Legal Framework Foreign Trade Policy and Handbook of Procedures Vol.I [Chapter 6] From ‘Approval’ to ‘Exit’ provisions Central Excise Act, 1944 Customs Act, 1962 and Duty free imports under Central Excise Rules, 2002. Section 25 DTA Sales [Section 3 of CE Act, 1944] of the Customs Act, 1962 Local Procurement [Section 5A of Warehousing Provisions CE Act, 1944]
About EOU The EOU Scheme is introduced in 1981 To facilitate the Units which intend to export a majority of their production To generate Foreign Exchange To increase employment and boost exports of the country The Development Commissioner of the SEZ is the governing & monitoring Authority for EOU units
Eligibility Units undertaking to export their entire production/ services (except permissible sales in the DTA), can be set up under Export Oriented Unit (EOU) Scheme. Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) or Bio-Technology Parks (BTPs) are also covered under EOU scheme. These are product specific units availing the same benefits as EOUs.
Purpose Units can be set up for any of the following purposes: – manufacture of goods – repair – re-making – reconditioning – re-engineering – rendering of services NOTE: Trading to the extent of 5% of FOB value is permitted subject to the prime condition that such goods should be related to manufactured goods.
Investment Criteria Projects having a minimum investment of Rs.1 crore in plant and machinery can only be considered for establishment as EOU. Minimum Investment criteria is not applicable to existing EOU units and units in EHTP/STP/BTP and following sector: – Handicrafts – Agriculture – Floriculture – Aquaculture – Animal Husbandry
Investment Criteria – Information Technology – Services – Brass Hardware and – Handmade jewellery Board of Approval (BoA) can however, allow establishment of EOUs with a lower investment criteria.
Administrative Control Unit Approval Committee Jurisdictional Development Commissioner The provisions of the Customs and Central Excise Law in respect of the EOUs are administered by the Commissioners of Customs and Central Excise, who are under the control of Central Board of Excise & Customs [CBEC].
ExemptionsIndustrial Direct Tax Indirect Tax State TaxesLicensing for § As per Section § Customs duty § VATmanufacture 10B on import ofof items inputs and CGs, § Stamp Dutyreserved for §Extended for etc.SSI sector the Financial [Subject to year 2010-11 § Excise Duty on provisions in goods procured the state laws] [CBDT Cir. No. 1 from DTA Dtd. 06.01.2005- for converted units]
Reimbursement/ Refund Refund of CST Drawback by way and of Brand Rate inInterest @ 6% on case EOU worksdelayed refunds as Job-worker for DTA exporter
OtherCENVAT Export 100% of 100% FDI Exports made Credit proceeds can export investment by EOUs wouldFacility be realized earning permitted also get within 12 can be through benefits under Months retained Automatic FMS & FPS in EEFC Route Schemes account provided direct tax benefits are not availed.
Formalities for setting up of EOU Preparation of a detailed project report and Locational clearances. Making application for Letter of Intent (LOI) / Letter of Permission (LOP) to Development Commissioner (DC). Acceptance of LOP/LOI when granted. Execution of Legal Undertaking and attestation of capital goods / inputs and obtaining Green Card.
Making application for declaration of a place (unit) as warehousing station under Section 9 of Customs Act, 1962 (if required), in case the location is not covered under various notifications issued by customs for warehousing purpose. Application for setting up of private bonded warehouse for EOU purpose with customs / excise authorities asthe case may be. (Warehousing licence under Sections 58 (for issue of warehouse licence) and 65 (for manufacture in bond) of Customs Act, 1962. Execution of B-17 bond supported by security or Bank Guarantee (BG). Registration with the customs authorities at the port of import.
Step-1A: Preparation of a detailed projectreport Preparation for Project Report: Project report should normally consist of: – Introduction and importance of items for which the unit is to be established. – Promoter’s profile including that of the Directors and various divisions of promoting company. – Export promotion efforts undertaken by the company/ promoters – Potential of the item/items for export – Advantage of new unit over existing units
Step-1A: Preparation of a detailed projectreport – Land location – Building, Plant & Machinery – Power & Water Supply – Process of Manufacture – Raw material, requirement and sources – Indian & World Scene – Projections for five years – Manpower Requirements – Marketing Potential and Selling Arrangements – Cost of project and means of finance – Financial Forecasts – Summary and Conclusions
Step-1B: Locational clearances Locational Clearance is required either from Industrial Development Corporation of the concerned State or from Local Gram Panchayat. If the EOU unit is being set up in urban area, the location should be in an Industrial Area/Estate designated/Set up prior to issuance of Ntfn No. 477 (E) Dtd. 25.07.1991 for clearance under automatic route; otherwise the case would be refer to Board of Approval, New Delhi. If the item of manufacture is subject to Pollution then NOC from Pollution Control Board. The locations which are beyond 25 kms from the periphery of standard urban area limit of city having population above 1 million, according to 1991 Census, are acceptable for setting up of EOU.
