, Kanpur, Ludhiana, Moradabad,

Nagpur, Pimpri (Pune), Pitampur (Indore), Surat, Tirupur, Varanasi, Nasik, Rudrapur (Nainital),

Dighi (Pune), Vadodara, Dauladtabad, (Wanjarwadi and Maliwada), Waluj (Aurangabad),

Anaparthy (Andhra Pradesh), Salem, Malanpur, Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad,

Bhiwadi, Madurai, Bhilwara, Pondicherry, Garhi Harsaru, Bhatinda, Dappar (Dera Bassi), Chheharata

(Amritsar), Karur, Miraj, Rewari, Bhusawal, Jamshedpur, Surajpur, Dadri, Tuticorin, Kundli, Bhadohi,

Raipur, Mandideep (District Raisen), Durgapur (Export Promotion Industrial Park), Babarpur and

Loni (District Gaziabad) or through the Land Customs Station at Ranaghat, Singhabad, Raxaul,

Jogbani, Nautanva (Sonauli), Petrapole, Mahadipur, Nepalganj Road, Dawki, Agartala, Sutarkhandi,Amritsar Rail Cargo, Attari Road, Hilli, Ghojadanga and Changrabandha or Special Economic

Zone as specified in the notification issued under section 76A of the Customs Act, 1962 (52 of

1962).

(6) notwithstanding anything contained in condition (3) above, where the Licensing Authority

grants extension of block wise period for any block(s) or overall period of fulfillment of export

obligation upto a period of two years or regularization of shortfall in export obligation, not

exceeding five percent of such export obligation, the said block-wise period or overall period of

export obligation shall be extended/ condoned by the Deputy Commissioner of Customs or

Assistant Commissioner of Customs, as the case may be:

Provided that in respect of sick units as specified in the second proviso to condition (2)

above, extension of overall period of export obligation shall not be allowed.



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3. Where the goods specified in the said Table are found defective or unfit for use, the said goods

may be re-exported back to the foreign supplier within 3 years from the date of payment of duty

on the importation thereof:

Provided that at the time of re-export, the goods are identified to the satisfaction of the

Deputy Commissioner of Customs or Assistant Commissioner of Customs as the goods which

were imported.

4. where the total exports of a sector or product group during the year 2007-08 has declined by

more than 5% as compared to the year 2006-07, the average export obligation of the licencee for

2007-08 may be reduced proportionate to the reduction in exports of that particular sector /

product group during 2007-08 as against 2006-07.

TABLE____________________________________________________________________________________________S.NO. Description of goods____________________________________________________________________________________________1 2

____________________________________________________________________________________________

1. Capital goods for pre production, production and post production including second

hand capital goods upto 10 years old.

2. Capital goods in SKD/CKD conditions to be assembled into capital goods by the importer.

3. Components of capital goods required for assembly or manufacture of capital goods by

the importer.

4. Spare parts of goods specified at Serial Nos.1,2,and 3 as actually imported and required

for maintenance of capital goods so imported, assembled, or manufactured.

5 Spares for the existing plant and machinery of the licence holder.

____________________________________________________________________________________________

Explanation - In this notification,-

(1) Capital Goods has the same meaning as assigned to it in Paragraph 9.10 of the Export and

Import Policy;

(2) Export and Import Policy means the Export and Import Policy 2002-2007 published vide

notification of the Government of India in the Ministry of Commerce and Industry, No.1/

2003 dated the 31st March, 2003 as amended from time to time;

(3) Licensing Authority means the Director General of Foreign Trade appointed under section

6 of the Foreign Trade (Development and Regulation) Act,1992 (22 of 1992) or an officer

authorised by him to grant a licence under the said Act;


(i) in relation to importers other than those rendering services, means exports, to a place

outside India, of products manufactured with the use of capital goods imported, assembled

or manufactured in terms of this notification:



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Provided that export obligation may also be fulfilled by ,-

(a) export of same products capable or being manufactured with the use of said capital

goods; or

(b) export of same products manufactured in different units of the licence holder; or

(c) through third party exports made by an exporter or manufacturer on behalf of the

licence holder by exporting the same product and in such cases, inter-alia the

Shipping bills shall indicate name of both the third party and the licence holder; or

(d) making supplies of same product in terms of sub- paragraphs (a) (b) (d) (e) (f) (g) (h)

(i) and (j) of paragraph 8.2 of the Export and Import Policy; or

(e) export of other goods manufactured by the importer;

(ii) in relation to importers rendering services, means, receiving payments in freely convertibleforeign currency for services rendered through the use of capital goods.

Provided that in respect of units holding license both as manufacturer exporter and

service provider, the export obligation may be fulfilled either by export of products specified in

clause (i) or by receiving payments in freely convertible foreign currency for services rendered

through the use of such capital goods.

Provided further that in respect of group companies as defined in the Companies Act,

1956 (1 of 1956), where licence has been issued to any one of the group company, the export

obligation may also be fulfilled by export of any goods/services by any other company(s) belonging

to the said group:

Provided also that in respect of service providers in the Port Handling sector, the export

obligation may be fulfilled by earning service charges in Indian rupees which are otherwise

considered as free foreign exchange by the Reserve Bank of India.

(iii) shall be, over and above, the average level of exports achieved by the licencee in the

preceding three licencing years for same and similar products.


Concessional duty of 5% on Capital goods, components and spares imported under the (EPCG)Scheme EXIM Policy 2002-2007.

[Notfn. No. 44/02-Cus. dt. 19.4.2002 as amended by Notfn. No. 113/02, 116/02, 44/03, 29/04,65/04, 65/08].



so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty


1975 (51of 1975) as is in excessofthe amount calculated at the rate offive percent ad valoram and

from the whole of the additional duty and special additional duty leviable thereon respectively

under sections 3 and 3A of the said Customs Tariff Act.



