EPCG – Closure / Redemption

Introduction fo EPCG – Closure / Redemption

EPCG Closure / Redemption is the process businesses follow to officially close their EPCG (Export Promotion Capital Goods) authorization after fulfilling export obligations. The Export Promotion Capital Goods (EPCG) Scheme under India’s Foreign Trade Policy (FTP) allows exporters to import or procure capital goods at zero customs duty, with a commitment to export products worth six times the duty saved within a fixed period.

Once the exporter completes the required export obligation (EO) and fulfills all conditions of the license, they must apply to DGFT for EPCG Closure or Redemption. This process ensures that the exporter’s duty-free import is officially recognized as completed, securing full legal compliance and avoiding future liabilities.

At BEST EXIM and Industrial Services, we provide expert end-to-end assistance for smooth EPCG Closure / Redemption with 100% DGFT compliance.

What is EPCG Closure / Redemption?

EPCG Closure, also known as Redemption of EPCG License, is the final stage of the scheme.

It confirms that the exporter has successfully fulfilled both the Export Obligation (EO) and installation conditions for the capital goods imported or procured under the EPCG Scheme.

Once the DGFT verifies all submitted documents, it issues a Redemption Letter (also called an Export Obligation Discharge Certificate – EODC). This certificate officially closes the EPCG authorization and releases the exporter from any duty or legal obligation under the license.

Importance of EPCG Closure

Avoids Customs Demand: Proper closure prevents customs authorities from raising duty and interest demands.
Legal Compliance: Confirms that the exporter has fulfilled all DGFT obligations.
Smooth Future Licenses: Exporters with closed licenses get faster approvals for future DGFT applications.
Prevents Blacklisting: Avoids being listed as “EO pending” or “non-compliant” in DGFT records.
Releases Bank Guarantees: Ensures the release of BGs or bonds submitted during import.

When Should EPCG Closure Be Applied?

An exporter should apply for closure immediately after completing the EO and installation conditions, but before the expiry of the license validity.
If EO is partially fulfilled or delayed, the exporter can first apply for an extension and then proceed with closure upon full compliance.

Types of Export Obligation (EO) under EPCG

Specific Export Obligation (SEO):
Direct export of goods manufactured using the EPCG machinery, equivalent to six times the duty saved, within 6 years.
Average Export Obligation (AEO):
Exporters must maintain average export performance achieved in the preceding three licensing years, in addition to the SEO.

Both conditions must be satisfied before applying for closure.

Step-by-Step Process for EPCG Closure / Redemption

Preparation of Export Documents:
Collect all relevant shipping bills, eBRCs (Bank Realisation Certificates), and invoices related to exports made against the EPCG license.
Compile EO Fulfillment Statement:
A Chartered Accountant must certify the export values achieved against the EO target.
The format should include details of shipping bills, currency, FOB value, and corresponding EPCG license number.
Verification of Installation Certificate:
Submit a Chartered Engineer’s Installation Certificate confirming that the capital goods imported under the EPCG have been installed and are in use at the declared premises.
Prepare Application Online (DGFT Portal):
- Log in using the IEC and navigate to “EPCG – Export Obligation Discharge.”
- Upload all supporting documents and statements.
- Ensure data accuracy between eBRCs, shipping bills, and license details.
Submit to DGFT Regional Office:
Submit the online application along with physical copies (if required by regional DGFT) for verification.
DGFT Examination:
DGFT reviews export performance, cross-checks customs data, and verifies whether all conditions are met.
Issuance of EODC / Redemption Letter:
Once approved, DGFT issues an Export Obligation Discharge Certificate (EODC) and updates the status in the online DGFT system.
The EPCG license is then officially redeemed and closed.

Documents Required for EPCG Closure

Copy of EPCG Authorization.
Chartered Accountant Certificate for EO fulfillment.
Shipping Bills and eBRCs.
Chartered Engineer’s Installation Certificate.
Statement of Exports with item-wise linkage.
Copy of import bills of entry or domestic procurement invoices.
Valid RCMC (Registration Cum Membership Certificate).
GST registration certificate.
Self-declaration of no pending EO.
Copies of DGFT correspondence (if any extension granted).

Common Errors to Avoid

Mismatch in export product description between shipping bills and EPCG authorization.
Missing linkage between machinery and exported product.
Non-submission of correct Chartered Engineer or CA certificates.
Failure to maintain export performance records.
Delayed filing after EO period expiry.

Proper guidance from experts like BEST EXIM and Industrial Services ensures these errors are avoided for faster redemption.

Special DGFT Guidelines for Closure

Pro-rata redemption is allowed if partial EO is fulfilled.
Transfer of machinery before EO completion requires DGFT permission.
Installation must be certified within 6 months of import/purchase.
Post-verification by DGFT or Customs may be conducted in some cases.
No redemption is possible without proper eBRCs for realized exports.

How BEST EXIM and Industrial Services Helps

We specialize in EPCG Closure, Redemption, and DGFT Compliance Services, ensuring a hassle-free process for exporters. Our professional team provides:

End-to-End Documentation Support: From CA certificates to export linkage statements.
Data Validation and Corrections: Ensuring 100% data accuracy before DGFT submission.
Representation Before DGFT: Handling clarifications, queries, and follow-ups.
Pro-rata or Partial EO Closure Cases: Managing complex cases efficiently.
Post-Redemption Record Management: Assisting in future DGFT audits or verifications.

With BEST EXIM and Industrial Services, exporters get assured compliance, fast processing, and complete peace of mind during EPCG closure.

Why Timely Closure is Important

Failure to apply for EPCG Closure on time can lead to:

Customs demand for duty with interest.
Blocking of future DGFT benefits.
Difficulty in obtaining fresh EPCG authorizations.
Penalties or legal complications.

Therefore, exporters should always complete closure immediately after EO fulfillment.

Conclusion

The EPCG Closure / Redemption process is the final compliance step that secures your duty-free import benefits and maintains your DGFT record in good standing.
It protects you from penalties, ensures regulatory transparency, and allows you to confidently expand your export operations.

With the expertise of BEST EXIM and Industrial Services, exporters can achieve EPCG redemption quickly, accurately, and without stress.
Our experienced consultants manage every detail — from export validation to DGFT communication — ensuring 100% compliance and successful closure.

BEST EXIM and Industrial Services – Your trusted partner for EPCG License, Extension, and Closure across India.

Best Exim and Industrial Consultants, at the forefront of global trade, is committed to easing the complexities of international business and providing specialized services in subsidies, customs procedures, and GST compliance