Act Name/Rule Name: Foreign Trade Policy 2023
Applicable Rule/Section: Para 5.10(c) of Handbook of Procedures 2015-20
Type of Document: Policy Circular
Date: 13th December 2024
Policy Circular No.: 10/2024-25
The EPCG Scheme (Export Promotion Capital Goods Scheme) allows Indian exporters to import capital goods (machinery and equipment) at reduced or zero customs duty. In exchange, the exporter must meet an export obligation, typically exporting goods worth several times the value of the imported goods within a set timeframe, usually 6 years. The scheme helps boost production efficiency and enhances the competitiveness of Indian exports.
The High Court of Ahmedabad, through a judgment dated 21.12.2023, set aside Policy Circular No. 22/2015-20 (29.03.2019), concerning the EPCG Scheme. Following this, the Supreme Court dismissed the Special Leave Petition (SLP) filed by the Union of India on 02.08.2024, upholding the judgment.
As a result of the judicial decision, it has been clarified that the amendment to Para 5.10(c) of the Handbook of Procedures 2015-20 (Mid-Term Review) will apply only to third-party exports made under EPCG Authorizations issued on or after 05.12.2017. This amendment is prospective in nature and does not affect past authorizations.
Exporters and relevant authorities must ensure that the updated provisions of Para 5.10(c) are followed only for EPCG Authorizations granted from 05.12.2017 onward. This will impact how third-party exports are treated under the EPCG Scheme moving forward.
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