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2. The exemption contained in above paragraph, shall be subject to the following conditions

namely:-

(1) The goods imported are covered by a valid licence issued under the Export Promotion

Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Export and Import Policy permitting

import of goods at the rate of five percent duty and the said licence is produced for debit by the

proper officer of the customs at the time of clearance;

Provided that for the import of spare parts, the validity period of the licence shall be

deemed to be the period permitted for fulfilment of the export obligation in full;

(2) The importer executes a bond in such form and for such sum and with such surety or

security as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of

Customs binding himself to fulfil export obligation equivalent to five times the CIF value of the goodsimported on FOB basis, as specified in the licence, or for such higher amount as may be fixed by the

Licensing Authority or for such amount as may be fixed by the Licensing Authority in terms of clause

(i) of Paragraph 5.4 of the Export and Import Policy, 2002-2007, within a period ofeight years from the

date of issue of licence, in the following proportions, namely:-

_______________________________________________________________________________________

S.No. Period from the date of issue of licence Proportion of total export

obligation

_______________________________________________________________________________________

1 2 3

_______________________________________________________________________________________

1. Block of 1st and 2nd year Nil2. Block of 3rd and 4th year 15%



_______________________________________________________________________________________

Provided that where the CIF value of licence is not less than Rs.100 crores, or where the

license is issued to Units in the agri export zones as may be notified by the Director General of

Foreign Trade in the Ministry of Commerce and Industry, the export obligation shall be fulfilled

within a period of12 years from the date of issue of licence in the following proportions, namely:-

_______________________________________________________________________________________

S.No. Period from the date of issue of licence Proportion of total exportobligation

_______________________________________________________________________________________

1 2 3

_______________________________________________________________________________________

1. Block of 1st , 2nd, 3rd, 4th & 5th year Nil




_______________________________________________________________________________________

Provided further that where a sick unit notified by the Board for Industrial and FinancialReconstruction (BIFR) is subsequently taken over by another unit for revival, the export obligation

may be fulfilled within a period of 12 years from the date of issue of license:



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Provided also that the export obligation of particular block may be set off against the

excess exports made in the said preceding block(s);

(3) the importer produces within 30days from the expiry of each block from the date of issue

of licence or within such extended period as the Assistant Commissioner of Customs or Deputy

Commissioner of Customs may allow, evidence to the satisfaction of the Assistant Commissioner

of Customs or Deputy Commissioner of Customs showing the extent of export obligation fulfilled

, and where the export obligation of any particular block is not fulfilled in terms of the preceding

condition, the importer shall within three months from the expiry of the said block pay duties of

customs of an equal amount equal to that portion of duties leviable on the goods but for the

exemption contained herein which bears the same proportion as the unfulfilled portion of the

export obligation bears to the total export obligation together with interest at the rate of15% per

annum from the date of clearance of the goods;

(4) the capital goods imported, assembled or manufactured are installed in the importers

factory or premises and a certificate from the jurisdictional Assistant Commissioner of Central

Excise or Deputy Commissioner of Central Excise or an independent Chartered Engineer, as the

case may be, is produced confirming installation and use of capital goods in the importers

factory or premises, within six months from the date of completion of imports or within such

extended period as the said Assistant Commissioner of Customs or Deputy Commissioner of

Customs may allow:

Provided that in the case of ,-

(i) manufacturer exporter and merchant exporter having supporting manufacturer (s)or vendor(s),


products,and

(iii) importer rendering services.

the capital goods may be installed at the factory or premises of such other person

whose name and address are endorsed on the licence referred to in condition (i) and where the

bond for full difference of duty, if necessary, in terms of conditions (2) , with a bank guarantee is

executed by the importer and such other person binding themselves jointly and severally to fulfil

the export obligation and all other conditions of this notification and to pay duty with interest in

case of default;(5) notwithstanding anything contained in condition (3) where the Licensing Authority

grants an extension of block wise period for any block(s) or overall period of fulfilment of export

obligation upto a period of two years or regularization of shortfall in export obligation, not

exceeding five percent of such export obligation, the said block-wise period or overall period of

export obligation may be extended and the said shortfall in export obligation be condoned by the

Assistant Commissioner of Customs or Deputy Commissioner of Customs:

Provided that in respect of licence holder units affected by the earthquake in the State

of Gujarat in the month of January 2001, the Licensing Authority may grant extension in the

overall period of export obligation up to one more year:

Provided further that in case of a license holder unit referred to in the first proviso, having

overall export obligation period of 13 years and in case of other licence having export obligation



13/74

v816

period of 12 years, extension of overall period of export obligation shall not be allowed.

3. where the goods are found defective or unfit for use, the said goods may be re-exported

back to the foreign supplier within 3 years from the date of payment of duty on the importation

thereof:


Assistant Commissioner of Customs or Deputy Commissioner of Customs as the goods which

were imported.


by more than 5% as compared to the year 2006-07, the average export obligation of the licencee

for 2007-08 may be reduced proportionate to the reduction in exports of that particular sector /


TABLE

_______________________________________________________________________________________

S.NO. Description of goods

_______________________________________________________________________________________

1 2

_______________________________________________________________________________________

1. Capital goods.

2. Capital goods in SKD/CKD conditions to be assembled into capital goods by the

importer.

3. Components of capital goods required for assembly or manufacture of capital goods

by the importer.

4. Spare parts not exceeding twenty percent of the value of goods specified at Serial

Nos. 1,2,and 3 as actually imported and required for maintenance of capital goods

so imported, assembled, or manufactured.

