Foreign Trade Policy 2015-20
CHAPTER- 6
EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs)
(Relevant Procedure Chapter 6)
6.00 Introduction and Objective
(a) Units undertaking to export
their entire production of goods and
services
(except permissible sales in DTA), may be set up under the
Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park
(EHTP) Scheme, Software Technology Park(STP) Scheme or Bio-Technology
Park (BTP) Scheme for manufacture
of goods, including repair, re-making,
reconditioning, re-engineering, rendering of services, development of
software, agriculture including agro-processing, aquaculture, animal
husbandry, bio-technology, floriculture, horticulture, pisciculture,
viticulture, poultry and sericulture. Trading units are not covered
under these schemes.(b) Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production and employment generation.
6.01 Export and Import
of
Goods
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park unit may export all
kinds of goods and services except items that are prohibited
in ITC(HS). However
export of gold jewellery, including partly processed jewellery, whether plain or
studded, and articles, containing gold of 8 carats and above upto a maximum
limit of 22 carats only shall be permitted.old[(a) An EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park unit may export all kinds of goods and services except items that are prohibited in ITC (HS). However export of gold jewellery, including partly processed jewellery, whether plain or studded, and articles, containing gold of 8 carats and above upto a maximum limit of 22 carats only shall be permitted.]
(b) Export of Special Chemicals,
Organisms, Materials, Equipment and Technologies (SCOMET) shall be
subject to fulfilment of the conditions indicated in ITC (HS). In
respect of an EOU, permission to export a prohibited item may be
considered, by BOA Board of Approval, on a case to case basis, provided such raw materials
are imported and there is no procurement of such raw material from DTA.
(c) Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc up to a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed.
(d) (i) An EOU / EHTP Electronic Hardware Technology Park/ STP/ BTP Biotechnology Park unit may
import and / or procure, from DTA or bonded warehouses in DTA /
international exhibition held in India, all types of goods, including
capital goods
, required for its activities, provided they are not
prohibited items of import in the ITC (HS) subject to conditions given
at para (ii) & (iii) below. Any permission required for import under any
other law shall be applicable. Units shall also be permitted to import
goods including capital goods required for approved activity, free of
cost or on loan / lease from clients. Import of capital goods will be on
a self-certification basis. Goods imported by a unit shall be with
actual user
condition and shall be utilized for export production.
*(ii) The imports and/ or procurement from bonded warehouse in DTA or from international exhibition held in India shall be without payment of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and additional duty, if any, leviable thereon under Section 3(1), 3(3) and 3(5) of the said Customs Tariff Act. Such imports and/ or procurements shall be made without payment of integrated tax and compensation cess leviable thereon under section 3(7) and 3(9) of the Customs Tariff Act, 1975 as per notification issued by the Department of Revenue and such exemptions would be available upto 10[30.06.2022] old[9[31.03.2022]] old[8[30.09.2021]] Old[7[31.03.2021]] old[5[31.03.2020]] old[3[31.03.2019]] old[1[01.10.2018.]] old[31.03.2018] only.
(iii) The procurement of goods covered
under GST from DTA would be on payment of applicable GST and
compensation cess. The refund of GST paid on such supply from DTA to EOU
would be available to the supplier subject to such conditions and
documentations as specified under GST rules and notifications issued
there under. EOUs can also procure excisable goods
falling under the
Fourth Schedule of Central Excise Act, 1944 from DTA without payment of
applicable duty of excise.
(e) State Trading regime shall not apply to EOU manufacturing units. However, in respect of Chrome Ore/Chrome concentrate, State Trading Regime as stipulated in export policy of these items, will be applicable to EOUs.
(f) EOU
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units may
import
/procure from DTA, with or without payment of duties/taxes as
provided at Para 6.01 (d)(ii) and 6.01(d)(iii) above, certain specified goods
for creating a central facility. Software EOU/ DTA units may use
such facility for export
of software.
(g) An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture, pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in connection with its activities for use outside the premises of the unit.
(h) Gems and jewellery EOUs may source gold / silver / platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold / silver / platinum from nominated agencies, either on loan basis or outright purchase basis shall export gold / silver / platinum within 90 days from date of release.
(i) EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park units, other than service units, may export to Russian Federation in Indian Rupees against repayment of State Credit/ Escrow Rupee Account of buyer subject to RBI Reserve Bank of India clearance, if any.
(j) Procurement and export of spares
/
components
, upto 5% of FOB value of exports, may be allowed to same
consignee / buyer of the export article, subject to the condition that
it shall not count for NFE Net Foreign Exchange and direct tax benefits.
