No change in the existing two conditions for availing benefits

K.R. Srivats

New Delhi, June 20

The Government has further tightened the norms for import of motorcars and sports utility vehicles by the hospitality and tourism industry under the export promotion capital goods (EPCG) scheme.

Import norms were tightened in January 2006 after investigations by the Revenue Department revealed that vehicles imported, under a concessional duty of the EPCG scheme, to promote tourism had found their way to select politicians and film stars for their personal use. A number of such vehicles were impounded and the owners were made to pay the full duty on imported cars.

The Directorate General of Foreign Trade (DGFT) has now through an executive order brought about some disciplining on the registration front. It has stipulated that vehicles imported by the hospitality and tourism industry under the EPCG scheme should be registered either as a tourist vehicle or should have an appropriate registration specific to a particular State enabling the vehicle to be used for tourist purposes.

Moreover, a copy of the registration certificate should be submitted to the concerned licensing authority as a confirmation of the vehicle having been imported and capital goods installed.

However, there is no change to the existing two conditions for availing benefits under the EPCG scheme. The first condition stipulates that the concessional import regime would be available only to those hotels, travel agents, tour operators or tour transport operators and companies owning or operating golf resorts whose total foreign exchange earning from these specific businesses in the current and preceding three licensing years is Rs 1.5 crore or more.

The other condition is that the `duty saved' amount on all EPCG licences issued in a licensing year from import of motor cars,

SUVs and all purpose vehicles should not exceed 50 per cent of the average foreign exchange earnings from the hotel, travel and tourism and golf tourism sectors in the preceding three licensing years.

(This article was published in the Business Line print edition dated June 21, 2006)
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