Conditions for exemption of goods specified in the Table 1

[TO BE PUBLISHED IN
THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

Notification No. 16/ 2015 – Customs

New Delhi, the 1^st
April, 2015.

G.S.R.
252 (E) – 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 1 annexed hereto, from,-

(i)            
the whole of the duty of
customs leviable thereon under the First Schedule to the Customs Tariff
Act, 1975 (51 of 1975) (hereinafter referred to as the said Customs Tariff Act), and

(ii)           
the whole of the additional duty leviable thereon under section
3 of the said Customs Tariff Act, when specifically claimed by the importer.

2.        
The exemption under this notification shall be subject to the following
conditions, namely:-

(1)  that the goods imported are covered by a
valid authorisation issued under the Export Promotion Capital Goods (EPCG)
Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of
goods at zero customs duty;

(2)  that the authorisation is registered
at the port of import specified in the said authorisation and the goods, which
are specified in the Table 1 annexed hereto, are imported within validity of
the said authorisation and the said authorisation is
produced for debit by the proper officer of customs at the time of clearance:  

Provided
that the goods imported should not fall under clause (f) of paragraph 5.01 of
Foreign Trade Policy:

Provided
further that the catalyst for one subsequent charge shall be allowed, under the
authorisation in which plant, machinery or equipment and catalyst for initial
charge have been imported, except in cases where the Regional Authority issues
a separate authorisation for catalyst for one subsequent charge after the
plant, machinery or equipment and catalyst for initial charge have already been
imported;

(3)  that the  importer is not issued, in
the year of issuance of zero duty EPCG authorisation, the duty credit scrips
under the erstwhile Status Holder Incentive Scrip (SHIS) scheme. In the case of
applicant who is Common Service Provider (herein after referred as CSP), the
CSP or any of its specific users should not be issued, in the year of issuance
of the zero duty EPCG authorisation, the duty credit scrips under SHIS. This
condition shall not apply where already availed SHIS benefit that is unutilised
is surrendered or where benefits availed under SHIS that is utilised is
refunded, with applicable interest, before issue of the zero duty EPCG
authorisation. SHIS scrips which are surrendered or benefit refunded or not issued
in a particular year for the reason the authorisation has been issued in that
year shall not be issued in future years also;

(4)
that the goods imported shall not be
disposed of or transferred by sale or lease or any other manner till export
obligation is complete;

(5)
that the importer executes a bond in such
form and for such sum and with such surety or security as may be specified by
the Deputy Commissioner of Customs or Assistant Commissioner of Customs binding
himself to comply with all the conditions of this notification as well as to
fulfill export obligation on Free on Board (FOB) basis equivalent to six times
the duty saved on the goods imported as may be specified on the authorisation,
or for such higher sum as may be fixed or endorsed by the
Regional Authority in terms of Para 5.16  of
the Handbook of Procedures,  within a
period of six years from the date of issue of Authorisation, in the following
proportions, namely :-

Provided
that in case the authorisation is issued to a CSP, the CSP shall execute the
bond with bank guarantee and the bank guarantee shall be equivalent to 100% of
the duty foregone, and the bank guarantee shall be given by CSP or by anyone of
the users or a combination thereof, at the option of the CSP:

Provided
further that the export obligation shall be 75% of the normal export obligation
specified  above when fulfilled by export of following green
technology products, namely, equipment for solar energy decentralised and grid
connected products, bio-mass gassifier, bio-mass or waste boiler, vapour
absorption chillers, waste heat boiler, waste heat recovery units, unfired heat
recovery steam generators, wind turbine, solar collector and parts thereof, water
treatment plants, wind mill and wind mill turbine or engine, other generating
sets – wind powered, electrically operated vehicles – motor cars, electrically
operated vehicles – lorries and  trucks, electrically operated
vehicles – motor cycle and  mopeds, and solar cells:

Provided
also that for units located in Arunachal Pradesh, Assam, Jammu and
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, the export
obligation shall be 25% of the normal export obligation specified above:

Provided
also that where a sick unit holding  EPCG
authorisation is notified by the Board for Industrial and Financial
Reconstruction (BIFR) or where a rehabilitation scheme is announced by the
concerned State Government in respect of sick unit holding  EPCG authorisation for its revival, the
export obligation may be fulfilled within time period allowed by the
Regional Authority as per the rehabilitation package prepared by the operating
agency and approved by BIFR or rehabilitation department of State Government.
In cases where the time period is not specified in the rehabilitation package,
the export obligation may be fulfilled within the period specified in
paragraph 5.05 of the Foreign Trade Policy;

(6)
that if the importer does not claim
exemption from the additional duty leviable under section 3 of the Customs
Tariff Act, 1975, the additional duty so paid by him shall not be taken for
computation of the net duty saved for the purpose of fixation of export
obligation provided the Cenvat credit of additional duty paid has not been
taken;

