Notification No. 44/2002, Dated 19th April, 2002

19th April, 2002.

Notification No.44 / 2002 – Customs

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) as is in excess of the amount calculated at the rate of five percent ad valoram and from the whole of the additional duty and special additional duty leviable thereon respectively under sections 3 and 3A of the said Customs Tariff Act.

2. The exemption contained in above paragraph, shall be subject to the following conditions namely :-

(1) The goods imported are covered by a valid licence issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Export and Import Policy permitted import of goods at the rate of five percent duty and the said licence is produced for debit by the proper officer of the customs at the time of clearance;

Provided that for the import of spare parts, the validity period of the licence shall be deemed to be the period permitted fulfillment of the export obligation in full;
(2) The importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself to fulfil export obligation equivalent to five times the CIF value of the goods imported on FOB basis, as be fixed be the licence, or for such higher sum as may be fixed by the Licensing Authority, within a period of eight years from the date of issue of licence, in the following proportions, namely:-

S.No.	Period from the date of issue of licence	Proportion of total export obligation
(1)	(2)	(3)
1. 2. 3. 4.	Block of 1^st and 2^nd year Block of 3^rd and 4^th year Block of 5^th and 6^th year Block of 7^th and 8^th year	Nil 15% 35% 50%

Provided that where the CIF value of licence is not less than Rs.100 crores, the export obligation shall be fulfilled with a period of 12 years from the date of issue of licence in the following proportions, namely :-

S.No.	Period from the date of issue of licene	Proportion of total export obligation
(1)	(2)	(3)
1. 2. 3. 4.	Block of 1^st, 2^nd ,3^rd ,4^th and 5^th year Block of 6^th,7^th and 8^th year Block of 9^th and 10^th year Block of 11^th and 12^th year	Nil 15% 35% 50%

Provided further that Export Obligation of a particular block may be set off against the excess exports made in the said preceding block;

(3) the importer produces within 30days from the expiry of each block from the date of issue of licence or within such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow, evidence to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs showing the extent of export obligation fulfilled , and where the export obligation of any particular block is not fulfilled in terms of the preceding condition, the importer shall within three months from the expiry of the said block pay duties or customs of an equal amount equal to that portion of duties leviable on the goods but for the exemption contained herein which bears the same proportion as the unfulfilled portion of the export obligation bears to the total export obligation together with interest at the rate of 24% per annum from the date of clearance of the goods;
(4) the capital goods imported, assembled or manufactured are installed in the importer’s factory or premises and a certificate from the jurisdictional Assistant Commissioner of Central Excise or an independent Chartered Engineer, as the case may be, is produced confirming installation and use of capital goods in the importer’s factory or premises, within six months from the date of completion of imports or within such extended period as the said Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow:

Provided that in the case of ,-
(i) manufacturer exporter and merchant exporter having supporting manufacturer (s) or vendor(s),
(ii) import of irrigation equipment for use in contract farming for export of agricultural products , and

the capital goods may be installed at the factory or premises of such other person whose name and address are endorsed on the licence referred to in conditions (i) and where the bond for full difference of duty, if necessary, in terms of conditions (2) , with a bank guarantee is executed by the importer and such other person binding themselves jointly and severally to fulfil the export obligation and all other conditions of this notification and to pay duty with interest in case of default;

(5)
notwithstanding anything contained in conditions (3) where the Licensing Authority grants an extension of block – wise period for any block(s) or overall period of fulfillment of export obligation upto a period of two years or regularization of shortfall in export obligation, not exceeding five percent of such export obligation, the said block-wise period or overall period of export obligation be condoned by the Assistant Commissioner of Customs or Deputy Commissioner of Customs:

Provided that where the CIF value of licence is not less than Rs.100 crores extension of overall period of export obligation shall not be allowed;

3. where the goods are found defective or unfit for use, the said goods may be re-exported back to the foreign supplier within 3 years from the date of payment of duty on the importation thereof:

Provided that at the time of re-export the goods are identified to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs as the goods which were imported.

Table

S.NO.	Description of goods
(1)	(2)
1.	Capital good.
2.	Capital goods in SKD/CKD conditions to be assembled into capital goods by the importer.
3.	Components of capital goods required for assembly of manufacture of capital goods by the importer.
4.	Spare parts not exceeding twenty percent of the value of goods specified at Serial Nos. 1,2,and 3 as actually imported and required for maintenance of capital goods so imported, assembled, or manufactured.