_______________________________________________________________________________________

Explanation - In this notification,-

(1) Capital Goods means any plant, machinery, equipment and accessories required

for

(a) manufacture or production of other goods, including packaging machinery

and equipments, refractories, refrigeration equipment, power generating sets,

machine tools, catalysts for initial charge, and equipment and instruments fortesting, research and development, quality and pollution control;

(b) use in manufacturing, mining, agriculture, marine, aquaculture, animal

husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and

sericulture;

(c) rendering services;

(2) Export and Import Policy means the Export and Import Policy 2002-2007

published vide notification of the Government of India in the Ministry of Commerce, No.1/2002-

2007 dated the 31st March, 2002;

(3) Licensing Authority means the Director General of Foreign Trade appointedunder section 6 of the Foreign Trade (Development and Regulation) Act,1992 (22 of 1992) or an



14/74

v817

officer authorised by him to grant a licence under the said Act;


(i) in relation to importers other than those rendering services, means exports, to

a place outside India, of products manufactured with the use of capital goods

imported, assembled or manufactured in terms of this notification:

Provided that export obligation may also be fulfilled by

(a) export of same products capable of being manufactured with the use

of said capital goods; or

(b) export of same product manufactured in different units of the licence

holder; or

(c) through third party exports made by an exporter or manufacturer onbehalf of the licence holder by exporting the same product and in such cases,

inter-alia the Shipping bills shall indicate name of both the third party and the

licence holder; or

(d) making supplies of same product in terms of sub- paras (a) (b) (d) (e)

(f) (g) (h) (i) and (j) of paragraph 8.2 of the Export and Import Policy;

(ii) in relation to importers rendering services; means, receiving payments in freely

convertible foreign currency for services rendered through the use of such

capital goods.

(iii) means, export of goods in terms of the notification of the Government of India

in the Ministry of Commerce and Industry (Department of Commerce) No.28(RE-2003)/2002-2007 dt. 28th January. 2004.

(iv) shall be, over and above, the average level of exports achieved by the licencee

in the preceding three licencing years for same and similar products.


Concessional duty of 5% on Capital goods, components of capital goods and spares imported

under (EPCG) scheme - EXIM Policy 1997-2002 - CIF Criteria.

[Notfn. No. 49/00-Cus. dt.27.4.2000 as amended by Notfn. Nos.120/00, 49/02, 113/02, 116/02,

44/03 , 29/04, 65/04, 65/08].



so to do hereby exempts goods specified in the Table annexed hereto from so much of the duty of

customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975

(51 of 1975) as is in excess of the amount calculated at the rate of5% ad valorem and from the

whole of the additional duty and special additional duty leviable thereon respectively under

sections 3 and 3A of the said Customs Tariff Act.

2. The exemption contained in paragraph 1, shall be subject to the following conditions,

namely:-(1) The goods imported are covered by a valid licence issued under the Export Promotion



15/74

v818

Capital Goods (EPCG) Scheme in terms of paragraph 6.2 of the Export and Import Policy permitting

import of goods at the rate of 5% duty and the said licence is produced for debit by the proper

officer of the customs at the time of clearance:

Provided that for the import of spare parts, the validity period of the licence shall be

deemed to be the period permitted for fulfilment of the export obligation in full.


security as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner

of Customs binding himself to fulfil export obligation equivalent to five times the CIF value of the

goods imported on FOB basis, or four times the CIF value of capital goods on Net Foreign

Exchange basis as specified in the licence, or for such higher amount as may be fixed by the

Licensing Authority or for such amount as may be fixed by the Licensing Authority in terms of

clause (i) of Paragraph 5.4 of the Export and Import Policy, 2002-2007, within a period ofeight yearsfrom the date of issue of licence, in the following proportions, namely:-

S.No. Period from the date of Proportion of total

issue of licence export obligation

1 2 3

1. Block of Ist and 2nd year Nil




Provided that where the CIF value of licence is not less than Rs. 100 crores, the export

obligation shall be fulfilled within a period of12 years from the date of issue of licence in the

following proportions, namely:

S.No. Period from the date of Proportion of total

issue of licence export obligation

1 2 3

1. Block of Ist ,2nd, 3rd, 4th and 5th year Nil


3. Block of 9th and 10th year 35%4. Block of 11th and 12th year 50%

Provided further that where a sick unit notified by the Board for Industrial and Financial

Reconstruction (BIFR) is subsequently taken over by another unit for revival, the export obligation

may be fulfilled within a period of 12 years from the date of issue of license:

Provided also that export obligation of a particular block may be set off by the excess

exports made in the said preceding blocks(s);

(3) The importer produces within 30 days from the expiry of each block of two years from

the date of issue of licence or within such extended period as the Assistant Commissioner ofCustoms or Deputy Commissioner of Customs may allow, evidence to the satisfaction of the

Assistant Commissioner of Customs or Deputy Commissioner of Customs showing the extent of



16/74

v819

export obligation fulfilled, and where the export obligation of any particular block of two years is

not fulfilled in terms of the preceding condition, the importer shall within three months from the

expiry of the said block pay duties of customs of an equal amount equal to that portion of duties

leviable on the goods but for the exemption contained herein which bears the same proportion as

the unfulfilled portion of the export obligation bears to the total export obligation together with

interest at the rate of15% per annum from the date of clearance of the goods.

(4) The importer shall, if he fails to discharge a minimum of 25% of the export obligation

prescribed for any particular block of two years for two consecutive blocks, be liable to pay

forthwith the whole of the duties of customs leviable on the goods imported but for the exemption

contained in this notification together with interest at the rate of15% per annum from the date

of clearance of the goods.

