Installation Certificate in the EPCG Scheme: Why is it Crucial for Exporters

Table of Contents

• Introduction

• What is the Installation Certificate in EPCG?

• Why is the Installation Certificate Required?

• How to Get an Installation Certificate?

• What is the Period for Submission of the Installation Certificate?

• Latest Installation Certificate Public Notice

• Conclusion

Introduction

In the dynamic landscape of international trade and commerce, India's Export Promotion Capital Goods (EPCG) Scheme has emerged as a pivotal instrument to enhance the country's manufacturing competitiveness. A crucial element of this scheme is the Installation Certificate—a document essential for ensuring proper utilisation of capital goods and safeguarding against misuse.

In this blog, we’ll explore the significance of the Installation Certificate, why it is required, how to obtain it, and the latest developments in its submission requirements under the Foreign Trade Policy of 2023.

Our expert EPCG consultants at Commercial Consultancy Counsel are here to assist you on your journey to obtain the Installation Certificate and access the various benefits offered under the EPCG scheme.

What is the Installation Certificate in EPCG?

The EPCG Scheme facilitates the import of capital goods for producing high-quality goods and services, thereby enhancing India's manufacturing competitiveness. It allows the import of capital goods for pre-production, production, and post-production at zero customs duty, provided the goods are used to produce exportable items.

To avail these benefits, the exporter (or Authorisation Holder) must obtain an EPCG Authorization from the Regional Licensing Authorities (RA) under the Director General of Foreign Trade (DGFT), Ministry of Commerce and Industry. This authorization permits the import of capital goods under the scheme.

Once the goods are imported, the Authorisation Holder must submit an Installation Certificate to the concerned RA within six months of completing the import process. This certificate is issued either by the Jurisdictional Customs Authority or an Independent Chartered Engineer and confirms the installation of the capital goods at the factory or premises of the Authorisation Holder.

Why is the Installation Certificate Required?

The Installation Certificate serves as a critical compliance document under the EPCG scheme. Its purpose is to:

• Confirm the successful installation and operational use of the capital goods for which customs duty concessions were granted.

• Ensure that the imported goods are being used for their intended purpose—enhancing export production.

• Act as a safeguard against the misuse of the EPCG scheme by preventing the diversion of capital goods for non-export purposes.

Without the Installation Certificate, exporters risk penalties and the withdrawal of the scheme’s benefits.

How to Get an Installation Certificate?

An Installation Certificate can be obtained from either the Jurisdictional Customs Authority or an Independent Chartered Engineer.

The process involves several steps, and it is essential to remain updated with the latest regulations to ensure smooth compliance. Our team of experts at Commercial Consultancy Counsel can help you navigate the entire process.

However, obtaining the certificate is just the first step. There are important submission timelines that must be followed to stay compliant with the scheme.

What is the Period for Submission of the Installation Certificate?

The Authorisation Holder is required to submit the Installation Certificate to the concerned RA within six months from the date of completion of imports.

Our consultants can assist in ensuring that your business meets these regulatory requirements in a timely manner, so you can continue to benefit from the EPCG scheme without any disruptions.

Latest Installation Certificate Public Notice

According to Paragraph 5.04 of Chapter 5 of the Handbook of Procedures, the RA may allow a one-time extension of up to 12 months for submitting the Installation Certificate, with a composition fee of Rs. 5000.

However, as per the latest public notice dated 13th July 2023 issued by the Ministry, a relaxation has been introduced for submission of the Installation Certificate for authorizations under FTP 2009-14 and FTP 2015-20 (extended up to 31.03.2023).

According to the notification, Authorisation Holders who could not submit the Installation Certificate within the prescribed timeline under FTP 2023 can now submit the certificate by 31st December 2023 (for regularisation purposes) on payment of Rs. 10,000 per authorization, subject to the following conditions:

• The EPCG authorization was issued under FTP 2009-14 and FTP 2015-20.

• The Installation Certificate was obtained within the prescribed timeline but was not submitted to the RA on time.

• The Authorisation Holder has valid reasons for the delay in submission.

• The particular EPCG authorization is not under any investigation by the RA.

Conclusion

The Installation Certificate is a crucial component of India's EPCG Scheme, ensuring the proper use of imported capital goods for export production. By validating the installation and use of these goods, the certificate helps maintain the integrity of the scheme and safeguards it from misuse.

With the latest relaxations in submission timelines under FTP 2023, exporters have an extended window to regularise their Installation Certificates. Staying informed and compliant with these developments is essential to fully benefit from the EPCG scheme.

Our team of expert consultants at Commercial Consultancy Counsel offers comprehensive guidance on all aspects of DGFT and Customs regulations, including certification assistance and FSSAI-related services.

Get a FREE Consultation today and maximize the benefits of the EPCG scheme for your business!