As we know the EPCG Scheme (Export Promotion Capital Goods Scheme) is for Duty-free import of Capital Goods/Machinery for producing high-quality goods and services. And the EPCG Scheme comes with the Export Obligation to export finished goods produced from imported capital machinery equal to 6 times of actual duty saved within a period of 6 years from the License issued date.
Watch this short introductory video on the EPCG Scheme; which explains the complex concept of EPCG in an easy to understand manner. It Explains What is EPCG Scheme and its application process; details about Export obligation & Redemption of EPCG License; entire summary and step by step procedures involved in the EPCG scheme.
Installation Certificate under EPCG Scheme
While applying for the EPCG License online, we need to add details mandatorily of supporting manufacturer/ factory premises where the imported capital goods are to be installed. Once the License is issued from DGFT RA and verified from customs, we will import Capital Goods duty-free and from customs, it will be directly moved to the registered factory premises mentioned in the License.
After installing the capital goods at factory premises, a certificate has to be obtained from Jurisdictional Customs authority or an Independent Chartered Engineer at the option of the EPCG License Holder evidencing the installation of machinery under his/her presence and after cross verifying the details with License and actual imported capital goods. This certificate generated by the Independent Chartered Engineer/Customs Authority is called the Installation Certificate under EPCG.
[Don't know, how to apply online for EPCG License, read the step by step procedure for EPCG Online Application here, "How to apply for EPCG License Online"]
Note:
- Import of machinery under the EPCG Scheme has to be completed within 18 months of the License issue date. No further revalidation will be provided.
- If the EPCG License holder opts to obtain an Installation Certificate from Independent Chartered Engineer, then a copy of the same should be forwarded to Customs Authority for their intimation/record.
Why Installation Certificate is required?
Installation Certificate is required because DGFT needs confirmation that the imported capital goods are installed at the said factory premises, and the use of capital goods has been started for production.
The submission of the Installation Certificate to DGFT is an essential aspect of monitoring the EPCG Scheme. DGFT RA verifies the Installation Certificate issued by the Independent Chartered Engineer on a random basis.
How to get an Installation Certificate?
Installation Certificate under EPCG Scheme can be obtained from either Jurisdictional Customs Authority or can be generated by an Independent Chartered Engineer (at the option of EPCG Authorisation holder) having and expertise in that particular domain after cross verifying the details with License and actual import. The Independent Chartered Engineer will check the Imported Capital Goods with respect to the Bill of Entry, whether it is installed in the given factory premises or not? The Installation Certificate will then be issued after thorough checking. The same we have to submit at DGFT RA within a period of six months of actual import.
Installation Certificate Format under EPCG Scheme
Installation Certificate under EPCG Scheme should be printed on the letterhead of the Independent Chartered Engineer.
Installation Certificate Format under EPCG Scheme is given below:
Compliance Associated with Installation Certificate w.r.t DGFT & Customs
As per para 5.04 of HBP 2015-20, the Installation Certificate should be compulsorily submitted to DGFT for their record. As we know, we can import capital goods and spares under the EPCG Scheme. Hence DGFT under the EPCG scheme has given time limits to submit the Installation Certificate to DGFT and below are the details:
- In the case of Capital goods, within a period of 6months from the date of completion of Import, Installation Certificate from Independent Chartered Engineer/Customs Authority should be submitted at DGFT RA by the Authorisation holder.
- And in the case of Spares, the license holder should submit the Installation Certificate within a period of 3 years from the date of import.
- In both cases, a copy of the Installation Certificate should also be submitted at Customs for their record.
- If the authorisation holder fails to provide the Installation Certificate to DGFT within 6 months, then DGFT may allow a one-time extension by a maximum period of 12 months with a penalty of Rs. 5000/-. Hence total time available for submission of the Installation Certificate to DGFT will be 6+12 = 18 months.
- Due to some reasons, the imported capital goods need to be shifted from one factory unit to another during the export obligation period, in such cases fresh new Installation Certificate should be submitted at DGFT RA within a period of six months of shifting. But the shifting is only allowed if the address to which it is shifted, is mentioned in the IEC and RCMC.
Latest EPCG Installation Certificate Notification
Recently, as per latest DGFT’s Public Notice No. 01/2015-20 dt. 07.04.2020, we have received one-time relaxation till 31.03.2021 under EPCG Scheme for submission of the Installation Certificate to DGFT. Under this Public Notice, DGFT gives a chance to those exporters who failed to submit the Installation Certificate within the given time frame.
Therefore, as per the latest notification, for EPCG Licenses issued before 31.03.2015, the EPCG License holder can submit the Installation Certificate till 31.03.2021 without penalty of Rs. 5000/-. Licenses issued on or after 01.04.2015 will have a time period of 6+12 = 18 months only for submission of the Installation Certificate to DGFT.
Note: The date mentioned above of relaxation, i.e. 31.03.2021, may change from time to time. Kindly refer to the latest notification.
Why us?
Afleo Consultants is a leading Import Export DGFT consulting firm having a client base across India. We offer services like Issuance and Redemption for Export Promotion Capital Goods (EPCG) Scheme, Services Export from India Scheme (SEIS), Merchandise Export From India Scheme (MEIS), DFIA – Issuance and Transferability, Advance License Application & Redemptions, SION fixation/revision, RoDTEP Scheme, RoSCTL Scheme and obtaining Restricted Import/Export license from DGFT HQ.
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