'Declaration exempt for freely exportable trade samples'

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We had imported certain machinery under Export Promotion Capital Goods (EPCG) Authorisation. We could not export in our name to maintain even annual average exports. We did some job work for a merchant exporter (who supplied the necessary raw material and other inputs) and manufactured goods using the machines imported under the EPCG Authorisation, which were exported by him. So far as specific export obligation (EO) is concerned, the EPCG number and date have been mentioned on shipping bills representing exports by the merchant exporter, but in most of the shipping bills for maintaining annual average EO, EPCG number and date or the name of manufacturer are not mentioned. We can prove our exports through third party from our account books and documents as well as of the merchant exporter. Under the circumstances, what are the chances for redemption of EPCG Authorisation? It may be noted that both annual average and specific EO are fulfilled through third party exports.

For counting exports made through a third party, whether for maintaining annual average exports or towards specific EO, the conditions stipulated in Para 5.10 of the Handbook of Procedures, Vol. 1 must be fulfilled. One of the conditions is that the shipping bills must contain the name of the authorisation holder and supporting manufacturer, if any, and the EPCG authorisation number. Therefore, your best recourse is to approach the Policy Relaxation Committee and seek regularisation on the basis of the supporting documents.
 
We need to export our product as a sample free of cost, the value of which is $1,000. As per Regulation 4 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, it can be made without furnishing the declaration required under Regulation 3 of the said Regulation. The limit for free sample as stated under Regulation 4 (d) has been increased to $25,000 through RBI Notification No.FEMA.116/2004-RB dated March 25, 2004. Customs has also issued Circular No. 53/2004-Cus dated October 13, 2004 to clarify the above matter. Now at the time of export, Customs demand GR waiver from bank. Please clarify whether we need to get the GR Waiver certificate from an authorised dealer (AD-I) Bank, even though the value of free sample is below $25,000. We also want to know whether this limit of $25,000 is for the whole financial year.

Exemption filing declaration and free of cost supplies are different. For freely exportable trade samples, supplied free of payment, declaration is exempted (Regulation 4(a)). For goods of value up to $25,000, declaration is exempted for every shipment (Regulation 4 (d)), but you have to realise and repatriate export proceeds. The bank’s grant of waiver of declaration applies for export of goods free of cost, for export promotion up to two per cent of the average annual exports during the preceding three financial years, subject to a ceiling of Rs 5 lakhs. For status holder the limit is two per cent of the annual average realisation during the preceding three financial years, or Rs10 lakhs, whichever is less.