(5) The capital goods imported, assembled or manufactured are installed in the importersfactory or premises and a certificate from the jurisdictional Assistant Commissioner of Central

Excise or Deputy Commissioner of Central Excise or any independent Chartered Engineer, as the

case may be, is produced confirming installation and use of capital goods in the importer's factory

or premises, within six months from the date of completion of imports or within such extended

period as the said Assistant Commissioner of Customs or Deputy Commissioner of Customs may

allow.

Provided that in the case of,

(i) manufacturer exporter and merchant exporter having supporting manufacturer(s)/

vendor(s),


products, and(iii) importer rendering services, the capital goods may be installed at the factory or premises,

of such other person whose name and address are endorsed on the licence referred to in condition

(1) and where the bond for full difference of duty, if necessary, in terms of condition (2), with a

bank guarantee is executed by the importer and such other person binding themselves jointly

and severally to fulfil the export obligation and all other conditions of this notification and to pay

duty with interest in case of default.

(6) Notwithstanding anything contained in conditions (3) and (4), where the Licensing

Authority grants extension of block-wise period for any Block(s) or overall period of fulfilment of

export obligation upto a period of two years or regularisation of shortfall in export obligation, not

exceeding 5% of such export obligation, the said block-wise period or overall period of exportobligation may be extended and the said shortfall in export obligation be condoned by the

Assistant Commissioner of Customs or Deputy Commissioner of Customs.

Provided that in respect of licence holder units affected by the earthquake in the State of

Gujarat in the month of January 2001, the Licensing Authority may grant extension in the overall

period of export obligation up to one more year:

Provided further that in case of a licence holder unit referred to in the first proviso, having



3. Where the goods are found defective or unfit for use, the said goods may be re-exportedback to the foreign supplier within 3 years from the date of payment of duty on the importation

thereof.



17/74

v820


Assistant Commissioner of Customs or Deputy Commissioner of Customs as the goods which

were imported.


by more than 5% as compared to the year 2006-07, the average export obligation of the licencee

for 2007-08 may be reduced proportionate to the reduction in exports of that particular sector /


TABLE

_____________________________________________________________________________________________


1 2

1. Capital goods.

2. Capital goods in SKD/CKD condition to be assembled into capital goods by theimporter.

3. Components of capital goods required for assembly or manufacture of capital goods

by the importer.

4. Spare parts not exceeding 20% of the value of goods specified at serial Nos. 1, 2 and

3 as actually imported and required for maintenance of capital goods so imported,

assembled, or manufactured.

Explanation In this notification,

(1) "Capital Goods" means any plant, machinery, equipment and accessories required for

(a) manufacture or production of other goods, including packaging machinery and

equipments, refractories, refrigeration equipment, power generating sets, machine tools, catalystsfor initial charge, and equipment and instruments for testing, research and development, quality

and pollution control;

(b) use in manufacturing, mining, agriculture, marine, aquaculture, animal husbandry,

floriculture, horticulture, pisciculture, poultry, viticulture and sericulture;

(c) rendering services;

(2) "Export and Import Policy" means the Export and Import Policy 1997-2002 published

vide notification of the Government of India in the Ministry of Commerce, No.1 (RE-99)/1997-

2002, dated the 31st march, 2000.

(3) "Licensing Authority" means the Director General of Foreign Trade appointed under

section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer

authorised by him to grant a licence under the said Act;

(4) "export obligation",

(i) in relation to importers other than those rendering services, means export to a place

outside India of products manufactured with the use of capital goods imported, assembled or

manufactured in terms of this notification or making of supplies of such products in terms of

clauses (a), (b), (d), (e), (f) and (g) of paragraph 10.2 of the Export and Import Policy; and

(ii) in relation to importers rendering services, means receiving payments in freely convertible

foreign currency for services rendered through the use of such capital goods;

(iii) means, export of goods in terms of the notification of the Government of India in the

Ministry of Commerce and Industry (Department of Commerce) No.28(RE-2003)/2002-2007 dated

28th January, 2004.



18/74

v821

(iv) shall be, over and above, the average level of exports achieved by the licencee in the

preceding three licencing years for same and similar products

(5) "Net foreign exchange", in relation to importers other than those rendering services,

means FOB value of products exported in discharge of obligation in terms of this notification

minus CIF value of inputs used in manufacture thereof where such inputs have been,

(a) imported by the importer directly against a licence; or

(b) procured indigenously, for which the importer claims replenishment under the Duty

Exemption Scheme as contained in Chapter 7 of the Export and Import Policy, and the said foreign

exchange is earned in freely convertible currency.


Concessional Customs duty of 10% on capital goods, components & spares thereof importedunder EPCG scheme - EXIM Policy 1997-2002.

[Notfn. No. 28/97-Cus. dt. 1.4.1997 as amended by Notfn. No. 8/98, 33/98, 42/98, 56/99, 52/00,

49/02,113/02,14/03, 44/03 and 29/04].



so to do, hereby exempts goods as specified in the Table annexed hereto from so much of the duty


1975(51 of 1975) as is in excess ofthe amount calculated at the rate of10% advalorem and from

whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act,

subject to the following conditions, namely:-

(1) The goods imported are covered by a valid licence issued under the Export Promotion

Capital Goods (E.P.C.G.) Scheme in terms of Export and Import Policy (hereinafter

referred to as the said policy) permitting import on payment of duty of Customs at the

rate of 10% and the said licence is produced for debit by the proper officer of the

customs at the time of clearance:

Provided that for the import of spare parts, the validity period of the licence

shall be deemed to be the period permitted for fulfillment of the export obligation in full.


security as may be specified by the Assistant Commissioner of Customs binding

himself to fulfil export obligation equivalent to four times the CIF value of the goods

imported or for such higher sum as may be fixed by the Licensing Authority within a

period offive years from the date of issue of the said licence in the following proportions:-__________________________________________________________________________________________S.No. Period from the date of Proportion of total export

issue of licence obligation_______________________________________________________________________________________1. Ist year Nil

2. 2nd year 10%

3. 3rd year 20%

4. 4th year 30%

5. 5th year 40%_______________________________________________________________________________________



19/74

v822

Provided that where a sick unit notified by the Board for Industrial and Financial

Reconstruction is subsequently taken over by another unit for revival, the export

obligation may be fulfilled within a period of 12 years from the date of issue of said license;

Provided further that export obligation of a particular year may be set off by the

excess exports made in the preceding years.

