Q. Under the EPCG scheme, is it necessary that for redemption, the export proceeds should have been realised? Will exports made, for which payment has not yet come forth, be counted towards discharge of export obligation? Please give the relevant provisions.
Para 5.11 of HBP says “export proceeds shall be realised in freely convertible currency except for deemed exports supplies under Chapter 7. Exports to SEZ units /Supplies to developers/ co-developers irrespective of currency of realisation would also be counted for discharge of Export Obligation. Realization in case of supplies to SEZ units shall be from foreign currency account of the SEZ unit.” Appendix-5C of the HBP also requires the Chartered Accountant to clearly certify that the exporter has submitted e-BRC and the same have been verified.
Q. We had imported an item (ethyl alcohol: ITCHS Code-22072000), which falls under the Restricted List, duty free under Advance Authorisation, as per Para 4.18 (iv) of FTP, 2015-2020. However, after import, the overseas buyer has cancelled the export orders. The entire imported quantity is lying with us and we do not have any export order. Can we use this imported raw material to manufacture the finished product and sell in the domestic market, after paying Customs Duty, interest and 3 per cent of CIF Value (as per Para 4.49 (ii) of HBP, 2015-2020)?
Yes. The said Para 4.49 of HBP clearly allows regulation of bona fide defaults even in cases where restricted items were imported under advance authorisation and remain unutilised in export production.