Avoid Falling Flat : Mistakes one can make on obtaining EPCG

EPCG is a term used in India under exports and imports. EPCG means, Export Promotion Capital Goods. EPCG is one of the schemes provided by government of India to importers and exporters to promote exports.

Today we will look at a case related to obtaining EPCG benefit, as to how unawareness about scheme policy as a whole can be harmful for any exporter/importer.

*Please note the name of the firm and their place have been purportedly changed to ensure that their repute is not affected. This a case of unawareness and not of deliberate fraud.

Let’s understand it by an Example

There is a furniture manufacturer exporter in South India which was unaware of the conditions of EPCG as to for how long it is valid and extension of EPCG. Their request was relaxation of the policy under Para 2.58 of the FTP 2015-2020.

# Their Request –

Extension of EPCG License for four years for EPCG license number XXXXXXX, dated 03.02.2010
To condone the delay in filing application for Export Obligation Period (EOP) extension
To condone the procedural lapse of not mentioning the EPCG license number on the Direct Export Shipping Bills.

# What EPCG committee found ?

They did not get export orders to fulfil the Export Obligation (EO) within the specified EOP. They have made substantial direct exports from March 2019 to August 2019 which could have helped in fulfilling the EO to redeem the license. The party is seeking extension in EOP for 4 years.
The delay in seeking the extension for EOP beyond 03.02.2016 was due to the fact that the management was not aware that this license was pending. The delay in applying for extension in EOP may please be condoned.
They have exported the export items as mentioned on the EPCG license but they did not mention it on the shipping bills.

# Verdict…

Rejection : The EPCG committee deliberated upon the case and decided to reject it as there is not merit in the case.

# Conclusion

Therefore, we can understand that how small confusions or overlooking of details or non-compliance with conditions may cause problems and affect the business adversely. Apart from the monetary losses in terms of payment of additional customs duties with interest and penalty which they bore, they also had to spend their precious time.

Hence, consultation can help firms from falling into any such unnecessary troubles.

We at Bizbrains Advisors firmly believe on a saying that most of us had learned in childhood –
‘A stitch in time saves nine!’

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