The Directorate General of Foreign Trade recently issued a clarification on the applicability of the prospective amendment made to Para 5.10(c) of the Handbook of Procedures, 2015-20 (Mid-term Review) to third-party exports conducted under the Export Promotion Capital Goods ( EPCG ) Scheme.
Policy Circular No. 10/2024-25 dated 13.12.2024 at the outset, references the judgment of the Ahmedabad High Court in the case of South Gujarat Warp Knitters Association & Anr. vs. Union of India and Ors. (2021), setting aside the Policy Circular No.22/2015-20 dated 29.03.2019.
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The EPCG Scheme enables Indian exporters to import capital goods duty-free, provided they fulfill an export obligation equivalent to six times the duty saved within six years. It supports manufacturers and service providers by reducing costs, allowing access to advanced machinery for improved productivity and competitiveness. Applicable to pre-production, production, and post-production capital goods, the scheme enhances product quality, boosts export volumes, and aligns with the “Make in India” initiative. By reducing investment costs and promoting technology upgrades, EPCG strengthens India’s export potential and fosters economic growth through increased global trade participation
Additionally, SLP(Civil) Diary No(s). 29793/2024 instituted by the Union of India before the Supreme Court of India had been dismissed on 02.08.2024.
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Taking into account the decision rendered by the Honourable Courts in both the matters specified above, the Policy Circular No. 10/2024-25 clarified that the amendment to Para 5.10(c) of the Handbook of Procedures, 2015-20 (Mid-term Review) to be prospective in nature and only applicable to third party exports made against EPCG Authorizations that have been issued on or after 05.12.2017 only.
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