(3) The importer produces within thirty days of the expiry of each year from the date of

issue of licence from 2nd year or within such extended period as the Assistant

Commissioner of Customs or Deputy Commissioner of Customs may allow, evidence to

the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of

Customs showing the extent of export obligation fulfilled, and where export obligation

of any particular year is not fulfilled in terms of the preceding condition, the importer

shall within three months from the expirty of the said year pay an amount equal to thatportion of the duty leviable on the goods but for the exemption contained herein which

bears the same proportion as the unfulfilled portion of the export obligation bears to

the total export obligation together with interest at the rate of 15% per annum from the

date of clearance of the goods.(As per Sec.120 (1) of Finance Bill 2003 the rate of

15% is applicable w.e.f. 1.4.1997).

(4) The importer shall, if he fails to discharge a minimum of 25% of the export obligation

prescribed for any particular year, for three consecutive years, be liable to pay forthwith

the whole of the duty of customs leviable on the goods imported but for the exemption

contained in this notification together with interest at the rate of 15% per annum from

the date of clearance of the goods. (As per Sec. 120(1) of Finance Bill 2003 the rate of15% is applicable w.e.f. 1.4.1997).

(5) The capital goods imported, assembled or manufactured are installed in the importers

factory and a certificate from the jurisdictional Assistant Commissioner or Deputy

Commissioner of Central Excise is produced within six months from the date of completion

of imports or within such extended period as the said Assistant Commissioner of

Customs or Deputy Commissioner of Customs may allow:

Provided that in case of -

(i) Manufacturer exporter and merchant exporter having supporting manufacturer(s)/vendor(s),

(ii) import of irrigation equipment for use in contract farming for export of

agriculture products, and

(iii) importer rendering services,

the capital goods may be installed at the factory/premises of such other person

whose name and address are endorsed on the licence referred to in condition

(1) and where the bond for full difference of duty, if necessary, in terms of

condition (2) with a Bank Guarantee is executed by the importer and such

other person binding themselves jointly and severally to fulfil the export

obligation and all other conditions of this notification and to pay duty withinterest in case of default;



20/74

v823

Provided further that in case of importers rendering services not required to

be registered with Central Excise authorities, a certificate from independant Chartered

Engineer confirming the installation and use of capital goods in the importers premises

may be produced.

(6) Notwithstanding anything contained in conditions (3) and (4), where the Licensing

Authority grants an extention of yearwise period for any year(s) or overall period of

fulfilment of export obligation upto a period of two years or regularisation of shortfall, in

export obligation not exceeding 5% of such export obligation, the said yearwise period

or overall period of export obligation may be extended and the said shortfall in export

obligation be condoned by the Assistant Commissioner of Customs or Deputy

Commission of Customs.

Provided that in respect of licence holder units affected by the earthquake in

the State of Gujarat in the month of January 2001, the Licensing Authority may grantextension in the overall period of export obligation up to one more year:

Provided further that in case of a license holder unit referred to in the first proviso,

having overall export obligation period of 13 years and in case of other licence having

export obligation period of 12 years, extension of overall period of export obligation shall

not be allowed.

2. Where the goods are found defective or unfit for use, the said goods may be re-

exported back to the foreign supplier within 3 years from the date of payment of duty on the

importation thereof.


Assistant Commissioner of Customs or Deputy Commissioner of Customs as the goods which were

imported.

TABLE

_____________________________________________________________________________________________________


__________________________________________________________________________________________

(1) (2)

___________________________________________________________________________________________

1. Capital goods.

2. Capital goods in SKD/CKD condition to be assembled into capital goods by

the importer.

3. Components of capital goods required for assembly or manufacture of capital

goods by the importer.

4. Spare parts not exceeding 20% of the value of goods specified at serial Nos. 1,2

and 3 actually imported and required for maintenance of the capital goods so

imported, assembled, or manufactured.

___________________________________________________________________________________________

Explanation.- In this notification,-

(i) Capital goods means any plant, machinery, equipment and accessories

required for-



21/74

v824

(a) manufacture or production of other goods, including packaging

machinery and equipments, refractories, refrigeration equipment,

power generating sets, machine tools, catalysts for initial charge,

and equipment and instruments for testing, research and development,

quality and pollution control;

(b) use in manufacturing, mining, agriculture, aquaculture, animal

husbandry, floriculture, horticulture, pisciculture, poultry viticulture

and sericulture;

(c) rendering services ;

(ii) Export and Import Policy means the Export and Import Policy, April, 1997-

March, 2002 published vide notification of the Government of India in the

Ministry of Commerce No. 1/1997-2002, dated the 31st March, 1997.

