Export Oriented Units - CBEC's Customs Manual 2023 - Customs

Chapter 25: Export Oriented Units 1. Introduction: 1.1 Export Oriented Units (EOU) scheme was introduced vide Ministry of Commerce Resolution dated 31-12-1980. The purpose of the scheme was basically to boost exports by creating additional production capacity. It was introduced as a complementary scheme to the Free Trade Zones/ Export Processing Zone (EPZ) Scheme introduced in the sixties, which had not attracted many units due to locational restrictions. The exporters showed willingness to set up units with long term commitment to exports under Customs bond operations provided they had the freedom to locate them in places of their choice and given most of the benefits as provided to units set up in the Zones. 1.2 The EOUs are governed by the provisions of Chapter 6 of the Foreign Trade Policy (FTP) and its procedures, as contained in the Handbook of Procedure (HBP). Provisions of the said Chapter 6 and its procedures have also been made applicable to the Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Biotechnology Parks (BTPs). Hence the scheme is for EOU/STP/EHTP/BTP and is referred in common parlance as EOU scheme. 1.3 Over the years, the EOU Scheme has undergone various changes and its scope has also expanded substantially as compared to the initial Scheme, which was basically for manufacturing sector with certain minimum value addition in terms of export earnings. Presently, the units undertaking to export their entire production of goods are allowed to be set up as an EOU. These units may be engaged in the manufacture, services, development of software, repair, remaking, reconditioning, re- engineering including making of gold/silver/platinum jewellery and articles thereof, agriculture including agroprocessing, aquaculture, animal husbandry, bio- technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites. The EOUs can export all products/ services except prohibited items of exports in ITC (HS). 1.4 Some benefits that are extended to the EOUs to impart to them a competitive edge to compete in export market are, as follows: (i) EOUs are allowed to import raw materials/ capital goods duty free (including exemption from IGST and Compensation cess up to 31.03.2021), and also allowed to procure excisable goods without payment of duty indigenously; (ii) Reimbursement of Central Sales Tax (CST); (iii) CENVAT credit of excise duty/ITC of GST on the goods and service and refund thereof; (iv) Fast track clearance facilities; and (v) Exemption from Industrial Licensing for manufacture of items reserved for SSI sector. (vi) The DTA supplier or recipient EOU can avail refund of GST paid on supplies to EOUs.