6[Development Commissioner I Designated Officer may allow, on a case to case basis, requests of EOU / EHTP Electronic Hardware Technology Park / STP/ BTP Biotechnology Park units in sectors other than Gems & Jewellery, for consolidation of goods related to manufactured articles and export thereof along with manufactured article Such goods may be allowed to be imported / procured from DTA by EOU with or without payment of duty and/or taxes as provided at Para 6.01 (d)(ii)and(iii) above, as the case may be to the extent of 5% FOB value of such manufactured articles i exported by the unit in preceding financial year. Details of procured / imported goods and articles manufactured by the EOU will be listed separately in the export documents. In such cases, value of procured/imported goods will not be taken into account for calculation of NFE Net Foreign Exchange and DTA sale entitlement. Such procured /imported goods shall not bo allowed to be sold in DTA Development Commissioner /Designated Officer may also specify any other conditions.]
old[(k) BOA Board of Approval may allow, on a case to case basis, requests of EOU / EHTP Electronic Hardware Technology Park / STP/ BTP Biotechnology Park units in sectors other than Gems & Jewellery, for consolidation of goods related to manufactured articles and export thereof along with manufactured article. Such goods may be allowed to be imported / procured from DTA by EOU with or without payment of duty and/or taxes as provided at Para 6.01 (d) (ii) and (iii) above, as the case may be to the extent of 5% FOB value of such manufactured articles exported by the unit in preceding financial year. Details of procured / imported goods and articles manufactured by the EOU will be listed separately in the export documents. In such cases, value of procured / imported goods will not be taken into account for calculation of NFE Net Foreign Exchange and DTA sale entitlement. Such procured / imported goods shall not be allowed to be sold in DTA. BOA Board of Approval may also specify any other conditions.]
6.02 Second hand
Capital goods
Second hand capital goods, without any age limit, may also be imported with or without payment of duty/ taxes as provided under Para 6.01(d)(ii) above.
6.03 Leasing of Capital Goods
(a) An EOU
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park
unit may, on the basis of a firm contract between parties, source
capital goods from a domestic/ foreign leasing company with or without
payment of duties/taxes as provided at Para 6.01 (d) (ii) and (iii)
above, as the case may be in such a case, EOU/EHTP Electronic Hardware Technology Park /STP / BTP Biotechnology Park unit and
domestic/ foreign leasing company shall jointly file documents to enable
import
/ procurement of capital goods.
(b) An EOU/EHTP Electronic Hardware Technology Park/BTP Biotechnology Park/STP unit may sell capital goods and lease back the same from a Non Banking Financial Company (NBFC), subject to the following conditions:
(i) The unit should obtain permission from the jurisdictional Deputy /Assistant Commissioner of Customs for entering into transaction of 'Sale and Lease Back of Assets', and submit full details of the goods to be sold and leased back and the details of NBFC;
(ii) The goods sold and leased back shall not be removed from the unit's premises;
(iii) The unit should be NFE Net Foreign Exchange positive at the time when it enters into sale and lease back transaction with NBFC;
(iv) A joint undertaking by the unit and NBFC should be given to pay duty on goods in case of violation or contravention of any provision of the notification under which these goods were imported or procured, read with Customs Act, 1962 or Central Excise Act, 1944, and that the lien on the goods shall remain with the Customs Department, which will have first charge over the said goods for recovery of sum due from the unit to Government under provision of Section 142(b) of the Customs Act, 1962 read with the Customs (Attachment of Property of Defaulters for Recovery of Govt. Dues) Rules, 1995.
6.04 Net Foreign Exchange Earnings
EOU
/ EHTP Electronic Hardware Technology Park
/ STP / BTP Biotechnology Park unit shall be a positive net foreign exchange earner. In
addition sector specific provision of Appendix 6 B of Appendices & ANFs,
where a higher value addition and other conditions are given, shall be
required to be followed. NFE Net Foreign Exchange Earnings shall be calculated cumulatively
in blocks of five years, starting from commencement of production.
