Circular No. 45 /2016 - Customs
F.No.605/60/2013-DBK
Government of India
Ministry of Finance, Department of Revenue
Central Board of Excise and Customs
Drawback Division
New Delhi, dated 23" September 2016
To
Pr. Chief Commissioners/Pr. Directors General
Chief Commissioners/Directors
General
Pr. Commissioners/Commissioners
(All under CBEC)
Madam/Sir,
Subject: Incorrect simultaneous issuance of dual benefit of Zero duty EPCG and SHIS to
exporters under the FTP 2009-14 — option providing flexibility to return either
benefit.
The undersigned is directed to say that instances of simultaneous issuance of zero duty EPCG
and SHIS were detected by DRI and highlighted to the DGFT. Subsequently, the CAG of India also
mapped the concurrent availing of SHIS and zero duty EPCG not being in line with FTP 2009-14
provisions. The issue revolves around wordings in para 5.1A HBP (27.08.2009), para 5.1(f) FTP
(5.6.2012), para 5.1(b) FTP (18.4.2013), para 3.10.3 and 9.3 (HBP).
2. After inter-Departmental consultations, that also took into account wordings in conditions
specified in Customs EPCG/Post Export EPCG notification Nos. 101/2009-Cus, 102/2009-Cus,
22/2013-Cus, 5/2013-Cus, 23/2013-Cus and SHIS notification No. 104/2009-Cus and clarifications
made in Circular Nos. 26/2009-Cus and 38/2010-Cus, the Public Notice No. 30/2015-2020 dated
8.9.2016 (copy attached) has been issued by the Department of Commerce (DGFT) with the
concurrence of Department of Revenue. The aspects notified in the Public Notice are self-explanatory.
The Ministry directs that pending issues related to the simultaneous issuance or availing of zero duty
EPCG/Post Export EPCG and SHIS shall be decided in terms of the said Public Notice.
3. It was noted by the Ministry that consequent to issuance of the said Public Notice, the bar
related to dual issuance placed in Customs notifications insofar as they relate to the FTP 2015-20
become unnecessary. These have been removed through Notification No. 52/2016-Customs dated
23.9.2016 that has suitably amended Notification Nos. 104/2009-Cus, 16/2015-Cus and 17/2015-Cus.
4, The trade and officers should be guided by the Commissioners.
Encl: as above
(Dinesh Kumar Gupta)
Director
Tel: 23360581
To be published in the Gazette of India Extraordinary
{Part-l, Section -1)
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Public Notice No. 30/2015-2020
New Delhi dated the 8th September, 2016
Subject: Notification of procedure to be followed in cases of incorrectly issued
simultaneous benefits of Zero Duty EPCG and SHIS in FTP 2009-14 by the
Director General of Foreign Trade in exercise of powers conferred under
Para 2.04 of the Foreign Trade Policy 2015-2020
This Directorate had received references from Directorate of Revenue
Intelligence and various exporters, on the subject of incorrectly issued simultaneous
benefits of Status Holder incentive Scheme (SHIS) and Zero Duty EPCG Authorization
under Foreign Trade Policy 2009-14. The issue involves Para 5.1(b) of FTP and Para
3.10.3(b) of HBP 2009-14. The representations have been examined by this
Directorate in consultation with Department of Revenue and it has been decided
that exporters who have been issued or availed such simultaneous benefit of these
schemes shall be allowed flexibility, to the extent specified in this public notice, to
choose one of the two schemes. The option to return either benefit shall be subject
to the following :-
A. Return of SHIS
In case of return of SHIS (including splits), the unutilized SHIS (part or whole)
may be surrendered by the original holder to whom such SHIS was issued by
surrender of the original SHIS scrip.
The amount of SHIS that has been utilized, by the original applicant to whom
SHIS was issued (who has not transferred the SHIS) shall be refunded in cash (with
interest at the rate prescribed under Section 28AA of Customs Act from the date of
issue of SHIS by the original applicant.
The amount.of SHIS that has been transferred by original applicant shall be
treated as amount of SHIS utilized and treated accordingly including for purpose of
refund and interest payment by original applicant.
