Grant of benefits under (SFIS) – DGFT Clarifies

By Vijay Kumar

As per para 5.4 (v) of EPCG Scheme - FTP RE2007, “Foreign exchange counted towards fulfilment of EO (over and above the average) shall not be eligible for incentives/rewards under promotional measures/schemes”.

This clause has been deleted in FTP RE2008.

DGFT had clarified in Policy Circular No.15/RE: 2008 (2004-2009) dated 4th July 2008 that so far as Service Providers are concerned, Para 5.4(v) of FTP RE2007 applies to foreign exchange earned during 1.4.2007 till 31.3.2008 and does not apply to foreign exchange earned prior to 1.4.2007 or after 31.3.2008. Service Providers have to first utilize foreign exchange earned during 1.4.2007 till 31.3.2008 for fulfilment of pending EO under EPCG Authorisations (over and above the average, if any) and SFIS would be entitled only on any additional foreign exchange earned during 1.4.2007 till 31.3.2008 thereafter.

Now DGFT clarifies that “pending EO under EPCG Authorization (over and above average, if any)” means the duty saved export obligation which is pending over and above the minimum duty saved export obligation specified to be fulfilled in the prescribed block of years.

SFIS can therefore be granted on the foreign exchange earned during 1.4.2007 till 31.3.2008 in cases where the duty saved export obligation of the preceding “block” (i.e. the “block” prior to 1.4.2007) has been completed.

DGFT Policy Circular No. 62 (RE-08)/2004-2009, Dated : February 13, 2009