Whenever a unit is unable to achieve NFE Net Foreign Exchange due to prohibition /
restriction imposed on export
of any product mentioned in LoP Letter of Permit, the five
year block period for calculation of NFE Net Foreign Exchange earnings may be suitably
extended by BoA Board of Approval. Further, wherever a unit is unable to achieve NFE Net Foreign Exchange due
to adverse market condition or any grounds of genuine hardship having
adverse impact on functioning of the unit, the five year block period
for calculation of NFE Net Foreign Exchange earnings may be extended by BOA Board of Approval for a period of
upto one year, on a case to case basis. The method of calculation of NFE Net Foreign Exchange
in detail is given in Para 6.10 of Handbook of Procedures 2015-20
6.05 Applications & Approvals/Letter of Permission / Letter of Intent and Legal Undertaking
(a) (i) Application for setting up an EOU
shall be considered by Unit Approval
Committee (UAC)/ Board of Approval (BoA) as the case may be, as detailed
in the Hand Book of Procedure. A detail of administration of EOUs and
power of DC Development Commissioner is given in HBP.(ii)In case of units under EHTP Electronic Hardware Technology Park / STP schemes, necessary approval / permission under relevant paras of this Chapter shall be granted by officer designated by Ministry of Communication and Information Technology, Department of Electronics & Information Technology, instead of DC Development Commissioner, and by Inter-Ministerial Standing Committee (IMSC) instead of BOA Board of Approval.
(iii)Bio-Technology Parks (BTP) would be notified by DGFT on recommendations of Department of Biotechnology. In case of units in BTP Biotechnology Park, necessary approval / permission under relevant provisions of this chapter will be granted by designated officer of Department of Biotechnology.
(iv)On approval, a Letter of Permission (LoP) / Letter of Intent (LoI) shall be issued by DC Development Commissioner / designated officer to EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park unit. The validity of LoP Letter of Permit/LoI Letter of Intent shall be given in the Hand Book of Procedures.
(b) LoP Letter of Permit / LoI Letter of Intent issued to EOU / EHTP Electronic Hardware Technology Park / STP
/ BTP Biotechnology Park units by concerned authority, subject to compliance of provision
in Para 6.01 above, would be construed as an Authorisation
for all
purposes.
(c) Unit shall execute an LUT with DC Development Commissioner
concerned. Failure to ensure positive NFE Net Foreign Exchange or to abide by any of the
terms and conditions of LoP Letter of Permit / LoI Letter of Intent / IL Industrial Licensing / LUT shall render the unit
liable to penal action under provisions of the FT (D&R) Act, as amended,
and Rules and Orders
made there under, without prejudice to action under
any other law / rules and cancellation or revocation of LoP Letter of Permit / LoI Letter of Intent / IL Industrial Licensing.
6.06 Investment Criteria
Only
projects having a minimum investment of Rs.1 Crore in plant & machinery
shall be considered for establishment as EOU
s. However, this shall not
apply to existing units, units in EHTP Electronic Hardware Technology Park / STP/ BTP Biotechnology Park, and EOUs in
Handicrafts /Agriculture/ Floriculture/Aquaculture/Animal Husbandry
/Information Technology, Services
, Brass Hardware and Handmade jewellery
sectors. BOA Board of Approval may allow establishment of EOUs with a lower investment
criteria.
6.07 Applications & Approvals
(a) Deleted
(b) Deleted
(c) Deleted
(d) Deleted
6.08 DTA Sale of Finished Products / Rejects / Waste/ Scrap / Remnants and By-products
Entire production of EOU
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units shall be exported. However, the
following are allowed as exceptions subject to the conditions specified.
(a) (i) Units, other than gems and jewellery
units may sell finished goods manufactured by them as specified in LoP Letter of Permit
(including by¬products, rejects, waste and scraps arising in the course
of production, manufacture
, processing or packaging of such goods) which
are freely importable under FTP in DTA, subject to fulfillment of
positive NFE Net Foreign Exchange, on payment of excise duty, if applicable, and/ or payment
of GST and compensation cess along with reversal of duties of Custom
leviable under First Schedule to the Customs Tariff Act, 1975 availed as
exemption, if any on the inputs utilized for the purpose of
manufacturing of such finished goods (including by-products, rejects,
waste and scraps arising in the course of production, manufacture,
processing or packaging of such goods). No DTA sale shall be permissible
in respect of, pepper & pepper products, marble and such other items as
may be notified from time to time.
(ii) Such DTA sale shall also not be permissible to units engaged in activities of packaging / labeling / segregation / refrigeration / compacting / micronisation / pulverization / granulation / conversion of monohydrate form of chemical to anhydrous form or vice-versa.
(iii) (a) Sales made to a unit in SEZ
shall also be taken into account for purpose of arriving at FOB value of
export
by EOU provided payment for such sales are made from Foreign
Currency Account of SEZ unit.
(b) Sale to DTA would also be subject to mandatory requirement of registration of pharmaceutical products (including bulk drugs).
(iv) 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.
(v) The DTA sale by EOU/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units shall be subject to payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods). This reversal of Customs Duty would be as per prevailing SION norms or norms fixed by Norms Committee (where no SION norms are fixed).