(iii) Licensing Authority means the Director General, Foreign Trade appointed

under section 6 of the Foreign Trade (Development and Regulation) Act, 1992

(22 of 1992) or an officer authorised by him to grant a licence under the said Act

;

(iv) export obligation,

(a) in relation to importers other than those rendering services, means

export to a place out side India of products manufactured with the use

of capital goods imported, assembled or manufactured in terms of this

notification or making of supplies of such products in terms of clauses(a), (b), (d), (f) and (g) of paragraph 10.2 of the Export and Import Policy.

(b) in relation to importers rendering services, means receiving payments

in freely convertible foreign currency for services rendered through the

use of such capital goods; and

(c) means, export of goods in terms of the notification of the Government

of India in the Ministry of Commerce and Industry (Department of

Commerce) No.28(RE-2003)/2002-2007, dated the 28th January, 2004.


Nil Customs duty & 10% additional duty on Capital goods, components and spares thereof etc.imported under EPCG scheme - EXIM Policy 1997-2002.

[Notfn. No. 29/97-Cus. dt.1.4.1997 as amended by 71/97, 89/97, 9/98, 33/98, 42/98, 60/98, 62/98,

66/98, 74/98, 31/99, 56/99, 80/99, 92/99, 122/99, 20/00, 52/00, 58/01, 49/02, 113/02, 116/02, 44/

03, 29/04 and 65/04].



so to do, hereby exempts goods specified in the Table annexed hereto from whole of the duty

of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act,

1975 (51 of 1975) and from so much of theadditional duty leviable thereon under section 3 of the

said Customs Tariff Act, as is in excess of the amount calculated at the rate of10% of the value

of goods:



22/74

v825

Provided that where the said goods are required for:-

(i) the manufacture of leather garments, textile garments (including knitwears),

agro products and products ofhorticulture and floriculture and poultry and

bio-tech product, marine productandsoftwareor

(ii) rendering services by hotel industry and tourism industry.

such goods shall be exempt from the whole of the additional duty leviable thereon

under section 3 of the said Customs Tariff Act.

2. The exemption contained in paragraph 1 shall be subject to the following conditions,

namely:-

(1) The goods imported are covered by a valid licence issued under the Export

Promotion Capital Goods (E.P.C.G.) Scheme in terms of Export and ImportPolicy permitting import of goods free of duty and the said licence is produced

for debit by the proper officer of the customs at the time of clearance:

Provided that for the import of spare parts, the validity period of the licence

shall be deemed to be the period permitted for fulfillment of the export obligation

in full.

(2) The importer executes a bond in such form and for such sum and with such

surety or security as may be specified by the Assistant Commissioner of

Customs or Deputy Commissioner of Customs binding himself to fulfil export

obligation equivalent to six times the CIF value of the goods imported on FOBbasis, or five times of the CIF value on Net Foreign Exchange basis as specified

in the licence, or for such higher amount as may be fixed by the Licensing

Authority or for such amount as may be fixed by the Licensing Authority in terms

of clause (i) of Paragraph 5.4 of the Export and Import Policy, 2002-2007, within a

period of eight years from the date of issue of licence in the following

proportions:-

___________________________________________________________________________________

S.No. Period from the date of issue of licence Proportion of total export obligation

___________________________________________________________________________________

1 2 3

_________________________________________________________________________________1. Block of 1st and 2nd year NIL




___________________________________________________________________________________

Provided that where the CIF value of licence is not less than Rs.100 crores,

the export obligation shall be fulfilled within a period of12 years from the date of issue

of licence in the following proportions, namely:-



23/74

v826

_____________________________________________________________________________________

S.No. Period from the date of issue of licence Proportion of Total Export

Obligation

_____________________________________________________________________________________

1 2 3

_____________________________________________________________________________________

1. Block of 1st, 2nd, 3rd, 4th and 5th Year Nil

2. Block of 6th, 7th and 8th Year 15%

3. Block of 9th and 10th Year 35%

4. Block of 11th and 12th Year 50%

__________________________________________________________________________________

Provided further that where a sick unit notified by the Board for Industrial and

Financial Reconstruction (BIFR) is subsequently taken over by another unit for revival,

the export obligation may be fulfilled within a period of 12 years from the date of issue oflicence:

Provided also that export obligation of a particular block may be set off by the

excess export made in the said preceding block(s).

Provided also that in case of a licence of CIF value of Rupees one crore or more

but less than twenty crores, where the licence is issued,-

(a) with an obligation to export products ofelectronics, food processing, garments,

leather, sport goods, gem and jewellery, agriculture, animal husbandry, floriculture,

horticulture, pisciculture, viticulture, poultry, sericulture, bio-tech, engineering, textileand chemicals sectors, or

(b) to tourism industry for rendering services,

the export obligation shall be required to be discharged in six years from the date of

issue of licence and the proportion of total export obligation for the block of 1st and 2nd

year, 3rd and 4th year and 5th and 6th year shall respectively be 15%, 35% and 50%;

Provided also that in case of licence ofCIF value of Rs. Ten lakhs or more but less than

twenty crores, where the licence is issued with an obligation to export products of

software sector, the export obligation shall be required to be discharged in six years

from the date of issued of licence and the proportion of total export obligation for theblock of 1st and 2nd year, 3rd and 4th year and 5th and 6th year respectively be 15% ,

35% and 50%;

3. The importer produces within 30 days from the expiry of each block of two years from

the date of issue of licence or within such extended period as the Assistant Commissioner of

Customs may allow, evidence to the satisfaction of the Assistant Commissioner of Customs

showing the extent of export obligation fulfilled, and where the export obligation of any

particular block of two years is not fulfilled in terms of the preceding condition, the importer

shall within three months from the expiry of the said block pay duties of customs of an equal

amount equal to that portion of duties leviable on the goods but for the exemption contained

herein which bears the same proportion as the unfulfilled portion of the export obligation bearsto the total export obligation together with interest at the rate of15% per annum from the date




