Capital Goods from SEZ - Eligible for EPCG Scheme
AS per Para 5.2A of the Foreign Trade Policy,
Spares (including refurbished/reconditioned spares), moulds, dies, jigs, fixtures, tools, refractory for initial lining and catalyst for initial charge; for existing plant and machinery (imported earlier, under EPCG or otherwise), shall be allowed to be imported under the EPCG scheme subject to an export obligation equivalent to 50% of the normal export obligation prescribed in para 5.1 and 5.2 above (for import of capital goods), to be fulfilled in 8 years (6 years for zero duty EPCG scheme), reckoned from Authorization issue date. This would however be subject to the condition that the c.i.f. value of import of the above spares etc. will be limited to 10% of the value of plant and machinery imported under the EPCG scheme. In case of plant and machinery not imported under the EPCG scheme, c.i.f. value of import of the spares etc. will be limited to 10% of the book value of the plant and machinery.
DGFT Policy Circular No. 54 (RE-2010)/2009-14 dated 23.02.2012 clarified,
"for all types of imported Capital Goods, import of Spares under EPCG Schemes is allowed.
3. Under Para 8.2 (c) of Foreign Trade Policy, Capital Goods can be procured indigenously upon invalidating an EPCG Authorization. However, domestically procured Capital Goods cannot be treated as ‘imported Capital Goods' and hence the facility of Para 5.2A of Foreign Trade Policy cannot be allowed for such Capital Goods sourced domestically after invalidating EPCG Authorization."
Now, there is a doubt:
"whether the Capital Goods sourced from Special Economic Zone (SEZ) would be treated as ‘imported goods' and whether spares for such Capital Goods may be imported under the EPCG Scheme – Para 5.2A of FTP".
DGFT Clarifies:
Capital Goods sourced from SEZ are treated as ‘imported goods'. Hence, EPCG Scheme-under Para 5.2A is available for import of spares for such imported Capital Goods (i.e. sourced from SEZ) with reduced EO. Besides this, EPCG Authorization for “Spares” is also allowed under Para 5.2.
DGFT Policy Circular No. 65/(RE-2010)/2009-14, Dated: May 18, 2012