MID WEEK CAPSULE : Relaxations in certain existing provisions of policy and procedures

Dear Subscribers/Readers,

It remained always a joy for us to engage our readers in enriching their knowledge through our Online Portal and E-Newsletter. Harping on this, from last week we started a new column MID WEEK CAPSULE in the matter of regulatory aspects relevant to exports and imports. The said knowledge based column will be published on every Wednesday with different Topics.

This column is handled by Mr. Babu Ezhumavil who is known to the trade for long time.He started his career in Baroda with an exporter in 1978. Many companies could use his long experience. His approach to the problem are individual and tailor made but within the legal limits, says some of the trade members who had experienced it.

By Mr. Babu Ezhumavil

For some days in the past, DGFT has come with relaxations in certain existing provisions of policy and procedures.

The composite Fee structure for extensions in export obligation of advance authorisations has been rationalized with lump sum amount replacing the erstwhile system of charging straight away on percentage on unfulfilled value of FOB. This has been amended to pay fee on slab-wise. This is a great relaxation for many applicants. Slabs are notified or identified on CIF value of Advance Authorisations, and no more on the unfulfilled FOB value of exports. Upto  Rs. 2 crores, Above Rs. 2. Crores but below Rs.10 crores and above Rs.10 crores, fees have been fixed Rs.5,000/-, Rs.10,000/-  and Rs.15,000/- respectively. AA issued under Appendix J the extension shall be allowed for a period not more than the half of the stipulated export obligation.

For other categories, one extension upto six months from the date of expiry of export obligation period subject to payment of the composition fees @Rs.5,000/-, Rs.10,000/, Rs.15,000/- as the case may be on the basis of CIF value of the AA. Further extension of a six months period from the date of expiry of first extended period may be allowed by RA subject to further payment of fees on the same scale and value base. In any case RA cannot grant the extension beyond 12 months from the date of expiry of export obligation.

A declaration that the unutilized raw materials has to be accompanied with the application for extension of export obligation period. Still the automatic extension of export obligation period is available for the banned period, if it were banned for any period during the currency of obligation period. There is rider that the amended structure of fee is available to the applications made on or after 19.01.2023 only.

Readers are advised to read and understand the PN No.52/2015-2020 issued on 18.01.2023.

The 53^rd PN issued on 20/01/2023 lists out certain relaxations for EPCG Authorisation Holders. It mentions about two categories. One is “Hotels, Healthcare and Educational Sectors” and those are not of these categories.

Glad news for Hotels, Healthcare and Educational Sectors, that they are not required to maintain the average export obligation for the periods for 2020-21 and 2021-22. No fee to be paid even for extension, but no fee shall be refunded if already obtained the extension. The PN further says “For EPCG authorizations issued for Hotel, Healthcare and Educational sectors, Export Obligation (E0) period may be extended from the date of expiry for the duration equivalent to the number of days ED period falls within 01.02.2020 and 31.03.2022. Such extension shall be granted without payment of composition fees. EO extension already granted if any in terms of Public Notice No. 67/2015-20 dated 31.3.2020 and Notification No. 28/2015-20 dated 23.9.2021 shall be deducted from the extendable EO extension period. ii) In case where EPCG authorisation holder has already obtained EO extension on payment of composition fees, the refund of the composition fees will not be permitted. In addition, any penalties, duties and taxes already paid would also not be refunded.

For EPCG authorisations for other sectors Export Obligation (EO) period may be extended from the date of expiry, for the number of days the existing EO period of an authorisation falls within 01.02.2020 and 31.07.2021. Such EO extension may be granted without payment of composition fees. However, this extension is subject to 5% additional export obligation in value terms (in free Foreign Exchange) on the balance Export obligation as on 31.03.2022. The option to avail EO extension with payment of composition fees under the para 5.17(c) would remain available for these authorizations as per eligibility. In case where EPCG authorisation holder has already obtained 1 E0 extension on payment of composition fees,. Also notable is “In addition, any penalties, duties and taxes already paid would also not be refunded.

Another notable point is that the benefit under para 5.17(h) shall not be applicable in cases where extension of Export Obligation period has been obtained in terms of Public Notice No. 67 dated 31.03.2020 and Notification No. 28 dated 23.09.2021. If the benefits under par 2.58 of FTP has been obtained, then relaxations under 5.17 g & h will not be available. 

Readers are advised to read and understand the PN 53/2015-2020 dated 20.01.2023.

Written by :

Mr. Babu Ezhumavil