On 26th April 2023, the Central Board of Indirect Taxes and Customs (CBIC) amended certain notifications of the Customs Act, 1962.
As per the amendment, in case of the default in the export obligation the amount of interest to be paid by the importer shall be payable as specified in the said public notice dated the 1 st April, 2023.
The public notice issued on 1st April, 2023 states about the Amnesty scheme for one time settlement of default in export obligation by Advance and Export Promotion Capital Goods (EPCG) authorization holders.
According to the public notice, the authorisation holder may regularise all pending cases of failed export obligation (EO) mentioned in paragraph (1) onto the payment of all customs duties that were exempt corresponding to neglected EO, and the interest payable is restricted at an amount not exceeding of 100% of such duties excluded on which interest is due.
On the share of Additional Customs Duty and Special Additional Customs Duty, however, no interest is payable.
According to the new notification, the central government has clarified that the interest payable in default of the EO shall be on the basis of a one time settlement scheme.
An export obligation occurs when the government mandates an exporter to turn in a specified amount or worth of exports within a certain time frame. It is a prerequisite that exporters must meet in order to be eligible for rewards under specific export promotion programmes or to receive particular licences or permits.
It can arise in various forms, such as under the Export Promotion Capital Goods (EPCG) scheme, Advance Authorization scheme, Duty-Free Import Authorization (DFIA) scheme, or Export-Oriented Unit (EOU) scheme..etc.
If the exporter does not complete the export obligation within the allotted time, penalties or the termination of benefits or licences may apply. Consequently, it is imperative that the exporters comprehensively recognise and assure the timely compliance of the Export Obligation requirements.
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