Page 128 - SMUGGLING IN INDIA REPORT FOR 2020-2021

82 2020-2021 SMUGGLING IN INDIA REPORT
DRI had booked 73 cases involving export value of Rs. 4,626.49 Crore, which involved excess MEIS benefit of Rs. 188.88 Crore. Further, 35 cases were booked by DRI involving SEIS benefit of Rs.115.41 Crore against export service providers, who were engaged in providing various services related to software, information technology and computer related services, for misuse of SEIS. This is just indicative of the colossal loss of revenue, this modus-operandi is facilitating. It indicates a systematic subversion of the policies of the Government by miscreants, by not only indulging in fraud, but also making the margins for genuine businesses lower.
Misuse of EPCG Scheme
Chapter 5 of the FTP covers the Export Promotion Capital Goods Scheme (EPCG Scheme). This Scheme can be explained as “Duty-Free (Zero Customs Duty) Import of Capital Goods/ Machinery for the manufacture
of products meant for Export”. The Capital Goods may be used for production, pre-production & post-production stages of goods. The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services and to enhance India’s manufacturing competitiveness.
This scheme enables an importer (who is carrying out an export-oriented business) to import capital goods at zero / concessional rates of customs duty. However, the said duty-free import of capital goods is subject to an export obligation of a value equivalent to six or eight times of duty saved on the importation of such capital goods, within six years from the date of issuance of the EPCG authorization. In simple words, there is an obligation on the businesses to export goods and bring in foreign exchange equivalent to six/eight times the duty saved on such imports. These exports are required to be made within six years from availing the EPCG benefit.