In cases where SHIS was issued based on exports of immediately preceding
year and then zero duty £PCG was also issued, and the exporter opts to return the
SHIS, the power under Para 2.58 of FTP 2015-20 in consultation with relevant
Committee would be exercised by DGFT to relax the FTP/HBP provisions requiring
the ‘prior’ return of SHIS.
B. Return of zero duty EPCG/Post Export EPCG
When zero duty EPCG (i.e. all relevant authorizations) has to be returned, the
amount equivalent to the duty forgone shall be refunded in cash with interest at the
rate prescribed —
(a) Rate in EPCG notification if EPCG returned was correctly availed
(b) Rate Under Section 28AA of Customs Act if EPCG returned was incorrectly
availed) by the exporter.
The unutilized zero duty EPCG (whole or part) may be surrendered. Further,
instead of return of zero duty EPCG (i-e. return of all the relevant authorizations), the
exporter may opt to convert zero duty EPCGs issued till 17.4.2013 to 3% EPCGs
(subject to eligibility) by paying the differential duties plus applicable interest (at the
rate prescribed under Section 28AA) from date of clearance of the goods till the date
of payment. In such cases, SHIS scrip need not be surrendered. This option shall not
be available when the zero duty EPCG is already redeemed by DGFT.
When zero duty Post Export EPCG is to be returned, the authorization(s) shall be
surrendered. If any related duty credit scrip(s) against such Zero duty Post Export
EPCG authorization(s) have been issued the same if unutilized may be surrendered
by the original holder [by surrendering the original duty credit scrips}. The amount of
such Post Export EPCG scrip(s) that has been utilized by the original applicant-shall be
refunded in cash (with interest at the rate prescribed under Section 28 AA of
Customs Act from the date of issue of the PE EPCG). The amount of PE EPCG Scrip(s)
that has been transferred shall be treated as amount of Post Export EPCG scrip(s)
utilized and treated accordingly including for purposes of payment of interest by
exporter.
C. Mode of payment
The amount shall be paid back to Government ‘a cash. The facility of debiting the
amount in valid freely transferable duty credit scrip issued under Foreign Trade
Policy or in valid SHIS scrip held by the original holder to whom it was issued, shall be
allowed for paying the refund part. However, interest part shall be always paid in
cash.
D. Time Frame
A time frame of 9 months from provision of option by DGFT is allowed to exporters
for the above.
°
E, No penal action in cases of incorrect issuance
On account of different interpretations on the issue in the past, it has been decided
in consultation with DoR that any erroneous issuance of SHIS/Zero Duty EPCG
Authorisation will be considered bonafide error and no penal action shall be taken.
against exporters by RAs / field formations of Custom, including DRI. The Annexure
provides the proper interpretation on the issuance of SHIS and Zero duty EPCG/PE-
EPCG benefits.
F. Consequential Action by CBEC
The CBEC would be issuing a separate Circular for guidance of its field formations.
Effect of this Public Notice: The exporters who have incorrectly availed simultaneous
benefit of zero percent EPCG and SHIS have been provided an option to surrender
one of the benefits subject to certain conditions.
(Anup Wadhawan)
Director General of Foreign Trade
E-Mail: dgft@nic.in
[Issued from F.No. 01/61/180/41/AM-13/PC3(Pt.)]
Annexure to Public Notice No. 30 /2015-20 dated 08.09.2016
Different Scenarios of incorrect/simultaneous issuance of SHIS & Zero duty EPCG benefits
Glossary :
$1 SHIS issued for exports made in year 1
$2 SHIS issued for exports made in year 2
$3 SHIS issued for exports made in year 3
S4 SHIS issued for exports made in year 4
E Zero duty EPCG scheme availed i.e. issued
N Not taken i.e. not issued
*SHIS issued with one year late cut
**SHIS issued with two year late cut
Different scenarios in different years on issuance of SHIS, 0% EPCG and 0% Post Export EPCG
Year SHIS O%EPCG REMARKS
Issued issued (reference to 0% EPCG includes 0% PE-EPCG import
authorization)
Year | 2009-10 Not Relevant
1
— Year | 2010-11 | $1 E | EPCG issued first. Wrong issuance of SHIS. Si will
2 lapse forever i.e. $1* and $1** will not be available
in future, as E has been availed.