24/74

v827

4. The importer shall, if he fails to discharge a minimum of 25% of the export obligation

prescribed for any particular block of two years, for two consecutive blocks, be liable to pay

forthwith the whole of the duty of customs leviable on the goods imported but for the exemption

contained in this notification together with interest at the rate of15% per annum from the date


5. The importer shall, if he fails to import goods, including the spares permitted for import

during the entire period of export obligation, for a minimum value of twenty crores of rupees within

two years from the date of issue of the licence or within such extended period as the licensing

authority may allow, be liable to pay forthwith the whole of the duties of customs leviable on the

goods imported but for exemption contained in this notification together with interest at the

rate of 24% per annum from the date of clearance of the goods;

Provided that in case of licences issued,-

(a) with an obligation to export products of electronics, food processing, garments,

leather, sport goods, gem and jewellary, agriculture, animal husbandry, floriculture, horticulture,

pisciculture, viticulture, poultry, sericulture, bio-tech, engineering textile and chemical sectors, or

(b) to tourism industry for rendering services,

the minimum value together with the value of the spares specified in the Table annexed hereto shall

be rupees one Crore;

Provided further that in case of licences issued with an obligation to export products of

software sector, the minimum value together with the value of the spares specified in the Table

annexed hereto shall be rupees Ten lakhs.

Provided also that the aforesaid conditions of minimum value of import which is rupees

twenty crores, or rupees one crore, or rupees ten lakhs, as the case may be, shall be deemed to have

been complied with where the shortfall in import is within 10% of the limits so prescribed.

6. The capital goods imported, assembled or manufactured are installed in the importers

factory and a certificate from the judisdictional Assistant Commissioner of Central Excise or

Deputy Commissioner of Central Excise is produced withinsix months from the date of completion

of imports or within such extended period as the said Assistant Commissioner of Customs or

Deputy Commissioner of Customs may allow:

Provided that in case of -

(i) manufacturer exporter and merchant exporter having supporting manufacturer

(s)/vendor(s).

(ii) import of irrigation equipment for use in contract farming for export of agriculture

products, and

(iii) importer rendering services, -

the capital goods may be installed at the factory/premises of such other persons whose

name and address are endorsed on the licence referred to in condition (1) and where the bond for

full difference of duty, if necessary, in terms of condition (2) with a Bank Guarantee is executed

by the importer and such other person binding themselves jointly and severally to fulfil the exportobligation and all other conditions of this notification and to pay duty with interest in case of default.



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7. Notwithstanding anything contained in conditions (3) and (4), where the Licensing

Authority grants extention of blockwise period for any block(s) or overall period of fulfilment of

export obligation upto a period of two years or regularisation of shortfall in export obligation not

exceeding 5% of such export obligation, the said blockwise period or overall period of export

obligation may be extended and the said shortfall in export obligation be condoned by the

Assistant Commissioner of Customs or Deputy Commissioner of Customs.

Provided that in respect of licence holder units affected by the earthquake in the State

of Gujarat in the month of January 2001, the Licensing Authority may grant extension in the overall

period of export obligation up to one more year:

Provided further that in case of a license holder unit referred to in the first proviso, having



TABLE

_____________________________________________________________________________________________________


__________________________________________________________________________________________

1 2

___________________________________________________________________________________________

1. Capital goods.

2. Capital goods in SKD/CKD condition to be assembled into capital goods by

the importer.

3. Components of capital goods required for assembly or manufacture of capital

goods by the importer.4. Spare parts not exceeding 20% of the value of goods specified at serial Nos. 1,2

and 3 actually imported and required for maintenance of the capital goods so

imported, assembled, or manufactured.

___________________________________________________________________________________________

Explanation. - In this notification,-

(1) Capital goods means any plant, machinery, equipment and accessories

required for -

(a) manufacture or production of other goods, including packaging

machinery and equipments, refractories, refrigeration equipment,

power generating sets, machine tools, catalysts for initial charge, andequipment and instruments for testing, research and development,

quality and pollution control;

(b) use in manufacturing, mining, agriculture, marine aquaculture,

animal husbandry, floriculture, horticulture, pisciculture, poultry,

viticulture and sericulture;

(c) in the case of hotel industry, plant, machinery, equipment and

accessories required for rendering services, specified in the Annexure I.

(d) in the case of marine products, plant, machinery, equipment and

accessories, specified in Annexure II;

(e) manufacture of textile products, which are specified in Annexure III,

and

(f) manufacture of chemical products, namely dye and dye intermediates

and drug and drug intermediates, which are specified in Annexure IV;



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(2) Export and Import Policy means the Export and Import Policy April, 1997 -

March 2002 published vide notification of the Government of India in the

Ministry of Commerce, No. 1/1997-2002 dated the 31st March 1997

(3) Licensing Authority means the Director General, Foreign Trade appointed

under section 6 of the Foreign Trade (Development and Regulation) Act, 1992

(22 of 1992) or an officer authorised by him to grant a licence under the said

Act;

(4) export obligation (i) in relation to importers other than hotel industry and

tourism industry, rendering services, means export to a place outside India of

products manufactured with the use of capital goods imported, assembled or

manufactured in terms of this notification or making of supplies of such

products in terms of clauses (a), (b), (d), (f) and (g) of paragraph10.2 of theExport and Import Policy; and

(ii) in relation to hotel industry and tourism industry, rendering services,

means receiving payments in freely convertible foreign currency for

services rendered through the use of such capital goods;

(iii) means, export of goods in terms of the notification of the Government

of India in the Ministry of Commerce and Industry (Department of

Commerce) No. 28 (RE-2003)-2002-2007 dt.28th January, 2004.

