Diffculties being faced by EOUs and EPZ/STP/SEZ units in procurement of indigenous goods without payment of duty - regarding - Central Excise - F. No. 305/121/2001

F. No. 305/121/2001 Dated 25-7-2001 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Diffculties being faced by EOUs and EPZ/STP/SEZ units in procurement of indigenous goods without payment of duty - regarding. I am directed to invite your kind attention to the new Central Excise (No. 2) Rules, 2001 notified under Notification No. 30/2001-C.E. (N.T.) dated 21-6-2001 and Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, notified under Notification No. 34/2001-C.E. (N.T.) dated 21-6-2001. These rules have come into force w.e.f. 1-7-2001 and with this the erstwhile Rules for movement of goods at concessional rate as per Chapter X are no longer effective. 2. Doubts have been raised as regards the procedure to be followed by 100% EOUs for obtaining duty free indigenously manufactured goods for manufacture of goods for export. Government have prescribed a detailed self-contained Notification No. 1/95-C.E. as amended, incorporating the various conditions subject to which 100% EOUs can obtain various categories of excisable, goods, duty free. This notification has inter alia, laid down a condition of execution of suitable bond by the 100% EOUs in the prescribed form for proper accountal of receipts, storage and utilisation of the duty free goods as well as fulfilling the export obligation as also to fulfil the various conditions laid down in the notification and EXIM Policy etc. The goods are also supposed to be brought directly from the factory of manufacture or from the warehouses for use for the purposes specified - solely for export. It is, however, observed that there is also a reference in para 1(f) 1(g) to the erstwhile Rules 156A and 156B of the Central Excise Rules, as modified by the rule 173N of the said rules, in so far as the actual movement of the duty free goods for manufacture to 100% EOUs is concerned; para 1(g) also refers to the procedure contained in Chapter X with the modification that instead of issue of certificate CT-2 prescribed in the said Chapter, the movement should be against the modified CT-3 certificate whose format also is incorporated in Notification No. 1/95-C.E. itself. 3. Apparently, certain doubts are being raised as to the procedure for procurement etc., as strictly speaking Rules 156A and 156B or the erstwhile Chapter X are no longer operative w.e.f 1st July. Whether the detailed procedure has prescribed under Notification No. 34/2001-C.E. effective from 1st July has to be followed now even by 100% EOUs, or the earlier procedure as incorporated in the 100% EOUs notification can continue, needs clarification. 4. Board has examined the issue. In the context of the functioning of the 100% EOUs, over a period of time various procedural requirements as well as simplifications have been evolved and special provisions made either in the notification or through instructions. There is no intention to make any modifications in these existing instructions/procedural formalities - as prescribed in terms of Notification No. 1/95-C.E. (which remains unamended) even though new rules under 34/2001-C.E. have been brought into operation for general movement of goods at concessional rates as may be prescribed in any particular notification. Board has, therefore, decided that to prevent any dislocation and administrative difficulties to 100% EOUs, pending slightly rewording of the clauses 1(f) and 1(g) of the EOU notification to avoid any confusion, all the procedural formalities and requirements as prescribed in Notification No. 1/95-C.E. read with Board's instructions for 100% EOUs/STP/EHTP/SEZ etc. units prevailing prior to 1-7-2001 may continue to be followed even on or after 1st July 2001. 5. Kindly acknowledge receipt of this letter. CENTRAL EXCISE TRADE NOTICES