Export Obligation (EO) is an arrangement used in the import of capital goods under the EPCG scheme. Such imports are made under an EO, which must be six times the duty that may preferably be paid on the import of the capital goods. Some conditions for EPCG export obligation calculation are to be fulfilled as follows:
- The export obligation is to be fulfilled by the authorisation.
- The export obligation under EPCG shall be over and above the typical export volume for the previous three licensing years for the product(s) almost like it within the EO period, including extensions if any.
- While calculating the EO volume, shipments made under advance authorisation, duty-free import authorisation (DFIA), drawback scheme, MEIS and SEIS also will be considered.
- Royalty payment for R&D services received in freely convertible currency and exchange is additionally counted while calculating exports under the EPCG scheme.
- An authorisation received under the EPCG scheme remains active for 18 months from the date of its issue, and can’t be revalidated thereafter.
- Only 25% of EO is required for units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and J&K.
- If the authorisation holder completes 75% of the EO in less than 1/2 the EO period, the remaining 25% is waived.
- Only 75% of the EO is required for export of green technology products.
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