(5) Net foreign exchange in relation to importers other than hotel and tourisum

industry, means FOB value of products exported in discharge of obligation interms of this notification minus CIF value of inputs used in manufacture

thereof where such inputs have been -

(a) imported by the importer directly against a licence or

(b) procured indigenously, for which the importer claims replenishment

under the Duty Exemption Scheme as contained in Chapter 7 of the

Export and Import Policy.

(6) Product for the purpose of engineering sector, means -

(a) machine tools, parts &accessories thereof.

(b) automotive components & accessories,

(c) bicycle parts & accessories,(d) hand tools, cutting tools & small tools,

(e) castings and forgings (ferrous & non-ferrous), all sorts,

(f) pumps, electric motors and parts thereof,

(g) fasteners, all types (ferrous and non-ferrous),

(h) fright bars and shafting,

(i) scientific & surgical instruments.

(7) Tourism industry" means, hotels, travel agents, tour operators or tourist

transport operators who are certified as Export House or Trading House or Star Trading House or

Super Star Trading House in terms of notification of the Government of India in the Ministry of

Commerce, No. 33 (RE-98) 1997-2002 dated the 26th November, 1998;



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ANNEXURE - I

1. Cooking Range/Chinese Cooking Range/Griddle Sets (with accessories)

(a) Gas

(b) Electric

(c) Oil Fired

(d) Microwave

2. Steam Kettle/ Boiling Kettles, Pans, Tilting Frying Pans/Boiling Pan

(a) Oil Fired

(b) Microwave

(c) Gas

3. Plate and Cup Lowerator/Warmers/Chafing Dishes with/without Fuel Holders

4. Food Regenerating Equipment

5. Salamanders/Broilers/Grillers/Char Broiler

6. Ovens-Baking/Bakery/Pizza/Convection/Rotary/Rotating/Microwave/Gas/Deck/UnderCounter/Proofing Cabinet/Chambers/Convotherm/Steaming steamer and Overn

Combiation - With/Without Trolley.

7. Deep Fat Fryers:

(a) Gas

(b) Electric

(c) Microwave

(d) Oil Fired

8. Cooking/Steaming/Frying/Broiling/Boiling Machines/Pressure Cooker/Pressureless/

Pressure Steamer/Roasting Machines/Combisteamer:

(a) Gas

(b) Electric(c) Microwave

(d) Oil Fired

9. Bain Maries/Food Pans:

(a) Gas

(b) Electric

(c) Steam Heated

(d) Microwave

10. Refrigerated Display Counters/Racks/Shelves/Cases/Confectionery Show cases/

Cabinets/Carts/Hot & Cold Cabinets/Wine Cabinets.

(a) All Types (with/without Rotary Motor)

(b) Sandwich Unit11. Almond Crushing/Pastry Machines

12. Coffee Machines/Makers with Blenders/Grinders/Espressor

13. Chocolate Melting Machines.

(a) Shaving Machines

(b) Coating Machines

(c) Holding Machines

(d) Tempering Machines

(e) Moulding Machines

14. Dough Mixing and Dividing Machines/Dough Rolling/Sheeting/Kneading Machine/

Flour Sifting Machine

15. Ice-Cream Making Machine/Custard Auto Dispenser/Hardening Cabinet.16. Infra Red Food Warmer/Roll Warmer.



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17. Juice Extractors/Commercial Juicers/Dispensers/Blenders/Mixers (Cream Air Whip)/

Planetary Mixers

18. Pancake/Waffle Iron Machines/Croissant Machine/Pasta Machines

19. Sausage Machines

20. Trollies (AllTypes)/Caddy Modular Trolley

21. Egg Boilers

22. Machines for Slicing/Cutting/Chopping/Mincing/Grinding/Tendering/Buffalo Chopper/

Meat Band Saw

23. Can Opener-Mechanical/Motorised.

24. Ice Cube/Crushing/Flaking Machines/Dispensing Machine/Water & Ice Station

25. Pre-fabricated walk-in cold rooms/freezers with refrigeration equipment with/without

doors proofing units.

26. Dispensers (Hot/Cold Beverages)

27. Potato Peelers/Choppers28. Hot Plates/Coffee Warmer

29. Toasters (Electrical)/Pop-up/Rotary/Slot Pop Down/Conveyor

30. Puree Machines

31. Blast Freezers/Blast Chillers

32. Vacuum Packing Machines

33. Oil Filtering Machines

34. Glass/Dishwashing/Pot-washing Machine with Trollies

35. Kitchen/Bulkware Wash-up Equipment/Flight Catering Wash-up System with conveyors.

36. Vegetable Preparation & Washing Machines.

37. Burnishing Machine/Polishing Machine

38. Smoker/Smoking Oven39. Salad Dryer

40. Glass/Plate Dispenser

41. Waste Food Disposal Machine and Compactors

42. Cotton Candy Machine

43. Refrigerated Food Storage Unit with Mountings/Hi-Loader Unit with/without Chassis/

Flight Catering High Lift/Mobile Hi-Lift Truck Fitted with Refrigerated Food Storage

Equipment for Aircraft Catering

44. Hoods with Built-in Water Circulating System

45. Steam/Hot Water Mixing Gun

46. Filling and Portioning Machines

47. Multi-purpose machines for bakery and confectionary48. Conveyors/Motorised Transport Conveyors for Multi-purpose Washing Machines.

49. Drink Mixers

50. Liquor Control System

51. Exhaust Chimneys

52. Bread Slicing/Buttering Machine/Butter Portioning Machine.

53. Draught Beer Dispensing Unit

54. Hamburger Machine, Pa

Capital Goods as Notified

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