(vi) Such DTA sale shall also be subject to refund of any benefits under Chapter 7 of FTP availed by the EOU/supplier as per FTP, on the goods used for manufacture of the goods cleared into the DTA.
2(b) For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and for 50% of foreign exchange earned, where payment of such services is received in foreign exchange. However, sale in OTA in respect of services classified under Chapter Heading 9988 and 9989 under GST, but covered in LOP Letter of Permit/para 9.31 of FTP as manufacturing of goods, will continue to be covered under para 6.08(a) above. At the time of OTA clearance, applicable GST and compensation cess as per GST classification would apply.
old[(b) For services, including software units, sale in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of foreign exchange earned, where payment of such services is received in foreign exchange.]
(c) Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA, subject to fulfillment of positive NFE Net Foreign Exchange. The unit shall pay applicable GST and compensation cess along with reversal of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed as exemption, on inputs used in such jewellery.
(d) Unless specifically prohibited
in LoP Letter of Permit,
rejects may be sold in DTA on payment of excise duty, if applicable,
and/or payment of GST and compensation cess along with reversal of
duties of Customs leviable under First Schedule of the Customs Tariff
Act, 1975 availed as exemption on inputs on prior intimation to Customs
authorities. Sale of rejects upto 5% of FOB value of exports shall not
be subject to achievement of NFE Net Foreign Exchange.
(e) Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of applicable duties and/ or taxes and compensation cess. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE Net Foreign Exchange. In respect of items not covered by norms, DC Development Commissioner may fix ad- hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Scrap / waste / remnants may also be exported.
(f) There shall be no duties / taxes on
scrap / waste / remnants, in case same are destroyed with permission of
Customs authorities. The expression "no duties/ taxes" shall not include
applicable taxes and cess under the GST laws. (g) By-products included
in LoP Letter of Permit may also be sold in DTA subject to achievement of positive
NFE Net Foreign Exchange,
on payment of excise duty, if applicable, and/or payment of GST and
compensation cess along with reversal of duties of Custom leviable under
First Schedule to the Customs Tariff Act, 1975, if availed on inputs.
(h) Deleted
(i) In case of units manufacturing electronics hardware and software,
NFE Net Foreign Exchange and DTA sale entitlement shall be reckoned separately for
hardware and software.
(j) Deleted
(k) In case of new EOU
s, advance DTA sale will be allowed not exceeding
50% of its estimated exports
for first year, except pharmaceutical units
where this will be based on its estimated exports for first two years.
(l) Deleted
(m) Procurement of spares
/ components
, up to 2% of the value of
manufactured articles, cleared into DTA, during the preceding year, may
be allowed for supply to the same consignee / buyer for the purpose of
after-sale-service. The same can be cleared in DTA on payment of
applicable GST and compensation cess along with reversal of duties of
Customs leviable under First Schedule of the Customs Tariff Act, 1975
availed as exemption, if any
6.09 Other Supplies
Following supplies effected from EOU
/ EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park units will be counted for
fulfillment of positive NFE Net Foreign Exchange. Such supplies shall not include "marble",
except if such supply of marble is an inter unit supply as provided at
Sub - Para(c) below:(a) Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIA Duty Free Import Authorisation under duty exemption / remission scheme / EPCG scheme. However, printing sector EOUs (or any other sector that may be notified in HBP), can't supply goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance Authorisation / Advance Authorisation for annual requirement.
(b) Supplies effected in DTA against foreign exchange remittance received from overseas.
(c) Supplies to other EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park / SEZ units, provided that such goods are permissible for procurement in terms of Para 6.01 of FTP.
(d) Supplies made to bonded warehouses set up under FTP and / or under section 65 of Customs Act and free trade and warehousing zones, where payment is received in foreign exchange.
(e) Supplies of goods and
services
to such organizations which are entitled for duty free import of such items
in terms of general exemption notification issued by MoF, as may be
provided in HBP.
(f) Supplies of Information Technology Agreement (ITA-1) items and notified zero duty telecom / electronics items.
(g) Supplies of items like tags, labels,
printed bags, stickers, belts, buttons or hangers to DTA unit for
export
.
(h) Supply of LPG produced in an EOU refinery to Public Sector domestic oil companies for being supplied to household domestic consumers at subsidized prices under the Public Distribution System (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas vide notification No. E- 20029/18/2001-PP dated 28.01.2003 (hereinafter referred to as PDS Public Distribution System Scheme) subject to the following conditions:-
(i) Only supply of such quantity of LPG would be eligible for which Ministry of Petroleum and Natural Gas declines permission for export and requires the LPG to be cleared in DTA; and
(ii) The Ministry of Finance by a
notification has permitted duty free imports
of LPG for supply under the
aforesaid PDS Public Distribution System Scheme.