$i E. SHIS issued first. Wrong issuance of EPCG if SHIS
benefit availed was not already surrendered, or
refunded with applicable interest in case utilized.
N E $1 will lapse forever i.e. S1* and $1** will not be
available in future, as E has been availed.
$1 \ N Scrip has been correctly issued
N N Not Relevant
Year | 2011-12 | S1* E | EPCG issued first. S1* available if EPCG not availed in
3 2010-11.
| $2 E EPCG issued first. Wrong issuance of SHIS. 52 will
lapse forever i.e. S2* and $2** will not be available
in future, as E has been availed.
| $1*/S2 E | SHIS issued first. S1* available if EPCG not availed in
2010-11. Wrong issuance of EPCG if $2 availed was
not already surrendered or refunded with applicable
interest in case utilized.
N -1E $2 will lapse forever i.e. S2* and $2** will not be
{ available in future, as E has been availed.
S1i* N Scrip has been correctly issued, provided 0% EPCG
has not been availed in 2010-11.
S2 N Scrip has been correctly issued —
| Not Relevant
Year | 2012-13 | $1**
EPCG issued first. $1** available if EPCG not availed
4
in 2010-11.
S2*
EPCG issued first. S2* available if EPCG not availed in |
2011-12.
S3
EPCG issued first. Wrong. issuance of SHIS. 53 will
lapse forever i.e. $3* and S3** will not be available
.
in future, as E has been availed.
S1**/S2*/S3
SHIS issued first. S1** available if EPCG not availed
in 2010-11. $2* available if EPCG not availed in 2011-
42. Wrong issuance of EPCG if S3 availed was not
already surrendered or refunded with applicable
interest in case utilized.
|
N
$3 will lapse forever i.e. S3* and S3** will not be |
available in future, as E has been availed.
S1**
Scrip: has been correctly issued, provided E has not
| been availed in 2010-11.
$2*
3 Scrip has been correctly. issued, provided. E has. not
| been availed in 2011-12.
$3 | Scrip has been correctly issued
N:
| Not Relevant.
Year | 2013-14 | S2** EPCG issued first. $2** available if EPCG not availed
| 5
in 2011-12.
-_
S3*
EPCG issued first. 53" available if EPCG not ‘availed in
2012-13.
$4
EPCG issued first. Wrong issuance of SHIS. $4 will
lapse forever i.e. S4* and s4** will not be available
in future, as E has been availed.
S2**/S$3*/S4
SHIS issued first. $2** available if EPCG not availed in in
2011-12. or $3* available if EPCG not availed in
2012-13. Wrong issuance of EPCG if 54 availed was
not already surrendered or refunded with applicable
interest in case utilized.
)N
| SA will lapse forever i.e. sa* and §4** will not be
available in future, as E has been availed.
$2**
Scrip has been correctly issued, provided E has not
been availed in 2011-12.
S3*
Scrip has been correctly issued, provided E has not |
been availed in 2012-13.
$4
Scrip has been correctly issued.
LN
Not Relevant
Year | 2014-15 | S3** EPCG issued first. S3* available if EPCG not availed
6
in 2012-13.
s4* EPCG issued first. $4* available if EPCG not availed in
2013-14.
|
$3**/SA* SHIS issued first. $3** available if EPCG not availed i n
2012-13. 54* available if EPCG not availed in 2013-
14, _ | | |
N Not relevant as the scheme has already sunset on 31
| March 2013 |
S3** Scrip has been correctly issued, provided E has not
been availed in 2012-13.
s4* Scrip has been correctly issued, provided E has not
been availed in 2013-14
N Not relevant as the SHIS scheme has already sunset
on 31 March 2013
Year | 2015-16 | S4** EPCG issued first. S4** available if EPCG not availed
7
in 2013-14
s4** SHIS issued first. $4** available if EPCG not availed in
| 2013-14.
s4** | Scrip has been correctly issued, provided E has not.
been availed in 2013-14.
N Not relevant as the SHIS scheme has already sunset
on 31 March 2013.
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