dgft press note dated 25 07 2024 epcg committee

DGFT’s Press Note Dated 25-07-2024 - EPCG Committee

DGFT’s press release issued in July 2024 represents a significant change in the way complex EPCG cases are handled. Going forward, all decisions of the Policy Relaxation Committee (PRC) and the EPCG Committee relating to export-obligation (EO) extensions and regularisation will follow a uniform, slab-based composition-fee structure. This reform not only simplifies implementation within DGFT’s IT systems but also makes the cost of EPCG relaxations more predictable and affordable for exporters.

Why this change was necessary

Earlier, PRC and EPCG Committee decisions often imposed composition fees on a case-by-case basis or as a percentage linked to duty saved or EO shortfall. This approach:

1. Led to inconsistent implementation across DGFT Regional Authorities and Customs ports, and
2. Created uncertainty for exporters, who could not accurately estimate the financial impact of seeking EO extensions or regularisation.

DGFT’s press note dated 25 July 2024, titled “DGFT simplifies Export Promotion Capital Goods Scheme procedures”, directly addresses these issues by introducing standardised, lower fee structures and uniform norms for implementing PRC decisions.

Meaning of “uniform composition-fee structure”

As per the press release, all PRC decisions granting EO extensions or regularisation under EPCG will now be implemented using a fixed composition fee, allowing seamless processing through DGFT’s online system. In practical terms:

1. Composition fees for PRC/EPCG Committee cases are no longer discretionary or ad-hoc.
2. DGFT has introduced pre-defined fee slabs based on the duty-saved value of the EPCG authorisation.

Indicative slabs highlighted in official explanations and press coverage include:

1. ?30,000, where the duty-saved value is up to ?2 crore
2. ?60,000 where the duty-saved value exceeds ?2 crore and is up to ?10 crore
3. ?1,00,000 where the duty-saved value is above ?10 crore

These slabs apply to PRC-approved EO extensions or regularisation cases. DGFT has also clarified that any composition fee paid earlier under previous decisions will not be refunded.

Connection with Public Notice No. 15/2024-25

The PRC-related reform complements Public Notice No. 15/2024-25 dated 25 July 2024, which introduced simplified and reduced composition fees for routine EPCG EO extensions (outside PRC), based on duty-saved slabs for:

1. Applications filed within 6 months of block or EO period expiry, and
2. Applications filed after 6 months but within 6 years.

The notice also forms part of a wider EPCG simplification drive, including extended timelines for Installation Certificates and increased automation of EPCG services.

Together, Public Notice 15 and the uniform PRC fee framework ensure that whether relief is granted by the Regional Authority or by the PRC/EPCG Committee, the applicable composition fee is standardised and formula-based for each duty-saved category.

Why this matters for EPCG exporters

For manufacturers, merchant exporters, and service providers using EPCG, the July 2024 reforms deliver three major advantages:

1. Greater predictability: Exporters can now estimate composition fees in advance, as they depend solely on the duty-saved bracket of the EPCG licence.
2. Reduced compliance cost: The new structure is officially described as “simplified and reduced,” and in many high-value cases it results in lower fees than earlier percentage-based calculations.
3. Faster, system-driven processing: Uniform slabs allow DGFT’s IT system to automatically apply the correct fee, reducing manual intervention and ensuring quicker, consistent implementation across all authorities.