6.10 Export through others
An EOU
/
EHTP Electronic Hardware Technology Park/ STP/BTP Biotechnology Park unit may export goods manufactured/ software developed by
it through another exporter or any other EOU/EHTP Electronic Hardware Technology Park/STP/SEZ unit subject
to conditions mentioned in Para 6.19 of
HBP.
6.11 Entitlement for Supplies from the DTA
(a) Supplies from DTA to EOU
/EHTP Electronic Hardware Technology Park/STP/ BTP Biotechnology Park units for use in their
for exports will be eligible for "benefits under Chapter 7
of FTP". DTA supplier shall be eligible for relevant entitlements under
chapter 7 of FTP, besides discharge of export obligation
, if any, on the
supplier. The refund of GST paid on such supply from DTA to EOU would be
available to the supplier subject to such conditions and documentations
as specified under GST rules and notifications issued there under.(b) Suppliers of precious and semi-precious stones, synthetic stones and processed pearls from DTA to EOU shall be eligible for grant of Replenishment Authorisations at rates and for items mentioned in HBP.
(c) In addition, EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park units shall be entitled to following:-
(i) Reimbursement of Central Sales Tax (CST) on goods manufactured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in Para 9.10 (b) of HBP).
(ii) Exemption from payment of Central Excise Duty on goods, falling in Fourth Schedule of Central Excise Act, procured from DTA on such goods manufactured in India.
(iii) Deleted
(iv) Deleted
6.12 Other Entitlements
Other entitlements of EOU
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units are as under:
(a) Exemption from industrial licensing for manufacture of items reserved for SSI sector.
(b) Export proceeds will be realized within nine months.
(c) Units will be allowed to retain 100%
of its export
earnings in the EEFC Exchange Earners’ Foreign Currency account.
(d) Unit will not be required to furnish
bank guarantee at the time of import
or going for job work in DTA,
where:
(i) The unit has turnover of Rs. 5 crore or above;
(ii) The unit is in existence for at least three years; and
(iii) The unit:
(1) has achieved positive NFE Net Foreign Exchange /
export obligation
wherever applicable;
(2) has not been issued a show cause notice or a confirmed demand, during the preceding 3 years, on grounds other than procedural violations, under the penal provision of the Customs Act, the Central Excise Act, the Foreign Trade (Development & Regulation) Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder, on account of fraud / collusion / wilful mis-statement / suppression of facts or contravention of any of the provisions thereof;
(e) 100% FDI investment permitted through automatic route similar to SEZ units.
(f) Deleted
(g) The Units Approval Committee may consider on a case-to-case basis request for sharing of infrastructural facilities among EOUs and it shall forward its recommendation to the Board of Approval for its consideration. While accepting such proposals, the NFE Net Foreign Exchange obligations of the Units shall not be altered. Such facilities will be available to Units in EHTP Electronic Hardware Technology Park / STP after getting approval from IMSC Inter-Ministerial Standing Committee. However, sharing of facilities between EOUs and SEZ Units shall not be permitted.
6.13 Inter Unit Transfer
(a) Transfer of manufactured goods from one EOU
/ EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park unit to
another EOU / EHTP Electronic Hardware Technology Park/ STP/ BTP Biotechnology Park unit is allowed on payment of applicable
GST and compensation cess with prior intimation to concerned Development
Commissioners of the transferor and transferee units as well as
concerned Customs authorities, as per following procedure for movement
of goods:i . The supplier EOU
shall endorse on usual commercial documents, such as, tax invoice and
delivery challan, the amount of duties of Custom leviable under First
Schedule to the Customs Tariff Act, 1975 availed as exemption on inputs
used in the manufacture
of such finished goods (including by¬products,
rejects, waste and scraps arising in the course of production,
manufacture, processing or packaging of such goods) supplied to another
EOU. The recipient EOU shall pay such endorsed Customs duty besides his
own liability of reversal of Customs duty as provided in Para 6.08
above, before clearance of such finished goods in DTA and as provided
under DoR Department of Revenue notifications/circulars/ guidelines in this regard.
ii . Upon receipt of goods, the recipient EOU shall submit endorsed copies of tax invoice to their jurisdictional Customs authority as well as to the jurisdictional Customs authorities of the supplier EOU.
