Special One-time Amnesty Scheme for default in export obligation by EPCG and Advance Authorization Holders

Recently, the Ministry of Commerce and Industry, vide Public Notice No. 2/2023 dated 1

st April 2023, introduced the Amnesty Scheme for default in export obligation by EPCG (i.e., under EPCG Scheme) and Advance Authorization Holders (i.e., under Advance Authorization Scheme). This article briefly covers eligibility criteria, time limit, benefits, and procedures to be followed under the Special One-time Amnesty Scheme for default in export obligation by EPCG and Advance Authorization Holders. Notably, the gist of both EPCG and the Advance Authorization Scheme is summarized hereunder –

Export Promotion Capital Goods Scheme (EPCG Scheme)	Advance Authorization Scheme
Import capital goods either at a concessional rate or NIL rate of duty, which are required to manufacture export products. The export obligation under EPCG Scheme – The export obligation under EPCG = 6 times of duty exempted. Such export obligation needs to be fulfilled within six years from the date of issuance of EPCG authorization.	Import of duty-free inputs, which are required to be incorporated in the goods which are to be further exported. The export obligation under Advance Authorization Scheme is to be fulfilled within 18 months from the date of issue of authorization or within such period as may be notified by DGFT.

Eligibility criteria under the Amnesty Scheme –

The inclusion under the Amnesty Scheme is briefed hereunder –

EPCG authorization and Advance Authorization issued under the Foreign Trade Policy 2009-2014 till 31st March 2015;
EPCG authorization and Advance Authorization issued under the Foreign Trade Policy 2004-2009 and before provided the Export Obligation period (whether original or extended) was valid beyond 12th August 2013;
Cases have already been adjudicated or are pending adjudication (either original or under appeal).

It is important to note that cases under investigation or adjudicated for fraud, misdeclaration, or unauthorized diversion of material/ capital goods are not included under the Amnesty Scheme. Further, even the cases wherein the entire duty amount and interest have already been deposited are not included under the Amnesty Scheme.

The time limit for availing of the Amnesty Scheme –

Following are the two crucial time limits that the applicant needs to keep in mind –

The registration of the authorization holder interested in availing benefits under the Amnesty Scheme via the DGFT website is to be completed on or before 30th June 2023; and
The requisite payment of customs duty and interest under the Amnesty Scheme will be made by 30th September 2023.

Benefits available under the Amnesty Scheme –

The benefit available under the Amnesty Scheme is summarized hereunder

Payment of maximum interest is capped at 100% of the duty exempted.
Interest is not payable on the amount of additional customs duty. Further, interest is also not payable on special additional customs duty.

Thus, under the Amnesty Scheme, the applicant is offered benefits in the form of reduced interest. Accordingly, the applicant will have to make payment in the following manner –

Cases, wherein the entire export obligation is not fulfilled	Cases wherein, the partial export obligation is not fulfilled
Here, the applicant must pay the requisite customs duty and interest to the Jurisdictional Customs Authority. Post payment of duty + interest, the applicant must submit the proof of payment to the Regional Authority.	Here, as there is partial default in export obligation, the applicant will have to apply to the Regional Authority to know the details of the default. Upon receipt of default details, the applicant must pay the requisite customs duty and interest to the Jurisdictional Customs Authority. Post payment of duty + interest, the applicant must submit the proof of payment to the Regional Authority.

Procedure to be followed under the Amnesty Scheme –

The authorization holder willing to avail of the benefit under the Amnesty Scheme is required to follow below steps –

STEP 1 – Visit the DGFT website
STEP 2 – Navigate –
Services > Advance Authorization/ DFIA (for Advance Authorization holder); or
Services > EPCG (for EPCG holder).
STEP 3 – Select ‘Closure of Advance Authorization’ or ‘Closure of EPCG’;
STEP 4 – Select checkbox, i.e., ‘Amnesty Scheme for One-time settlement of default in export obligation;
STEP 5 – Proceed to apply the closure against respective Advance Authorization or EPCG as per proforma;
STEP 6 – Indicate the respective duty and interest amount to be paid under the ‘Redemption Matrix’ tab;
STEP 7 – Apply.

