Guidelines for sale of goods in the Domestic Tariff Area (DTA) by Export Oriented Units. (EOUs) and units in Export Processing Zones (EPZs) - Customs - F. No. 305/178/92-FTT

Guidelines for sale of goods in the Domestic Tariff Area (DTA) by Export Oriented Units. (EOUs) and units in Export Processing Zones (EPZs) F. No. 305/178/92-FTT Dated 19-8-1992 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Guidelines for sale of goods in the Domestic Tariff Area (DTA) by Export Oriented Units. (EOUs) and units in Export Processing Zones (EPZs). I. DTA sale entitlement upto 25%/15% Paragraph 102 (b) of the Export and Import Policy and paragraphs 181, 182 and 183 of the Handbook of Procedures (1992-97) provide for sale of goods in the DTA by EOUs and units in EPZs upto 25% or 15% as the case may be, of the value of their production. Such sales in the DTA will be governed by the following guidelines : (a) The sale of goods in the DTA will be subject to the payment of the applicable duties as notified from time to time by the Department of Revenue, Ministry of Finance, Government of India. (b) DTA sale entitlement will be applicable only to those goods that are approved for manufacture and export in the Letter of Permission/Letter of intent. No DTA sale will be permissible if such sale is specifically prohibited in the Letter of Permission/ Letter of Intent. (c) Units may opt for DTA sales on a. quarterly, half yearly or annual basis by intimation to the Development Commissioner of the EPZ concerned. (d) Applications for DTA sales should be submitted within one year of the period of entitlement. The Development Commissioner of the EPZ concerned, may, if he deems it fit, extend this period by six months. (e) An application for DTA sale shall be accompanied by a statement indicating the ex-factory value of the goods produced (excluding rejects); ex-factory value of the goods actually exported; and the value of indigenous raw materials, components and consumables used in the manufacture of the exported goods. The statement shall be certified by an independent Cost/Chartered Accountant and endorsed by the Customs/Central Excise Officer having jurisdiction over the unit. The Development Commissioner of the EPZ concerned will determine the extent of the DTA sale admissible and issue an authorisation for removing a specified quantity of the goods to be sold in the DTA. (f) If the goods sought to be sold in the DTA requires any quality control certificate under any Act/Rule/Regulation, the DTA sale will be allowed only after the production of such a certificate. (g) DTA sale entitlement shall accrus only after the goods are exported during the relevant period as indicated under sub-para (c) above. However, this requirement may be waived in the case of such goods which, in the opinion of the Development Commissioner of the EPZ concerned, require trial production in order to produce goods of exportable quality. (h) Advance DTA Sale permission in respect of trial production shall not exceed 25% or 15% (as the case may be) of the ex-factory value of the production envisaged in the first year. Such advance DTA sale shall be adjusted against the subsequent entitlement for DTA Sale. The unit shall be required to execute a bond with the Development Commissioner of the EPZ concerned to cover the difference between the amount of duties paid on the advance DTA Sale and the full duties applicable on such goods. (i) The maximum DTA Sale entitlement of 25% or 15% as the case may be, is permissible if the value addition achieved by the unit is not less than the value addition stipulated in the Letter of Permission/Letter of Intent. In case the unit fails to achieve the value addition stipulated in the Letter of /Permission/Letter of Intent, the DTA sale entitlement will be determined as follows: (i) If the value addition achieved is not less than 90% of the value addition stipulated in the Letter of Permission/Letter of Intent, the unit will receive the full DTA sale entitlement of 25% or 15%, as the case may be. (ii) If the value addition achieved is less than 90% of the value addition stipulated in the Letter of Permission/Letter of Intent, the DTA sale entitlement will be determined according to the following formula: $Q9E8E000000B05B75EED1A5FFEEE5A1A141BC51645A44 09197D91A1A935F200624C068A2C8D2D4DF065F0DF2B 44286DFFF2955A01F75E2F 9E2E31F0B55746C1469B83DF07DC7BB5FA15FDE4E6D80F C07CAF7DBC793DC192BFB2CD44DAB368D2E855DB6716154C82A105E28 2C682BAD1EC4C166416A6E2E94168DCAA75B5061552821EBDE82C2DD812C388 A8395A3D75A162AA741159C98F93716DBD9B7303FB2B7ED554A0BF326DC5FFF064 19552941182461C0CF263BF34FEAD98AA8DEC1093B25C85F6376098C68498E2210CF6C 8DD8B42F9C389782A73A08B6664B811D81EA5FFBC82FDB67D6821ED1556FEC7B7F7A 7AAE460417520B9D9A650C8D45BFC509D082990464D90B2BF4E822C890BC3C12F18F6768F 79B42FB9909D36055B2FFFC The DTA sale in both the cases mentioned above will be Permissible only if the value addition achieved is not less than the minimum level of value addition specified for the item in Appendix-II of the Export and Import Policy or where no such percentage is specified in that Appendix, the minimum value addition of 20% stipulated in paragraph 97 of the Export and Import Policy. II. Other sales in DTA The following guidelines shall apply to the sale of goods in the DTA in respect of supplies specified in paragraph 103 of the Export and Import Policy and paragraph 184 of the Handbook of Procedures: (a) The unit-shall, at the time of application, indicate the quantity and value of goods sought to be supplied in the DTA. If the sale is effected against an import licence held by the DTA purchaser, the Customs/ Central Excise Officer concerned will allows such sales after making a suitable entry on the licence of the quantity and value of such sales permitted by the Development Commissioner. The import licence shall cease to be valid for further imports to the extent of such supplies effected by EOU/EPZ units. (b) If the goods proposed to be sold by the EOU/EPZ unit do not require an import license, the unit may submit an application to the Development Commissioner of the EPZ concerned supported by the relevant documents. The Customs/Central Excise officer concerned will allow such supplies to the unit in the DTA against a Release Order issued by the Development Commissioner concerned. The Release Order will be issued in duplicate, the original being retained by the unit as evidence of export. (c) The value of the goods supplied under (a) and (b) above will be treated as the FOB value of exports for the purposes of discharging export obligation and achievement of value addition. III. Sale of rejects Sale of rejects in the DTA, as provided for in Para 102 (a) of the Export and Import Policy and Para 180 of the Handbook of Procedures may be made with the prior permission of the Development Commissioner of the EPZ concerned. , IV. Sale of bye-products The aforementioned guidelines do not apply to the sale of bye-products generated by an EOU/EPZ unit during the process of manufacture. The sale of such bye-product in the DTA may be made - (i) if such sale is permitted in the letter of Permission/Letter of Intent; or (ii) in any other case with the prior permission of the Board of Approvals. V. General The guidelines contained in this Public Notice shall supercede the REP Circular No. 18/88 dated 2-5-1988 and 36/91, dated 11-9-91. This notice is issued in public interest.