100% Export Oriented Units and Export Oriented Units in Export Processing Zones/Free Trade Zones - amendments regarding - Customs - 030/99

F.No.305/18/99-FTT Circular No. 30/99-Cus dated 25/5/1999 Government of India Ministry of Finance Department of Revenue Central Board of Excise Customs, New Delhi Subject : 100% Export Oriented Units and Export Oriented Units in Export Processing Zones/Free Trade Zones - amendments regarding. The revised EXIM Policy, 1997-2002 corresponding Hand Book of Procedures (HOP), incorporating amendments in the policy upto 31-3-99, comes into force from 1st April 1999. The amendments made in the Chapter-9 of the EXIM Policy and Handbook of Procedures and agreed to, by our Department have necessitated amendments in notifications, governing standalone 100% EOUs including units of EHTP, STP, Agriculture/Floriculture Aquaculture sector Export Processing/Free Trade Zones, and units in EHTP/STP Complexes. These notifications have been amended vide Notification No. 65/99-Cus, dated the 19th My, 1999 and No. 25/99CE, dated the 19th May 1999 (copies enclosed). The salient features of the amendment are as under. A. DTA Sales Hitherto, clearance of the finished goods rejects into DTA, on payment of appropriate duty is allowed as a stipulated percentage of value of production. The scrap/waste/remnants upto a fixed percentage is also allowed clearance into DTA, on payment of duty. In addition to the above, separate scale of DTA sale entitlement for agriculture and EHTP sector had been provided. It has now been provided in the EXIM Policy that DTA sale on all accounts for all sector shall not exceed 50% of the FOB value of previous financial year's export. This provision has been incorporated in the amendments. The total value of the goods sold in the DTA by a unit under this provision shall be 50% of FOB value of exports. It may also be clarified that the DTA sale, in accordance with para 9.9 and 9.20 of the EXIM Policy, will only be eligible for concessional rate of duty, provided under notification 2/95-CE dated 4.1.95. B. Demand of Duty from the Defaulting Units (i) It has now been provided, to demand duty and interest on the duty free raw materials, components, spares, and consumable (other than capital goods) etc., if the unit fails to achieve the stipulated NFEP and EP within a period of one year of importation/procurement of such goods or within such extended period, not exceeding further one year as the Assistant Commissioner may, on being satisfied that there is a sufficient cause, allow. It has been further provided that, Commissioner may extend this period for achievement of NFEP or EP for further period not exceeding five years from the date of importation or procurement of such goods. (ii) The duty and interest will also be demanded from the units who have failed to - (a) install or use or re-export the capital goods within a period of one year from the date of importation or procurement or within the extended period as may be allowed by the Assistant Commissioner; (b) Use or re-export the capital goods within a period of one year from the date of importation or procurement or within the extended period as may be allowed by the Assistant Commissioner; (c) to export the manufacured/produced/packaged goods within one year or within such extended period as permitted by the AC, from the date of importation or procurement of imported or indigenous goods. For further details, notification may be referred to. The above extensions may be given liberally and the duty and interest may be demanded only in cases involving mala fide and diversion of raw material. C. The Notification No. 126/94-Cus, dated the 3rd June, 1994 136/94-CE, dated the 10th November, 1994, governing agriculture/horticulture/floriculture units have been enlarged to allow exports of processed fruits, vegetables, meat and edible meat offal. D. Inclusion of "Service" as Export Product The Notification No. 133/94-Cus. dated 22-6-94 and 126/94-CE dated 2-9-94, governing units in the EPZ/FTZ has been enlarged to include service as product for export. E. Procurement of Goods from Public/Private Bonded Ware Houses The EOU/EPZ units may now also source imported goods, duty free from the public/private bonded warehouses licensed under section 57 or 58 of the Customs Act. F. Duty Free Clearance into Warehouse or to License Holders Under Para 9.10(e) of the EXIM Policy Under Notification No. 26//98-CE(NT), dated 15-07-98, goods can be cleared to warehouses appointed or registered, without payment of central excise duty, for further exports. It has been provided that goods manufactured or produced with 100% EOU/EPZ units (except units in the aquaculture, agriculture STP sectors) may be cleared to the above said warehouses or to the licence holders as referred to, in Paragraph 9.10(e) of EXIM Policy, without payment of duty. G. Export from Jobworker's Premises It has now been provided that, the goods sent out for jobwork from the EOU/EPZ (except STP, agriculture or aquaculture sector) units, may be exported directly from the jobworker's premises provided the scrap, waste or remnants generated during the processing, is either returned or cleared on payment of appropriate duty. The existing instruction for permitting sub-contracting may be followed but export from the jobworrker's premises may only be permitted when the same is registered under rule 174 of the Central Excise Rules, 1944. A sample of goods exported may be sent to the parent unit for checking whether the goods supplied by the unit, are utilised by the jobworker, in the product under export. H. Assistant Commissioner to approve Importation/Procurement of Fuel Lubricants and other consumables It has now been provided that the EOU/EPZ units may import or source duty free fuel, lubricants and other consumables for their captive generating sets or captive power plants or boilers with the approval of the Assistant Commissioner, on the recommendation of the Development Commissioner. 2. Any difficulty faced in implementation the above said amendments may be brought to the notice of the Board, expeditiously by a DO Letter. 3. The Public Notice/Trade Notice to give wide publicity, may please be issued within two weeks or receipt of this circular. Sd/- (K.M.Ravichandran) Senior Technical Officer (FTT)