Step-2: Making application for LOI / LOP toDC Application in Appendix 14-I-A is to be made to the Concerned Development Commissioner in three copies alongwith following documents: – Demand Draft/Pay Order for Rs.5,000/- drawn in favour of the Pay & Accounts Officer, Ministry of Commerce & Industry, Department of Commerce, payable at the Central Bank of India, Udyog Bhavan, New Delhi. – Project Report – Self certified copy of PAN – Self certified copy of Ground Plan – Copy of IEC [if available] – Copy of RCMC [if available] – Copy of SSI Registration or IEM issued by SIA, Ministry of Commerce and Industry, New Delhi, as the case may be.
Step-2: Making application for LOI / LOP toDC – Copy of Memorandum and Articles of Association in case of company. – Copy of Manufacturing Process Flow Chart. – List of Machineries to be imported. – List of Raw Materials and Components to be imported. – List of Spares and Consumables to be imported. – List of Machinery and equipment, consumables, packing materials to be indigenously procured without payment of Central Excise Duty. – Chartered Accountant Certificate for last three years exports, if any.
Step-2: Making application for LOI / LOP toDC – Affidavit in duplicate on Rs. 50/- Stamp Paper duly notarised. – Directors Residential Proof/Passport/Ration Card/Driving Licence/Voter identity card, or any other proof. – Self Certified copy of Central Excise Registration Certificate. – Copy of Board Resolution / Authority letter. – Proof of Premises - Possession/Allotment Letter/Sales deed/ Lease Agreement, etc. – Copy of Passport of the Applicant. – Income Tax Return & all Directors/Promoters for last three years. – Digital Certificate.
Step-2: Making application for LOI / LOP toDC – Loan sanction copy of External Commercial Borrowing, if any. – Details of sources of finance – Indian and foreign. – Memorandum of Understanding (MoU) [executed/signed copy of MOU for export tie-up, if any]. – Copy of NOC issued by the Component Authority for setting up a unit (EOU) [MIDC/Gram Panchayat] . (If any) – List of Directors with their residential address, telephone nos. and e-mail address on Letter Head. – E-mail ID of company. – Website details.
Step-3: Acceptance of LOP/LOI when granted Acceptance of LOP/LOI needs to be conveyed within 45 days which is a confirmation that principal permission given by DC is accepted by the applicant for execution. Before submission of acceptance letter one has to verify the following: – Conditions mentioned in LOP/LOI – Complete/accurate address of the unit – Description and approved capacity of product to be manufactured and exported under the EOU unit. – Value of required imported capital goods for the proposed project.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card The approved EOU unit executes a legal undertaking [LUT] with the DC concerned as per the format given in Appendix- 14-I-F of HBPv1. [on Rs. 150 Stamp Paper, duly notarized] LUT binds EOU to fulfill the conditions of LOP/LOI. If EOU fails to abide by such conditions, it will be liable to pay penalty under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and/or under any other Law for the time being in force.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card At the time of execution of LUT, a list of exemption material as per Annexure I to Appendix 14-I-F has to be submitted to DC. The list contains description of – Plant, Machinery and Equipment to be imported. – Raw Materials, Components and Consumables to be imported. – Plant, Machinery and Equipment and Raw Material, Components and Consumables to be indigenously produced and purchased without payment of Central excise Duties. This list should be attested by the DC to enable the unit clearance of imported items as well as local procurement of items. Following Documents are to be submitted: – Application in Appendix 14-IF on stamp paper of Rs. 150/- – Self certified copy of LOP/LOI issued by Development Commissioner or Designated Officer.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card – Copy of IEC, if any – List of Directors with their residential address, telephone nos. and e-mail address on Letter Head. – Copy of Board Resolution. – List of Machineries to be imported (on ledger paper – 3 copies). – List of Raw Materials and Components to be imported (on ledger paper – 3 copies). – List of Spares and Consumables to be imported (on ledger paper – 3 copies). – List of Machinery and equipment, consumables, packing materials to be indigenously procured without payment of Central Excise Duty (on ledger paper – 3 copies). – Copy of Ground Plan.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card Other conditions of the LUT are as under: – The export obligation [EO] on the unit under EOU scheme shall be in addition to any other EO which is imposed under different schemes such as Advance Authorisation or EPCG Authorisation. – The unit under implementation will submit quarterly progress report to the concerned DC. – The unit will intimate date of commencement of production for exports within one month to the DC.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card The unit shall, after the commencement of production, submit quarterly progress report [QPR] to the DC within 30 days of the close of the quarter. The unit shall submit annual progress report [APR] to the DC within 90 days of the close of financial year [April-March]. The unit shall not dispose its production into DTA except in terms of FTP and/or when specifically allowed by the competent authority. The unit shall be bound by the decisions, if any, to changes in the provisions of the EOU scheme. The unit shall maintain e-mail address and have an operational website.
Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card The unit has to intimate any change in its address, telephone numbers, e-mail addresses, website, Bank address and passport nos. of concerned directors/partners etc. within a fortnight of the change. The unit shall comply with the conditions stipulated under the relevant Customs and Excise duty exemption notifications. Green card is issued automatically alongwith acceptance of LUT.
Step-5: Making application for declaration of a place(unit) as warehousing station under Section 9 of CustomsAct, 1962 It is required under the Customs Act, 1962 [CA, 1962] that a place is declared as a warehousing station under Section 9 of the Customs Act, before a private warehouse is licensed. The power vests with the Commissioner of Customs. Following Documents are to be submitted for Making Application for Declaration of a Place (Unit) as Warehousing Station Under Section 9 Of Customs Act, 1962. – Copy of project report. – Copy of industrial licence, if any. – Copy of LOP/LOI issued by DC. – Copy of exemption material list duly attested by DC. – Copy of Green Card. – Copy of Ground Plan. – Copy of manufacturing process flowchart.
Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WHLic.) and Sec.65 (for manufacture in bond) of CA, 1962.] Since EOUs operate under bond, a licence for setting up private bonded warehouse is required which empowers the EOU to warehouse and manufacture the goods in bond. For this purpose, an application has to be made to the Dy./Asst. Commissioner of Customs / Excise as the case may be depending on location. Public Notice No. 115/99 dtd. 18.08.99 issued by Commissioner of Customs, Pune prescribes documents for such application, which are listed as under:
Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WHLic.) and Sec.65 (for manufacture in bond) of CA, 1962.] – A Copy of the Notification or the Notification No. wherein the place has been declared as a warehousing station under section 9 of the customs act, 1962. – Copies of permission from the ministry of industries, allowing the facilities of 100% EOU to the applicant. – Purchase/Sale deed of the land. – 7/12 abstract of land records issued by local revenue authorities. – Allotment letter from M.I.D.C., if the factory is proposed to be in the industrial area. In other cases, N.O.C from local Grampanchayat. – N.O.C. from Pollution Control Board.
Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WH Lic.)and Sec.65 (for manufacture in bond) of CA, 1962.] – Ground plan duly verified by the jurisdictional range superintendent. – Stage-wise manufacturing process flow chart along with imported and indigenous raw material required. – An undertaking from the applicant, to the effect that they will bear the cost of establishment charges and other charges of the staff posted there. – List of imported machinery and indigenous machinery for setting up the 100% EOU. – List of Imported/Indigenous raw materials to be used in the manufacture. – Copy of LUT, Green card and list of exempted material.
Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG): A single all-purpose Bond is required to be furnished by EOU in lieu of the different bonds. The said Bond can be executed with either surety or security as per Notification No. 6/98-CE(NT) dated 02.03.1998 as amended. This bond is called B-17 bond and covers liabilities both under Customs and Central Excise Acts.
Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG): Calculation of Bond amount and Bank Guarantee. Rs. in Lakhs Description of Assessable Rate of Amount of Bond value* goods value duty duty A. Capital Goods Imported 100 24.42% 24.42 6.11 Indigenous 100 8.24% 8.24 2.06 B. Raw Material ** Imported 25** 24.42% 6.11 1.53 Indigenous 5** 8.24% 0.41 0.10 Total A+B 39.18 9.8 **Duty on raw materials to be held in stock for three months only.
Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG): Calculation of Bond amount and Bank Guarantee. Hence, Bond amount would be Rs. 9.8 lakhs and BG would be Rs. 0.49 lakhs. * Bond amount calculated @25% of duty saved amount Plus Bank Guarantee 5% of Bond amount.
Step-8: Registration with the customsauthorities at the port of import. Since goods imported by EOU are without payment of duty, the movement of such goods is under bond from port to the location of the EOU. To ensure that goods are not diverted otherwise, customs authorities at the port require maintenance of certain records to monitor exemption granted to EOUs. The EOUs are, therefore required to register themselves with the customs authorities at the port by following the procedure stipulated under Standing Order No. 7722/2002 dtd. 25.07.2002.
LOP / LOI LOP/LOI is granted by the Development Commissioner [DC] LOP/LOI list the conditions of approval. The initial validity of LOP/LOI is 3 years from the issue date during which time the unit should commence commercial production. This validity can be extended for a further period of 3 years. Request for extension beyond 6 years would considered by Board of Approval. After commencement of production, LOP becomes valid for 5 years. LOP/LOI is construed as an authorisation for all purposes.
LUT LUT is executed with the DC to ensure positive NFE & to abide by any of the terms and conditions of the LOP/LOI/IL Failure to a fulfill the criteria of positive NFE shall render the unit liable to penal action under the provisions of the Foreign Trade (Development & Regulation) Act, 1992 and may result in cancellation or revocation of LOP/LOI/IL
NFE (Net Foreign Exchange Earnings) The unit shall be a positive net Foreign exchange earner. Net Foreign Exchange Earnings = Foreign Exchange Inflow less Foreign Exchange Outflow Shall be calculated cumulatively in blocks of five years, starting from the commencement of production. The performance of EOU/ EHTP/ STP/ BTP units shall be monitored by the DC/Unit Approval Committee.
What is Foreign Exchange Inflow?(For NFE) Physical Exports of goods Export of Services Other supplies in DTA – Supplies to holders of advance authorisation/ advance authorisation for annual requirement/ DFIA/ EPCG scheme – Supplies to other EOU/EHTP/STP//BTP/SEZ units – Supplies made to bonded warehouses set up under the policy and/ or under section 65 of the customs act and warehouses in Free Trade and Warehouse SEZ, where payment is received in foreign exchange, etc.
What is Foreign Exchange outflow?(For NFE) Import of Inputs / Capital Goods Any other payment in Foreign Exchange like: • Interest payment • Payment to foreign technicians • Payment of Royalty / technical know-how fees • Repatriation of Dividend • Commission on exports • Foreign travel
Imports Local ProcurementOperations of EOU Exports DTA Sales Sub-contracting
Inter-Unit Transfer Export through others Other Sale of unutilisedActivities materials Refund of CST Re-import / Re-export
Import/Local Procurement under EOU Scheme EOU unit may import and/or procure from DTA/bonded warehouses in DTA / international exhibition held in India without payment of duty all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Import of goods free of cost or on loan / lease from clients is also permitted.
Export under EOU scheme What can be Exported under EOU Scheme: – EOUs can export all kinds of goods and services except items that are prohibited in ITC (HS). Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfillment of the conditions indicated in ITC(HS). – Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc. upto a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed.
Export under EOU scheme – EOU units can export to Russian Federation in INR against repayment of State Credit / Escrow Rupee Account of buyer subject to RBI clearance. – Procurement and export of spares/components upto 5% of FOB value of exports can also be exported to same consignee/buyer, subject to the condition that it shall not be counted for NFE and direct tax benefits.
Export under EOU scheme There are certain relaxations for the EOUs in respect of their export activities, as follows: – State trading regime does not apply. – It is permitted to send capital goods abroad for repair and return and any foreign exchange payment for this is allowed. – The export proceeds can be realized within 12 months of export. The time limit can be extended by RBI. – Items of manufacture for export specified in Letter of Permission (LoP) / Letter of Intent (LoI) alone can be taken into account for calculation of NFE.
