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Performance
Indirect Tax

Report No. 22 of 2011 - Performance Audit of Export Promotion Capital Goods Scheme Union Government, Department of -Indirect Taxes

Date on which Report Tabled:
Tue 20 Dec, 2011
Date of sending the report to Government
Government Type
Union
Union Department
Indirect Tax
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Sector Taxes and Duties

Overview

We conducted a performance audit on the 'Export Promotion Capital Goods Scheme' (EPCG] to evaluate the adequacy of the provisions of Foreign Trade Policy, Customs Act and related instructions and to assess their proper implementation in issue of authorisation under the scheme, post issue monitoring of authorisation and redemption of authorisation after completion of the export obligation (EO) periods. The aim was to see that the scheme was being effectively and efficiently implemented and there were no loopholes in the scheme being taken undue advantage of.

The Director General of Foreign Trade (DGFT) issued 89,000 licences between the year 2000 and 2008 of which 63 per cent were issued from Mumbai, Delhi, Coimbatore, Chennai and Bengaluru. Total revenue forgone on this scheme from 2005-06 to 2009-10 was RS 38,188 crore. The total revenue implication of this audit report is RS 3,154.87 crore.

Under EPCG Scheme, the licences issued have to be monitored over an eight year period through many prescribed checks. We observed that authorisations were issued without complete set of documents prescribed and post verification of declarations was usually not done by Regional Licencing Authorities (RLAs) in violation of DGFT's instructions. We recommend that DGFT should prescribe a time-bound schedule for carrying out the prescribed checks and monitor the implementation of this control mechanism.

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