Explanation - In this notification,-

(1) "Capital Goods" means any plant, machinery, equipment and accessories required for-

(a) manufacture or production of other goods, including packing machinery and equipment’s, refractories , refrigeration equipment and instruments for testing, research and development, quality and pollution control;

(b) use in manufacturing, mining, agriculture, marine, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and sericulture;

(c) rendering services;
(2) "Export and Import Policy" means the Export and Import Policy 2002-2007 published vide notification of the Government of India in the Ministry of Commerce, No.1/2002-2007 dated the 31^st March, 2002;
(3) "Licensing Authority" means the Director General, Foreign Trade (Development and Regulation) Act,1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act;
(4) "export obligation", -

(i) in relation to importers other than those rendering services, means exports, to a place outside India, of products manufactured with the use of capital goods imported, assembled or manufactured in terms or this notification:
Provided that export obligation may also be fulfilled by

(a) export of same products capable or being manufactured with the use of said capital goods; or

(b) export of same product manufactured in different units of the licence holder; or

(c) through third party exports made by an exporter or manufacturer on behalf of the licence holder by exporting the same product and in such cases, inter-alia the Shipping bills shall indicate name of both the third party and the licence holder; or

(d) making supplies of same product in terms of sub- paras (a) (b) (d) (e) (f) (g) (h) (1) and (j) or paragraph 8.2 of the Export and Import Policy;

(ii) in relation to importers rendering services; means, receiving payments in freely convertible foreign currency for services rendered through the use of such capital goods.

Alok Jha
Under Secretary to the Government of India

F.No.605/201/2001 -DBK

Notification No. 44/2002, Dated 19th April, 2002

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(1)	The goods imported are covered by a valid licence issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Export and Import Policy permitted import of goods at the rate of five percent duty and the said licence is produced for debit by the proper officer of the customs at the time of clearance;
	Provided that for the import of spare parts, the validity period of the licence shall be deemed to be the period permitted fulfillment of the export obligation in full;
(2)	The importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself to fulfil export obligation equivalent to five times the CIF value of the goods imported on FOB basis, as be fixed be the licence, or for such higher sum as may be fixed by the Licensing Authority, within a period of eight years from the date of issue of licence, in the following proportions, namely:-

(i)	manufacturer exporter and merchant exporter having supporting manufacturer (s) or vendor(s),
(ii)	import of irrigation equipment for use in contract farming for export of agricultural products , and
	the capital goods may be installed at the factory or premises of such other person whose name and address are endorsed on the licence referred to in conditions (i) and where the bond for full difference of duty, if necessary, in terms of conditions (2) , with a bank guarantee is executed by the importer and such other person binding themselves jointly and severally to fulfil the export obligation and all other conditions of this notification and to pay duty with interest in case of default;

(1)	"Capital Goods" means any plant, machinery, equipment and accessories required for-
	(a)	manufacture or production of other goods, including packing machinery and equipment’s, refractories , refrigeration equipment and instruments for testing, research and development, quality and pollution control;
	(b)	use in manufacturing, mining, agriculture, marine, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and sericulture;
	(c)	rendering services;
(2)	"Export and Import Policy" means the Export and Import Policy 2002-2007 published vide notification of the Government of India in the Ministry of Commerce, No.1/2002-2007 dated the 31^st March, 2002;
(3)	"Licensing Authority" means the Director General, Foreign Trade (Development and Regulation) Act,1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act;
(4)	"export obligation", -
	(i)	in relation to importers other than those rendering services, means exports, to a place outside India, of products manufactured with the use of capital goods imported, assembled or manufactured in terms or this notification:
Provided that export obligation may also be fulfilled by
	(a)	export of same products capable or being manufactured with the use of said capital goods; or
	(b)	export of same product manufactured in different units of the licence holder; or
	(c)	through third party exports made by an exporter or manufacturer on behalf of the licence holder by exporting the same product and in such cases, inter-alia the Shipping bills shall indicate name of both the third party and the licence holder; or
	(d)	making supplies of same product in terms of sub- paras (a) (b) (d) (e) (f) (g) (h) (1) and (j) or paragraph 8.2 of the Export and Import Policy;
	(ii)	in relation to importers rendering services; means, receiving payments in freely convertible foreign currency for services rendered through the use of such capital goods.