STP/EHTP Scheme - Central Excise Practice Manual (OLD) - Central Excise

STP/EHTP Scheme STP and EHTP Schemes are sector specific EOU scheme introduced in years 1991 and 1993 respectively. Under STP scheme, a software developmental unit can be set up for the purpose of development of software, data entry and conversion, data processing, data analysis and control, data management or call center services for export out of India. Under EHTP scheme, a unit can be set up for the purpose of manufacture and development of electronic Hardware, or electronics hardware and software in an integrated manner for export out of India. At the time of introduction of sector specified STP scheme in 1991 and Electronic Hardware Technology Park Scheme in 1993, considering the highly technical nature of the requirement as regards guidance and assistance of this sector, it was felt that the Ministry dealing with similar type of work would be more appropriate. With this intention, STP and EHTP Schemes were placed under the administrative control of Ministry of Communication Information Technology unlike general EOUs which are placed under the administrative control of Ministry of Commerce Industry. The administration of STP/EHTP scheme is done by the Department of Information Technology (under the Ministry of Communication Information Technology) through Director, Software Technology Park of India. STP complex (where number of STP units can be located)/EHTP Complex can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. Further, any private party may set up a Software Technology Park for the purpose of export of software developed by the units operating under STP scheme. Such infrastructure provider (for STP units) is allowed to import specified telemetric infrastructure equipments without payment of duty under notification No. 153/93-Customs, dated 13-8-93 (however, there is no corresponding Central Excise exemption notification allowing domestic procurement of telemetric infrastructure equipment). Such Private STP are required to be approved by Inter-Ministerial Standing Committee (IMSC) consisting of representatives of DIT, Department of Revenue, Department of Commerce etc., headed by the Secretary (Information Technology). An STP unit may be an individual unit by itself (stand alone) or it may be one of such units located in an area designated as STP Complex by the Ministry of Information Technology. The Government has already set up Software Technology Parks at Pune, Bangalore, Bhubaneswar, Hyderabad, Thiruvananthapuram, Gandhinagar and Noida. In these Parks, all the required infrastructural facilities are provided. For setting up a unit under STP scheme, application procedure is the same as applicable to EOUs. In case of setting up of units, for development of software and IT enabled services under STP Scheme, the Approval would be given by Director, Software Technology Park of India (STPI). In the Foreign Trade Policy, under EOU Scheme, wherever any permission is required to be obtained from Development Commissioner, the same, in case of STP units, may be given by officer designated by Ministry of Communication and Information Technology i.e. Director, STPI. The Policy provisions governing STP scheme are substantially same as for general EOU scheme. However, considering the requirement of software development sector, some specific provision has been made for the STP/EHTP units in the Policy as well as notification issued by Department of Revenue governing the scheme. The sector specific provisions in respect of STP/EHTP units are as follows:- (i) EHTP/STP units are allowed to make DTA sale of software so developed through data communication/telecommunication links. This is subject to the condition that the Director of STPI (Software Technology Park of India) certifies the valuation of such software sold in DTA. ( Circular No. 54/98-Cus., dated 31-7-1998 ). (ii) STP units are allowed to import telematic infrastructure equipments for creating the central facility system for export of software without payment of duty. The Central facilities so developed by STP units for transmission of data/software for export are allowed to be utilised for the purpose of export by other STP units and DTA units engaged in Development of software. In case of EHTP unit, such facility is not available. However, agency/society authorised to set up the EHTP/STP Complex are allowed to create Central facility system for unit by unit located within such complex. (iii) Under STP scheme, the units are allowed to render consultancy services for development of software on site‛ abroad and consultancy fees received by such units in convertible foreign currencies is deemed to be an exports for the purposes of fulfillment of export obligation under the Scheme. (iv) The STP units are allowed to use the computer system for the purpose of training including commercial training provided the unit has achieved the prescribed NFEP. However, Computer terminals are not allowed to be installed outside the bonded premises for the purpose of imparting training. In case of EHTP units are allowed to use computer system for imparting training to the workers only. (v) The STP units located in the same premises or in the adjoining premises belonging to the same owner are allowed to share specific goods as mentioned in the notification Nos. 52/2003-Customs , and 22/20003-CE, both dated 31.3.2003 .