(b) Capital goods
may be transferred or
given on loan to other EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park / SEZ units, with
prior intimation to concerned DC Development Commissioner and Customs authorities on payment of
applicable GST and compensation cess. Such transferred goods may also be
returned by the second unit to the original unit in case of rejection or
for any reason on payment of applicable GST and compensation cess.
(c) Goods supplied by one unit of EOU
/EHTP Electronic Hardware Technology Park/STP/
BTP Biotechnology Park to another unit shall be on payment of applicable GST and
compensation cess as per following procedure for movement of goods:
(i) The supplier EOU shall endorse on usual commercial documents, such as, tax invoice and delivery challan, the amount of duties of Customs leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption on such goods supplied to another EOU. The recipient EOU shall pay such endorsed Customs duty and applicable GST and compensation cess before clearance of such goods or finished goods manufactured or produced from such goods in DTA.
(ii) Upon receipt of goods, the recipient
EOU shall submit endorsed copies of tax invoice to their jurisdictional
Customs authority as well as to the jurisdictional Customs authorities
of the supplier EOU.
(d) In respect of a group of EOUs / EHTPs / STPs / BTP Biotechnology Park Units which
source inputs centrally in order to obtain bulk discount and / or reduce
cost of transportation and other logistics cost and / or to maintain
effective supply chain, inter unit transfer of goods and services
may be
permitted on a case-to-case basis by the Unit Approval Committee. In
case inputs so sourced are imported and then transferred to another
unit, then value of the goods so transferred shall be taken as inflow
for the unit transferring these goods and as outflow for the unit
receiving these goods, for the purpose of calculation of NFE Net Foreign Exchange.
6.14 Sub-Contracting
(a) (i) EOU
/EHTP Electronic Hardware Technology Park/STP
/BTP Biotechnology Park units, including gems and jewellery units, may on the basis of
annual permission from Customs authorities, sub - contract production
processes to DTA through job work which may also involve change of form
or nature of goods, through job work by units in DTA.(ii) These units may sub - contract upto 50% of overall production of previous year in value terms in DTA with permission of Customs authorities.
(b) (i) EOU may, with annual permission
from Customs authorities, under take job work for export
, on behalf of
DTA exporter, provided that goods are exported directly from EOU and
export document shall jointly be in name of DTA/ EOU. For such exports,
DTA units will be entitled for refund of duty paid on inputs by way of
brand rate of duty drawback. However, such brand rate of drawback shall
be as per Customs and Central Excise Duties Drawback Rules, 2017 and
shall be limited to Customs duties and Central Excise Duties (in respect
of eligible items covered under Schedule IV of Central Excise Act,
1944).
(ii) Import
of goods for execution of
export order placed on EOU by foreign supplier on job work basis, would
be allowed with or without payment of duties and/or taxes as provided
under Para 6.01(d)(ii) above subject to condition that no DTA
clearance shall be allowed.
(iii) Sub - contracting of both production and production processes may also be under taken without any limit through other EOU/EHTP Electronic Hardware Technology Park/ STP/ BTP Biotechnology Park/ SEZ units, on the basis of records maintained in unit.
(iv) EOU/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units may sub - contract part of production process abroad and send intermediate products abroad as mentioned in LoP Letter of Permit. No permission would be required when goods are sought to be exported from sub - contractor premises abroad. When goods are sought to be brought back, prior intimation to concerned DC Development Commissioner and Customs authorities shall be given.
(c) Scrap/waste/remnants generated
through job work may either be cleared from job worker's premises on
payment of applicable duty and/or taxes, as provided under Para 6.08
above on transaction value
or destroyed in presence of Customs authority
or returned to unit. Destruction shall not apply to gold, silver,
platinum, diamond, precious and semi-precious stones.
(d) Sub - contracting/ exchange by gem sand jewellery EOUs through other EOUs or SEZ units or units in DTA, shall be as per procedure indicated in HBP.
6.15 Sale of Unutilized Material
(a) In case an EOU
/ EHTP Electronic Hardware Technology Park/ STP/BTP Biotechnology Park
unit is unable to utilize goods and services
,
imported or procured from DTA,it maybe:
(i) Transferred to another EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park / SEZ unit; or
(ii) Disposed of in DTA with intimation to Customs authorities on payment of applicable duties and/ or taxes and compensation cess. In addition, exemption of duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975 availed, if any on the goods , at the time of import will also be payable and submission of import Authorisation; or
(iii) Exported. Such transfer from EOU/EHTP Electronic Hardware Technology Park/ STP/ BTP Biotechnology Park unit to another such unit would be treated as import for receiving unit.