Sale of Finished goods in DTA Units may sell goods upto 50% of FOB value of exports Conditions: – Permission from Development commissioner – Based on yearly/half yearly/quarterly exports – Upon fulfillment of positive NFE and on payment of concessional duties – Permission will be granted for its products similar to the goods which are exported or expected to be exported from the units
Sale of Finished goods in DTA Maximum sale of a single product can be to the extent of 90% of its export value. However, within overall ceiling of 50%. May sell finished products in the DTA under intimation to the Development Commissioner against payment of full duties provided they have achieved the positive NFE. In case of new EOUs, advance DTA sale will be allowed based on its estimated exports for the first year. An amount equal to Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import, shall be payable on the goods used for the purpose of manufacture or processing of the goods cleared into DTA from the unit.
Sale of Finished goods in DTA Subject to import restriction on inputs upto 3% of FOB value of exports of the previous year, EOU in textiles/granite sector can make DTA sale on payment of excise duty alone.
Sale of Rejects in DTA May sell rejects in DTA unless specifically prohibited in the LOP – On prior intimation to customs/excise authority – On payment of duties as applicable – Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE
Sale of scrap in DTA Scrap/ waste/ remnants arising out of production process or in connection therewith may be sold in the DTA: As per the Standard Input-Output norms notified under the Duty Exemption Scheme. Wherever norms are not available they should be got approved first from DC and subsequently from Norms Committee. On payment of concessional duties as applicable [as per CE Ntfn No. 23/2003-CE Dtd. 31.03.2003] Within the overall ceiling of 50% of FOB value of exports Scrap can also be destroyed with the permission of Customs /Excise authorities
Entitlement for DTA units supplying to EOUs Supplies from the DTA to EOU/EHTP/STP/BTP units will be regarded as "deemed exports” and will get the following benefits • Advance Authorisation/DFIA or Deemed Export Drawback • Terminal Excise duty refund Supplies from the DTA to EOU/EHTP/STP/BTP units will be counted for discharge of export obligation, if any, on the supplier
Sub-Contracting EOU units may sub-contract production process to DTA through job work which may also involve change of form or nature of goods. Annual permission from the Customs authorities is to be obtained. Goods sent for Jobwork are to be returned to the unit within 90 days. Subcontracting of both production and production processes may also be undertaken without any limit through other EOU/EHTP/STP/SEZ/BTP units on the basis of records maintained in the units. Subcontracting of part of production process abroad may also be permitted with the approval of the Development Commissioner.
Sub-Contracting (take-up job work) EOU units may take up job-work for export on behalf of DTA exporter – On the basis of annual permission from the Customs authorities – The goods are exported directly from EOU – And export documents shall be filed jointly in the name of DTA and EOU – The DTA exporter will be entitled for refund of duty paid on the inputs by way of All Industry Rate of Drawback/ Brand Rate of duty drawback
Sub-Contracting EOU/EHTP/STP/BTP units may take up job-work for export on behalf of foreign supplier provided that no DTA clearance shall be allowed Scrap/waste/remnants generated through job work – May either be cleared from the job worker’s premises on payment of applicable duty on transaction value or; – Destroyed in the presence of Customs/ Excise authorities or; – Returned to the unit
Export through Others An EOU unit may export goods manufactured through another exporter or other EOU/EHTP/STP/SEZ unit subject to following conditions: – Goods shall be produced in EOU. – Export orders so procured shall be executed within parameters of EOU scheme and goods shall be directly transferred from unit to port of shipment.
Sale of Un-utilised Material Un-utilised material / Obsolete or Surplus Capital goods can be disposed of as under: – Transferred to another EOU unit – Disposed off in the DTA with the approval of the Customs authorities on payment of applicable duties – Exported – Benefit of depreciation, as applicable, will be available in case of disposal in DTA only when the unit has achieved positive NFE taking into consideration the depreciation allowed.
Sale of Un-utilised Material – No duty shall be payable in case of destruction within unit after intimation to Customs authorities or destroyed outside with permission of Customs authorities. – Disposal of used packing material will be allowed on payment of duty on transaction value.
Refund of CST EOUs are entitled to reimbursement of Central Sales Tax (CST) paid by them on purchases made from the DTA, for production of goods and services on the specified terms and conditions. The disbursing authority for the claim of reimbursement is Development Commissioner.
