Action on default in export obligation under the Advance or EPCG authorizations



Facility for suo moto payment of customs duty in case of bona fide default in export obligation  under the Advance / EPCG authorisations 

Action on default in export obligation under the Advance or EPCG authorizationsThe extract of Circular No.  11/2015 – Customs 1st April,  2015 is given under:

The procedure may be adopted by an AH who has obtained acknowledgement from the concerned Regional Authority of its application for regularization of bona fide default in export obligation. The application must show, inter alia, the AH's own/self-calculation of the duty payable for the default in Export Obligation and interest thereon.

During pendency of the detailed calculations by the RA, such an AH may deposit, in cash, the own/self-calculated duty amount, along with interest in cash by challan (showing relevant particulars) in the designated bank at the port where the authorization is registered. One copy of the paid challan shall be submitted to the Customs Authority at the said port which shall update its records; and/or  produce valid duty credit scrip before the Customs Authority at the port where the authorization is registered for debit of the own/self-calculated duty amount.


Such scrip should be one issued underChapter 3 (excluding SHIS, SFIS and AIIS scrips) in terms of FTP (2009-14) or chapter 3 of FTP (2015-20) or be a Post-export EPCG duty remission scheme scrip. The debit shall only be in respect of goods that are permitted to be imported under the relevant scrip. The Customs Authority shall reflect the debit in Customs records and also suitably endorse it on the scrip. However, the AH shall pay the interest in cash in the designated bank at the port where the authorization is registered. One copy of the paid challan shall be submitted to the Customs Authority at the said port which shall update its records.


On receipt of the excess import letter issued by RA after its detailed calculations (indicating inter alia the reported duty deposited/debited and interest paid on self/own calculation basis, if any), the Customs would confirm the actual amount of duty payable for the default in EO and interest thereon and, taking into account the actual deposits/debits already made, would indicate the balance duty etc., if any. The AH shall pay these by the above modes and the Customs Authority shall endorse all the paid challan(s).

On receipt of the redemption letter (indicating, inter alia, details of payments including amount and mode) from RA, the Customs Authority shall reconcile and initiate the prescribed actions for releasing the Bond / BG.

Complete details of Circular is given here:


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KANNAN: Check list for complete export obligation to submit DGFT

GAUTAM M Kothari: In case you submitted all export performance epcg scheme and you half of the duty saved amount forefifited still Dgft demand the double the value of imported capital goods imported. And all this happened twenty years back how to come out in the absence of original paper s

Hymanth: I would like to have you guidance on the Procedure for closure of cases of default in Export Obligation. I will elaborate briefly about my case. We have started the company in 2005-2006. For the purpose of setting up and buying the capital goods ( Multilayer Film Plant), I have opted for the EPCG scheme where in I procured the machinary locally by Amending the licence in favour of domestic supplier. So instead of notional customs duty( Rs 12.5 Lakh) I had saved the actual excise duty in tune of 6.50 Lakh. for which i have provided the Bang guarantee of Rs 6.50 Lakh only. Unfortunately in 2012, our Managing Director at that time had diagnosed with Brain tumour. Considering he is sole person who was managing the company, We were struggling to run our company normally. In that chaos we were not able to fulfil the export obligation by 2013 as per the condition of licence. Eventually our Director has to undergo the brain tumour surgery in April 2016. Later on he also underwent the Radiation therapy ans Chemo Therapy for treat the Brain tumour. Also He was forced to resign Director due till health and now his father who has no experience of business is appointed as director as this business is kind of small family business. So we had to stopped our manufacturing activities and wind up the business. We have to now surrender all our various registration like VAT, PF, Excise , Service Tax, We would be also like to redeem our EPCG licence by paying back our dues or benefits which we enjoyed that was saving excise duty of Rs 6.50 lakh ( approx) ." We would definitely like to pay the benefit we enjoyed which was Excise Duty of Rs 6.50 Lakh and reasonable interest but as per the Handbook and relevant clauses in policy , We have to pay the notional duty ( 12.5 Lakh) and interest upon it which amounts to almost Rs 35 Lakh. The interest portion is what seems unrealistic and agasint the natural justice ( i.e. interest being the more that the principle)

Vijay Watere: how can we know that our EPCG obligation has been completed

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