(b) Capital goods
and spares
that have
become obsolete/ surplus, may be exported or transferred to SEZ unit,
transferred to another EOU/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park/on payment of applicable GST and
compensation cessor disposed of in DTA on payment of applicable GST and
compensation cess and duties of Customs leviable under First Schedule of
the Customs Tariff Act, 1975. Benefit of depreciation will be available
in case of disposal in DTA only when the unit has achieved positive
NFE Net Foreign Exchange
taking into consideration the depreciation allowed. No duty shall be
payable other than the applicable taxes under GST laws incase capital
goods, raw material
consumables
, spares, goods manufactured, processed
or packaged, and scrap/ waste/remnants /rejects are destroyed within
unit after intimation to Customs authorities or destroyed outside unit
with permission of Customs authorities. Destruction as stated above
shall not apply to gold, silver, platinum, diamond, precious and
semi¬precious stones.
(c) In case of textile sector, disposal of left over material/ fabrics upto 2% of CIF value or quantity of import, whichever is lower, on payment of duty on transaction value, may be allowed, subject to certification of Central Excise/Customs officers that these are left over items.
(d) Disposal of used packing
material will be allowed on payment of duty on transaction value
.
6.16 Reconditioning/Repair and Re - engineering
(a) EOU
s shall be set up with approval of UAC Units Approval Committee to carry out reconditioning,
repair, remaking, testing, calibration, quality improvement, upgradation
of technology and re-engineering activities for export
in foreign
currency. Provisions of paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP
and Para 6.29 (a), (b), (c) and (d) of HBP shall not, however, apply to
such activities.
(b) EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units shall be set up
with approval of IMSC Inter-Ministerial Standing Committee to carry out reconditioning, repair, remaking,
testing, calibration, quality improvement, upgradation of technology
and
re-engineering activities for export in foreign currency. Provisions of
paragraphs 6.08, 6.09, 6.10, 6.13, 6.14 of FTP and Para 6.29(a), (b),
(c) and (d) of HBP shall not, however, apply to such activities.
6.17 Replacement / Repair of Imported / Indigenous Goods
(a) General provisions of FTP relating to export /import
of replacement/repair of
goods would also apply equally to EOU
/EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park units. Cases not
covered by these provisions shall be considered on merits by DC Development Commissioner.
(b) Goods sold in DTA and not accepted for any reasons, maybe brought back for repair/replacement, under intimation to concerned jurisdictional customs authorities.
(c) Goods or parts
thereof, on being
imported / indigenously procured and found defective or otherwise unfit
for use or which have been damaged or become defective subsequently, may
be returned and replacement obtained or destroyed. In the event of
replacement, goods may be brought back from foreign suppliers or their
authorized agents in India or indigenous suppliers. The unit can take
free of cost replacement (duty paid) from the authorized agents in India
of foreign suppliers, provided the defective part is re - exported or
destroyed. However, destruction shall not apply to precious and
semi-precious stones and precious metals.
6.18 Exit from EOU
Scheme
(b) If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.
(c) In the event of a gems and jewellery
unit ceasing its operation, gold and other precious metals, alloys, gems
and other materials available for manufacture
of jewellery, shall be
handed over to an agency nominated by DoC Department of Commerce, at price to be determined by
that agency.
(d) An EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park unit may
also be permitted by DC Development Commissioner to exit from the scheme at any time on payment
of applicable duties and taxes and compensation cess on capital goods
under the prevailing EPCG Scheme for DTA Units. This will be subject to
fulfillment of positive NFE Net Foreign Exchange
criteria under EOU scheme, eligibility
criteria under EPCG scheme and standard conditions indicated in HBP.
(e) Unit proposing to exit out of EOU scheme shall intimate DC Development Commissioner and Customs authorities in writing. Unit shall assess duty liability arising out of exit and submit details of such assessment to Customs authorities. Customs authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has achieved positive NFE Net Foreign Exchange, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain "No Dues Certificate" from Customs authorities. On the basis of "No Dues Certificate" so issued by the Customs authorities, unit shall apply to DC Development Commissioner for final exit. In case there is no proceeding pending under FT (D&R) Act, as amended, DC Development Commissioner shall issue final exit order within a period of 7 working days. Between "No Dues Certificate" issued by Customs authorities and final exit order by DC Development Commissioner, unit shall not be entitled to claim any exemption for procurement of capital goods or inputs. However, unit can claim Advance Authorisation / DFIA Duty Free Import Authorisation / Duty Drawback. Since the duty calculations and dues are disputed and take a long time, a BG Bank Guarantee / Bond / Installment processes backed by BG Bank Guarantee shall be provided for expediting the exit process.