Re-import/Re-export and SalesReturn/Purchase Returns by EOUs Goods Procured Re-import Goods sold Re-export from DTA of goods in DTA are of goods and to be exported Returned imported Returned to back DTA unit
Replacement/ RepairOf Goods procured or sold The general provisions of the Policy relating to export of replacement/repair of goods would also apply equally to EOU units Cases not covered by these provisions shall be considered on merits by the Development Commissioner
Exit from EOU Scheme Guidelines for Exit of EOU scheme is given under Appendix 14 –I-L: Following points are to be taken into consideration during Exit from EOU Scheme: r With approval of DC, an EOU may opt out of scheme, subject to payment of Excise and Customs duties. r If unit has not achieved positive NFE, it shall be liable to penalty at the time of exit.
Fast Track Clearance Status Holder EOUs eligible for the Fast Track Clearance Procedure Benefits: – No examination of import cargo at port – Imports through pre-authenticated procurement certificate – DG set can be procured under intimation to DC & Excise – No DTA sales permission required – No Bank Guarantee required – Removal of capital goods and parts thereof for repairs under prior intimation to AC/DC of Customs/Excise. – Time bound disposal of applications.
Obligation of EOU Achieve Positive NFE cumulatively for a block period of five years Fulfill the terms & conditions of the LOP & LUT Quarterly performance report (QPR) to be submitted within 1 month from the end of every quarter Annual Performance report certified by CA to be submitted within 3 months from the end of the financial year (i.e., on or before 30th June every year) The procedure for bonding as per Customs and Central Excise Rules to be followed Commercial Registers are to be maintained Proper accounts books to be kept as required under the respective laws under which it is registered as an entity
When EOU is most beneficial? Raw materials/components are mainly imported New capital goods or second hand capital goods are to be imported/purchased and installed Where the orientation of the company is towards export and not towards DTA sale as under the new policy DTA sale permission is limited to 50% of physical exports in value terms and therefore in order to enjoy the benefits of DTA the company must export physically. IT benefits for Conversion of DTA into EOU (as per CBDT Circular No. 1 Dtd. 06.01.2005) are to be considered. When hassle free operations are desired. (Since there is no need of applying for licences like Advance Licence etc.)
Major Changes effected in New FTP 2009-14 CENVAT Credit facility for the component of SAD and Education Cess on DTA sale by EOU. EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%, without changing the criteria of ‘similar goods’, within the overall entitlement of 50% for DTA sale. During this period of downturn, Board of Approvals (BOA) to consider, extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs.
Deemed Exports This is a special facility provided for supplies of indigenous products which can be consumed ultimately in the production of goods to be exported. The conditions are that supplied goods as it is do not leave the country but get consumed in the process of manufacture, payment for which is received in Indian Rupees or in foreign exchange. The categories eligible for deemed exports benefits are given in Para 8.2 of Foreign Trade Policy which are listed here below:
Deemed Exports Supplies to Supplies to Marine Supplies toAuthorisation Freight EOUS/ Supplies to Supplies to Holder Containers by EHTPs/ Projects Fertilizer [Adv. Autho. 100% EOUs STPs/ Plant /AAL/ (Domestic BTPs DFIA/EPCG] Freight Containers Manufacturers)
Deemed Export BenefitsAdv. Authon/ Adv. Authon Deemed Refund of TED/ for Annual OR Exports + ExemptionRequirement/ Drawback from TED DFIA.
Important Provisions As far as (a) and (b) are concerned, these are mutually exclusive because if exemption from duty is claimed, refund cannot be claimed. Hence, deemed exporter will either claim Advance Authorisation for Intermediate supply / Advance Authorisation for deemed exports / DFIA or deemed exports duty drawback. Deemed exports duty drawback can be claimed on the basis of All Industry rate or on the basis of Brand rate following the procedure for fixation of brand rate. The deemed exports duty drawback is refunded by DGFT.
Important Provisions As far as claiming of refund of Terminal Excise Duty (TED) is concerned, the same principle applies. Terminal Excise Duty need not be paid by the deemed exports supplier if the supplies are given to EOU units under exemption notification no. 22 dtd. 31.03.2003 (which is commonly known as CT-3 procedure) or when supplies are made to Advance Licence holder under excise notification no. 44 dtd. 26.06.2001. In all other cases, deemed export suppliers have to pay Terminal Excise duty and claim refund, except when supplies are made against international competitive bidding. If the recipient units take CENVAT credit of terminal excise duty, then also the Govt. will not grant refund.
