Chatroom: EO fulfilment can start from date of issue of EPCG authorisation

Our JDGFT, Coimbatore office, says that under the EPCG scheme, only those exports done after installation of capital goods would be considered for discharge of the export obligation. Is this correct?

No. There is no such stipulation in the FTP or in the related Customs notification. The export obligation period starts from the date of issue of EPCG authorisation, and so the right to export towards fulfilment of the export obligation should also start from the date of issue of the authorisation.

In fact, Explanation (C)(I) in the related Customs notification 16/2015-Cus dated April 1, 2015 (now 26/2023-Cus dated April 1, 2023) says that “export obligation” means the obligation on the importer to export out of India goods manufactured, or capable of being manufactured, or services rendered by the use of capital goods imported in terms of this notification. So, you can export goods capable of being manufactured by the use of capital goods imported under the EPCG scheme. It implies that whether the exports are done before or after the installation of capital goods is not at all relevant.

Our bank had received the inward remittance towards payment of our export bill, but due to some internal disruptions, delayed crediting our account by over a week. Is there any way we can ask them to compensate for the delay and, if so, on what basis?

Yes. You can seek compensation on the basis of Rule 2.5 of the FEDAI (Foreign Exchange Dealers Association of India) Rules, 2019. It says that on receipt of credit advice/statement of the Nostro account and compliance with guidelines, requirements of the Bank and FEMA, the Bank shall transfer funds for the credit of the exporter’s account within two working days.

If the time limit stipulated above is not observed, the Bank shall pay compensation for the delayed period at the minimum interest rate charged on export credit; compensation for adverse movement of the exchange rate, if any, shall also be paid per the bank’s compensation policy.

We had obtained advance authorisations under Para 4.07 of HBP 2015-20 and got ad hoc norms fixed by the Norms Committee also. Now, Para 4.12 (vi) of HBP 2023 says that norms ratified by any Norms Committee (NC) in the O/o DGFT on or after April 1, 2023, in respect of any Advance Authorisation obtained under paragraph 4.07, will be valid for a period of three years from the date of ratification. Does it mean that for the norms letter received before April 1, 2023, we cannot consider applying for advance authorisations on a repeat basis?

In my opinion, Para 4.12 (vi) of HBP 2015-20 will continue to hold good, where the validity of ad hoc norms fixed was two years from the date of ratification, and the same applicant exporter was allowed to avail of advance authorisations on a repeat basis. So, for norms notified before April 1, 2023, the two-year time limit will apply. The change is that for norms notified after April 1, 2023, a three year-time limit will apply.