(f) In cases where a unit is initially
established as DTA unit with machines procured from abroad after payment
of applicable import duty, or from domestic market after payment of
excise duty/GST, and unit is subsequently converted to EOU
, in such
cases removal of such capital goods to DTA after exit would be without
payment of duty. Similarly, in cases where a DTA unit imported capital
goods under EPCG Scheme and after completely fulfilling export obligation
gets converted into EOU, unit would not be charged customs
duty on capital goods at the time of removal of such capital goods in
DTA when exit.
(g) An EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park unit may also be permitted by DC Development Commissioner to exit under Advance Authorisation as one time option. This will be subject to fulfillment of positive NFE Net Foreign Exchange criteria.
(h) A simplified procedure may be
provided to fast track the De- bonding/ Exit of the STP / EHTP Electronic Hardware Technology Park Unit
which has not availed any duty benefit on procurement of raw material
,
capital goods etc.
6.19 Conversion
(a) Existing DTA units may also apply for conversion into an EOU
/ EHTP Electronic Hardware Technology Park /
STP / BTP Biotechnology Park unit.(b) Existing EHTP Electronic Hardware Technology Park / STP units may also apply for conversion / merger to EOU unit and vice-versa. In such cases, units will avail exemptions in duties and taxes as applicable.
(c) Applications for conversion into an EOU / EHTP Electronic Hardware Technology Park / STP / BTP Biotechnology Park unit from existing DTA units, having an investment of Rs. 50 crores and above in plant and machinery or exporting Rs. 50 crores and above annually, shall be placed before BOA Board of Approval for a decision.
6.20 Monitoring of NFE Net Foreign Exchange
Performance
of EOU
/EHTP Electronic Hardware Technology Park/STP/ BTP Biotechnology Park units shall be monitored by Units Approval
Committee as per guidelines in HBP.
6.21 Export
through
Exhibitions / Export Promotion Tours/ Showrooms Abroad /Duty Free Shops
/ EHTP Electronic Hardware Technology Park/STP/BTP Biotechnology Park
are permitted to:
(i) Export goods for holding/participating in E xhibitions abroad with permission of DC Development Commissioner.
(ii) Personal carriage of gold / silver / platinum jewellery, precious, semi- precious stones, beads and articles.
(iii) Export goods for display / sale in permitted shops set up abroad.
(iv) Display / sell in permitted shops set up abroad, or in showrooms of their distributors / agents.
(v) Set up showrooms / retail outlets at International Airports.
6.22 Personal Carriage of
Import
/ Export Parcels including through Foreign Bound Passengers
Import/
export through personal carriage of gems and jewellery items may be
undertaken as per Customs procedure. However, export proceeds shall be
realized through normal banking channel. Import/ export through personal
carriage by units, other than gems and jewellery units, shall be allowed
provided goods are not in commercial quantity. An authorized person of
Gems & Jewellery EOU
may also import gold in primary form, upto10Kgs in
a financial year through personal carriage, as per guidelines prescribed
by RBI Reserve Bank of India and DoR Department of Revenue.
6.23 Export
/ Import by Post
/ Courier
Goods including free samples, may be exported/imported by air freight or through foreign post office or through courier, as per Customs procedure.
6.24 Administration of EOU
s /
Powers of DC Development Commissioner
Details of administration of EOUs and power of DC Development Commissioner is given in HBP.
6.25 Revival of Sick Units
Subject to a unit being declared sick by appropriate authority, proposals for revival of the unit or its takeover may be considered by BOA Board of Approval.
6.26 Approval of EHTP Electronic Hardware Technology Park/ STP
Deleted
6.27 Approval of BTP Biotechnology Park
Deleted
6.28 Warehousing Facilities
Deleted
1. Substituted Vide:- Notification No. 55/2015-2020 Dated 23/03/2018
2. Substituted Vide:- Notification No. 10/2015-2020 Dated 07/06/2018
3. Substituted Vide:- Notification No. 35/2015-2020 Dated 26/09/2018
4.Substituted Vide:- Notification No. 43/2015-2020 Dated 05/11/2018
5.Substituted Vide:- Notification No. 57/2015-2020 Dated 20/03/2019
6.Substituted Vide:- Notification No. 42/2015-2020 Dated 10/01/2020
7. Substituted Vide Notification No. 57/2015-2020 Dated 31/03/2020
8. Substituted Vide Notification No. 60/2015-2020 Dt.31/03/2020
9. Substituted Vide Notification No. 33/2015-2020 Dt.28/09/2021
10. Substituted Vide Notification No. 66/2015-2020 Dt.01/04/2022