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Exporters Should Extend Support for EODC Camps’ Success

Published: October 31, 2023
Author: TANVI_MUNJAL

In a commendable move, the Directorate General of Foreign Trade (DGFT) has recently announced that 11 of its Regional Offices (RO) will be conducting Export Obligation Discharge Certificate (EODC) camps for two weeks, starting from the 13th of next month. This initiative aims to facilitate the seamless processing of EODC applications and the timely closure of Advance Authorisation (AA) and Export Promotion Capital Goods (EPCG) cases.

Under the AA scheme and the EPCG scheme, exporters can import the required inputs and capital goods for export production without paying any duties, as long as they fulfil certain export obligations (EO). Typically, the Customs clear the goods imported under AA and EPCG authorizations after obtaining bonds from the authorization holders, who commit to fulfilling the EO within the stipulated timeframe.

After completing the necessary exports and receiving payments for them, the exporters are expected to submit their applications for EODC to the respective Regional Offices.

These offices verify the details and, if satisfied with the fulfilment of the EO, issue the EODCs. They also update the status of the authorizations in the database and transmit the EODCs electronically to the Customs portal in real-time. Upon receiving the EODCs, the Customs redeem the bonds based on the provided certification.

However, it has been observed that numerous exporters fail to fulfil their EO obligations even after having the EO periods extended. Furthermore, rather than promptly regularizing their cases by paying the duties on the imported goods, they tend to apply for more time through the Policy Relaxation Committee at the DGFT Headquarters.

This is primarily because the government does not impose penalties, but instead requests a simple interest of 15% per annum on the duty saved during the importation.

Even exporters who do fulfil their EO obligations often delay filing their EODC applications. The outstanding bonds are not considered contingent liabilities in their annual statements. Additionally, after receiving the EODCs, these exporters do not promptly redeem their bonds, further delaying the process.

Another issue that persists is that several Regional Offices do not proactively follow up on cases where the EO period has expired but the EODC application has not been received. Furthermore, they rarely process the EODC applications within the stipulated 30-day period. Instead, they incrementally raise deficiencies to delay the issuance of EODCs intentionally.

This lack of efficiency is noticeable in the updating of the DGFT website, where the statuses of AA/EPCG cases do not show as “closed” promptly. As a consequence, EODCs are not timely transmitted to the Customs, who periodically issue notices for all such open cases.

To address these persistent issues and streamline the process, the DGFT has repeatedly urged the exporters to upload copies of the EODCs where the authorization statuses are inaccurately reflected in the database.

Additionally, the Regional Offices have been instructed to promptly update the statuses based on the verification of details furnished by the exporters or based on their records. Unfortunately, despite these directives, a significant number of authorizations in the database still do not show as “closed.”

Realizing the urgency to address these concerns, the DGFT has now emphasized the importance of swiftly processing EODC applications and updating the authorization statuses in cases where EODCs have been issued.

The EODC camp has been limited to 11 Regional Offices, possibly to allow them to leverage the support of staff from other ROs to expedite the closure of AA/EPCG cases. For this initiative to be successful, exporters must cooperate by promptly submitting their EODC applications, responding to any deficiencies identified, and providing details of previously received EODCs. This collaboration will greatly assist the Regional Offices in ensuring the success of the EODC camps.

It is anticipated that this concentrated effort by the DGFT and the Regional Offices will ultimately lead to improved efficiency in processing EODC applications and the closure of AA/EPCG cases. Timely application submission, responsiveness to deficiencies, and the provision of accurate details will be instrumental in streamlining the overall process.

As the Regional Offices work towards promptly updating the DGFT website and efficiently transmitting EODCs to the Customs, a more transparent and accountable system can be established. With the active participation of exporters, the EODC camps can truly become noteworthy achievements, ensuring the smooth functioning of the AA and EPCG schemes while facilitating export growth.

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