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19-February-2015

Directorate General of Foreign Trade (DGFT) has imposed a Rs. 100-crore penalty on four Surat-based textile companies for misusing Export Promotion of Capital Goods (EPCG) schemes to claim duty-free imports without fulfilling the conditions required.

The four companies Nirmal Polyesters Pvt Ltd, Krishna Trading company, Pradeep Kumar Nirmal Kumar Ltd and Meenu Exim Pvt Ltd have allegedly defaulted on their export obligations, which were mandatory under the EPGC schemes where imports of raw-materials were exempted from cess.

Additional DGFT of Mumbai and the Appellate Authority upheld the order passed by the joint director general of Surat and also imposed a penalty of Rs. 25 crore each on the respective firms, for misuse of the Advance Authorization Schemes.

"EPCG authorisation holder has to fulfill export obligations against the scheme specified. The action taken by the authorities was to recover the import customs duty on defaulters through an institutional mechanism," a senior official of DGFT said.

In the said order, these four companies had obtained advance license during 2001-05, from joint DGFT Surat for duty-free imports of polyester filament yarn with condition to supply 100% of the finished goods to export oriented units (EOUs). Fabrics made out of such imported yarn should have been towards discharge of export obligation, but this was not the case here, according to DGFT. Each of the firm had obtained advance license for import worth around Rs. 70 crore.

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