'EPCG: Doubts persist over maintaining annual average exports of services'

TNC Rajagopalan answers SME queries related to GST, export and import matters

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We refer to Para 5.04(c) of the FTP 2023, which stipulates that under the EPCG scheme the annual average exports of same or similar products for preceding three years is required to be maintained. In the related customs notification no.26/2023-Cuss dated April 1, 2023 also, at Explanation C (i), the reference is to annual average exports of same or similar products during the preceding three years. They make no references to services. Does it mean that the annual average exports need not be maintained for export of services?

Your inference is not incorrect. However, at S.No.4 of the application form for EPCG authorisations ANF5A, the exporter is required to give FOB Value of exports/services rendered for the same/similar product/services (INR) for preceding three years. So, you have to give those details and invariably, the annual average exports will get endorsed as a condition in the EPCG authorisation. In the CA certificate format prescribed at Appendix-5B, there is a reference to export of services but in the table at S.No.VI, the details of previous three years exports called for refer only to export of same/similar products and not export of services. You can take a view that the provisions in the forms ANF-5A/Appendix-5B cannot bind you to maintain the previous three years annual average exports of services, when Para 5.04(c) of the FTP and the related Customs exemption notification do not refer to previous three years exports of services but you may not make much headway with the authorities.

We refer to condition (vii) introduced at import policy condition 4 of Chapter 84 of ITC (HS) through the commerce ministry notification no.38/2023 dated October 19, 2023. It says that private entities importing the said IT hardware for supply to central government or agencies, undertakings owned and controlled by central government, for defence or security purposes are exempted from therequirement of authorisation. So, can we import computers, laptops etc. without an authorisation and supply to public sector undertakings by furnishing to the Customs their end-use certificate that the said IT hardware items are required for the purposes of security of their plant, administrative premises and residential colonies?

In my opinion, you can do so for supply to undertakings that are owned and controlled by the central government. It is, however, better to seek a clarification whether the import for supply to the undertakings that are partly owned but controlled by the central government are also covered under the said exemption.

Can we reject the documents received under LC on the grounds that although the description of goods given in the invoice is as per LC, it also contains additional data?

If the description in the invoice along with the additional data appears to refer to a different nature, classification or category of the goods, then you can reject the documents. The normal rule is to ignore any additional data provided the additional data does not conflict with the data in the LC or other documents.

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