Once the application is submitted, the same will be examined by the concerned Regional Authority. The Regional Authority shall confirm the shortfall through an online letter. Upon receipt of the online letter, the applicant must make necessary payments to the Jurisdictional Customs Authority. On payment of the requisite amount to the Jurisdictional Customs Authority, the applicant must furnish proof of payment in response to the online letter received from the Regional Authority. Once the proof of payment is received, the Regional Authority may consider granting Export Obligation Discharge Certificate.

CENVAT Credit/ Refund vis-à-vis payment under the Amnesty Scheme –

The Public Notice No. 2/2023 dated 1

st April 2023, through which the Amnesty Scheme is introduced, clearly states that neither CENVAT Credit nor a refund of any amount will be allowed on the duties paid under the Amnesty Scheme. Further, it is also stated that the applicant must give an undertaking stating that they will not file any application either for CENVAT Credit or for a refund of any duty paid under the Amnesty Scheme before any authority or court.

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Frequently Asked Questions

Common questions about EPCG Advance Authorisation Amnesty Scheme.

A: The Special One-time Amnesty Scheme is a recently introduced scheme by the Ministry of Commerce and Industry that allows EPCG (Export Promotion Capital Goods) and Advance Authorization holders who have defaulted on their export obligations to settle their dues by paying a reduced amount of customs duty and interest. This scheme provides a one-time opportunity for defaulters to clear their outstanding export obligations.

A: The Amnesty Scheme is eligible for EPCG and Advance Authorization holders whose authorizations were issued under the Foreign Trade Policy 2009-2014 till 31st March 2015, or under the Foreign Trade Policy 2004-2009, provided the Export Obligation period was valid beyond 12th August 2013. Additionally, cases that have already been adjudicated or are pending adjudication are also eligible.

A: The primary benefit of the Amnesty Scheme is that the interest payable on the duty exempted is capped at a maximum of 100% of the duty exempted. Additionally, no interest is payable on the amount of additional customs duty and special additional customs duty. This essentially reduces the overall financial burden on defaulters.

A: Yes, there are two crucial deadlines to be aware of. The registration of the authorization holder interested in availing the benefits under the Amnesty Scheme must be completed on or before 30th June 2023, via the DGFT website. Furthermore, the requisite payment of customs duty and interest under the Amnesty Scheme must be made by 30th September 2023.

A: Authorization holders willing to avail the benefits under the Amnesty Scheme must follow a step-by-step procedure involving visiting the DGFT website, navigating to the respective services section, selecting the 'Closure' option, and indicating their intent to opt for the Amnesty Scheme. Once the application is submitted, the concerned Regional Authority will examine it and provide further instructions.

A: No, the Public Notice introducing the Amnesty Scheme clearly states that neither CENVAT Credit nor a refund of any amount will be allowed on the duties paid under the Amnesty Scheme. Applicants must provide an undertaking stating that they will not file any application for CENVAT Credit or a refund of duties paid under the Amnesty Scheme.

A: No, cases under investigation or adjudicated for fraud, misdeclaration, or unauthorized diversion of material/capital goods are not included under the Amnesty Scheme. The scheme is intended for genuine defaulters and does not cover cases of willful misconduct.

A: No, cases wherein the entire duty amount and interest have already been deposited are not included under the Amnesty Scheme. The scheme is designed to provide relief to defaulters who have not yet cleared their outstanding dues.

A: Yes, the Amnesty Scheme covers cases where the export obligation has been partially fulfilled. In such cases, the applicant must apply to the Regional Authority to know the details of the default, and then pay the requisite customs duty and interest to the Jurisdictional Customs Authority.

A: After making the necessary payment to the Jurisdictional Customs Authority, the applicant must furnish proof of payment to the Regional Authority in response to the online letter received from them. Once the proof of payment is received, the Regional Authority may consider granting the Export Obligation Discharge Certificate.