Important Provisions In case of deemed exports duty drawback as well as refund of terminal excise duty, both are to be claimed from licensing authorities alone. Deemed exports, per se, are monitored by DGFT and Excise and not by Customs. In case of EOU, Refund of Terminal Excise Duty and Duty Drawback must be claimed from the concerned Development Commissioner.
Chapter 9 – Definitions Accessory Actual User Capital Goods Component Consumables Consumer Goods Drawback Group Company Manufacture Raw Material Service Providers
Chapter 9 – Miscellaneous Matters [Handbook of Procedures]
Chapter 9 – Miscellaneous Matters Para 9.1 – Change in Name and Constitution An IEC holder must get the change in name / address / constitution incorporated within 90 days of such change. Provided, however, RA issuing IE Code may, condone delay on payment of penalty of Rs. 1000/-. Change in constitution, aforesaid, does not include change in directors of Public Limited Company.
Chapter 9 – Miscellaneous Matters Para 9.3 - Applications Received After Expiry of Prescribed Date of Receipt Wherever any application is received after expiry of last date for submission of such application, the application can be considered after imposing a late cut in the following manner: Application received after the expiry of last 1. 2% date but within six months from the last date 2. Application received after six months from the 5% prescribed date of submission but not later than one year from the prescribed date 3. Application received after twelve months from 10% the prescribed date of submission but not later than two years from the prescribed date
Chapter 9 – Miscellaneous Matters Para 9.7 – Consumption Register – Importers are required to maintain a register as in Appendix-23 (for 3 years period) of items imported under an Authorisation and separately for items imported with actual user condition and its consumption. – In respect of particular schemes such register shall be maintained for specified period.
Chapter 9 – Miscellaneous Matters Para 9.11 - Time Bound disposal of applications The time limit for disposal of application by Regional Authority is prescribed in this para. Para 9.11 A - Date of Shipment/ Dispatch In respect of Imports Date of shipment/dispatch for the purposes of imports will be reckoned as under:-
Mode of Date of Shipment / DispatchTransportation(i) By Sea The date affixed on the Bill of Lading(ii) By Air Date of relevant Airway Bill provided this represents date on which goods left last airport in the country from which the import is effected.(iii) From land-locked Date of dispatch of goods by rail, road or othercountries recognised mode of transport to consignee in India through consignment basis.(iv) By Post Parcel Date stamp of office of dispatch on the packet or dispatch note(v) By Registered Date affixed on Courier Receipt / WaybillCourier Service(vi) Multimodal Date of handing over goods to first carrier in atransport combined transport Bill of Lading.
Chapter 9 – Miscellaneous Matters Para 9.12 - Date of Shipment/ Dispatch in respect of Exports Date of shipment/despatch for the purposes of exports will be reckoned as under:-Mode of Date of Shipment / DispatchTransportation(i) By Sea For bulk cargo, date of Bill of Lading or date of mate receipt, whichever is later. a) For containerised cargo, date of “Onboard Bill of Lading”, or “Received for Shipment Bill of Lading”, where the L/C provides for such Bill of Lading. For exports by containers from Inland Container Depot (ICD), date of Bill of Lading issued by shipping agents at the time of loading of export goods in ICD after customs clearance. b) For Lash barges, date of Bill of Lading evidencing loading of export goods on board.
Chapter 9 – Miscellaneous Matters Date mentioned by appropriate Officer of Customs on Shipping Bill, evidencing loading or handing over(ii) By Air of goods to air cargo complex, which are not international airports, or by way of rotation of flight number and date.(iii) By Post Date stamped on postal receipt.Parcel(iv) By Rail Date of RR (Railway Receipt).(v) By Date affixed on Courier Receipt/ Waybill.RegisteredCourier Service(vi) By Road Date on which goods crossed Indian border as certified by Land Customs Authorities.
Thought for the Day… “The Master Key to Success is to set Goals higher than yourself and then to achieve them.”
Sudhakar Kasture Exim Institute [A Division of Helpline Impex Pvt. Ltd.]Mumbai - Head Off. Pune - Branch Off.A-203, Everest Chambers, EPI Centre, Opp. Indsearch,Next to Star TV Office, Law College Road, Pune 411004.Near Marol Naka, Andheri-Kurla Road, Tel: 020-65246159Andheri (East), Mumbai – 400 059. Fax: 020-25465195Tel: 022-28507615/28507329/65769126 Email:Fax: 022-28506419 firstname.lastname@example.orgE-mail: email@example.com