(7)
that the importer,  including a CSP, produces within 30 days from
the expiry of each block from the date of issue of authorisation or within such
extended period as the Deputy Commissioner of Customs or Assistant Commissioner
of Customs may allow, evidence to the satisfaction of the Deputy Commissioner
of Customs or Assistant 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 condition (5), the importer shall within three
months from the expiry of the said block pay duties of customs equal to an
amount which bears the same proportion to the duties leviable on the goods, but
for the exemption contained herein, which the unfulfilled portion of the export
obligation bears to the total export obligation, together with interest at the
rate of fifteen per cent. per annum from the date of clearance of the goods;

(8) that
where the importer fulfills 75% or more of the export obligation as specified
in condition (5) [over and above 100% of the average export obligation]
within half of the period specified for export obligation as mentioned in
condition (5), his balance export obligation shall be condoned and he
shall be treated to have fulfilled the entire export obligation;

(9)  that the capital goods imported, assembled or
manufactured,  are installed  and put to use, after their import, in the
importer’s  factory or premises anda certificate from the jurisdictional Deputy
Commissioner of Central Excise or Assistant Commissioner of Central Excise or
from an independent Chartered Engineer, is produced within a period of six
months from the date of completion of imports before the Deputy Commissioner of
Customs or Assistant  Commissioner of
Customs at the port of import confirming 
such installation and use of the capital goods in the importer’sfactory or premises:

Provided
that where the Regional Authority grants extension of the said period beyond
six months from the date of completion of imports, the said overall period
shall be extended by the Deputy Commissioner of Customs or Assistant
Commissioner of Customs as the case may be:

Provided further that an importer
(including an importer who is a CSP) registered with the Central Excise opting
for the independent Chartered Engineer’s certificate shall send a copy of the
certificate, upon its issuance, to the jurisdictional Deputy Commissioner of
Central Excise or Assistant Commissioner of Central Excise, as the case may be,
as intimation or record:

Provided also that in
case of import of spares, the installation certificate shall be produced within
three years from the date of import:

Provided also that in the case of
manufacturer exporter and merchant exporter having supporting manufacturer(s)
or in the case of import of irrigation equipment for use in contract farming
for export of agricultural products or in the case of importer rendering
services, the capital goods may be installed at the factory or premises of such
other person whose name and address is endorsed, prior to installation, by the
Regional Authority on the authorisation referred to in condition (1). This
would apply even when Regional Authority endorses a change in the factory or
premises or person. The name and address of such other person shall also be
mentioned on the relevant shipping bills. This shall not apply to a CSP:

Provided also that agro units
located in Agri Export Zones or service providers in Agri
Export Zones may move the capital goods within the Agri
Export Zones under intimation to the jurisdictional Deputy Commissioner of
Central Excise or Assistant Commissioner of Central Excise, as the case may be,
subject to the condition that the importer shall maintain accurate record of
such movement;

 (10)            that the
imports and exports are undertaken through the seaports, airports or through
the inland container depots or through the land customs stations as mentioned
in the Table 2 annexed hereto or a Special Economic Zone notified under
section 4 of the Special Economic Zones Act, 2005 (28 of 2005):

Provided
that the Commissioner of Customs may, by special order or a public notice and
subject to such conditions as may be specified by him, permit import and export
through any other sea-port, airport, inland container depot or through a
land customs station within his jurisdiction;

(11)             that
notwithstanding anything contained in condition (5) above,
where the Regional Authority grants extension of block-wise period for any
block(s) or overall period of fulfillment of export obligation up to 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 shall be extended or condoned by the Deputy
Commissioner of Customs or Assistant Commissioner of Customs, as the case may
be:

Provided
that in respect of sick units referred to in the fourth proviso to condition
(5) above, extension of overall period of export obligation shall not be
allowed.

3.         Where the goods specified in the Table
1 are found defective or unfit for use, the said goods may be re-exported back
to the foreign supplier within three years from date of clearance of said
goods:

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

Explanation –
For the purpose of this notification,-

(A)
“Capital goods” has the same meaning as assigned to it in paragraph 9.08 of the Foreign Trade Policy;

(B) “Common Service Provider” (CSP)
means a service provider who is designated or certified as a Common Service
Provider by the Director General of Foreign Trade, Department of Commerce or
State Industrial Infrastructural Corporation in a Town of Export Excellence;

(C) “Export
obligation”,-

(I)    
means
obligation on the importer to export to a place outside India, goods
manufactured or capable of being manufactured or services rendered by the use
of capital goods imported in terms of this notification  and the export obligation shall be over and
above the average level of exports achieved by the importer in the preceding
three licensing years for the same and similar products within the overall
export obligation period including the extended period, if any and such average
shall be the arithmetic mean of export performance in the last three years for
the same and similar products:

Provided that in case
of export of goods relating to handicraft, handlooms, cottage, tiny sector,
agriculture, animal husbandry, floriculture, horticulture, pisciculture,
viticulture, poultry, sericulture, carpet, coir and jute, the importer shall
not be required to maintain the average level of exports:

Provided also that in
case of export of goods relating to aquaculture (including fisheries), the
importer shall not be required to maintain the average level of exports subject
to the condition that EPCG authorisation has been obtained for goods other than
fishing trawlers, boats, ships and other similar items:

Provided also that
the goods, excepting tools, imported under this notification by the aforesaid
sectors, shall not be allowed to be transferred for a period of five years from
the date of imports even in cases where export obligation has been fulfilled:

Provided also that
exports made to such countries as notified by Director General of Foreign
Trade, shall not be counted for fixing the average level of exports:

Provided also that
exports against only such shipping bills which mention the authorisation number
and date of the authorisation shall be counted for the fulfillment of the
export obligation:

Provided also that in
the case of authorisation issued to a CSP, –

(i)            
the reference to ‘importer’ in this
Explanation shall be taken to mean a reference to ‘CSP and specific users whose details are informed
prior to export by CSP to the Regional Authority’;

(ii)           
for the exports by users
of the common service to be counted towards fulfilment of export obligation of
CSP, the respective shipping bills of the users of common service shall contain
the authorisation details of the CSP and the concerned Regional Authority shall
be informed about the details of the users prior to such export; and

(iii)          
the exports counted against the
authorisation in terms of this notification shall not be counted towards
fulfillment of specific export obligations against all other authorisations issued tothe CSP or user under Chapter 5 of the Foreign Trade Policy, including para 5.28 of
Handbook of Procedures;

(II)   
shall be fulfilled through physical exports and the export
proceeds realised in freely convertible currency. However, the following
categories of supplies, shall also be counted towards fulfillment of export
obligation:

(a)          
deemed exports, namely:

 (i) supply of goods against Advance
Authorisation or Advance Authorisation for annual requirement or Duty Free
Import Authorisation Scheme;

(ii) supply
of goods to Export Oriented Units or Software Technology Parks or Electronic
Hardware Technology Parks or Biotechnology Park;

 (iii) supply of goods to projects financed by
multilateral or bilateral agencies or funds as notified by Department of Economic Affairs, Ministry of Finance under International Competitive
Bidding (ICB) in accordance with the procedures of those agencies or funds,
where legalagreements
provide for tender evaluation without including customs duty;

(iv)
supply and installation of goods and equipment (single responsibility of
turnkey contracts) to projects financed by multilateral or bilateral agencies
or funds as
notified by Department of Economic Affairs, Ministry of Finance under
ICB in accordance with the procedures of those agencies or funds, where bids
may have been invited and evaluated on the basis of Delivered Duty Paid (DDP)
prices for goods manufactured abroad;

 (v) supply of goods to any project or
purpose in respect of which the Ministry of Finance, by Notification No. 12/2012-Customs
dated 17-3-2012, as amended from time to time, permits import of such goods at
zero customs duty subject to conditions specified in the said Notification and
the supply is made under ICB procedure;

(vi) supply of goods required for
setting up of any of the mega power projects specified in the list 32A at Sl.
No. 507 of Notification No. 12/2012- Customs dated 17.03.2012, as amended from
time to time, provided the mega power project conforms to the threshold
generation capacity specified in the 
said Notification. The supply should be made under ICB procedure. The
ICB condition shall not be mandatory if the requisite quantum of power has been
tied up through tariff based competitive bidding or if the project has been
awarded through tariff based competitive bidding;

(vii) Supply of goods to nuclear power projects through
National Competitive Bidding (NCB) or through ICB as provided in clause(h) of
para 7.02 of Foreign Trade Policy:

(b)        supply
of ITA-1 items to Domestic Tariff Area, provided realization is in free foreign
exchange;

(c) royalty payments
received in freely convertible currency and foreign exchange received for
Research and Development (R&D) services; and

(d) payments received in Rupee terms for such services as
are specified in paragraph 5.04(h) of the Foreign Trade Policy.

(D)
“Foreign Trade Policy” means the Foreign Trade Policy, 2015-2020,
published by the Government of India in the Ministry of Commerce and Industry
vide notification
No.   01/2015-2020, dated the 1^st April
2015 as amended from time to time;

(E) “Handbook of Procedures” means
the Handbook of Procedures 2015-20 published by the Government of India in the
Ministry of Commerce and Industry vide public notice No. 01/2015-2020, dated the 1^st April 2015 as amended
from time to time;

 (F)       “Manufacture”
has the same meaning as defined in clause (f) of section 2 of the Central
Excise Act, 1944 (1 of 1944);

(G)        “Regional
Authority” means the Director General of Foreign Trade appointed under section
6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or
an officer authorised by him to grant an authorisation including a duty credit
scrip under the said Act.

Table 1

Table 2

[F.No.605/55/2014-DBK]

(Sanjay Kumar)

Under Secretary to
the Government of India