Import/ procurement and warehousing - CBEC's Customs Manual 2023 - Customs

4. Import/ procurement and warehousing: 4.1 Under the EOU scheme, the units are allowed to import or procure from bonded warehouses in DTA/ International exhibitions in India, without payment of duty all types of goods including capital goods, raw materials, components, packing materials, consumables, spares and various other specified categories of equipment including material handling equipment, required for export production or in connection therewith. However, the goods prohibited for import are not permitted. In the case of EOUs engaged in agriculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, aquaculture, poultry, sericulture, gem jewellery manufacture and granite quarrying, only specified categories of goods mentioned in the relevant notification are permitted duty-free import. Indigenous excisable goods specified in Notification no. 22/2003-CE dated 31.03.2003 can be procured duty free. 4.2 The Customs exemption Notification No. 52/03-Cus. (for imports) and Central Excise exemption Notification No. 22/03-CE, both dated 31-3-2003 prescribe several conditions to be fulfilled by the beneficiaries keeping in view the objective of the EOU scheme and to prevent abuse. EOUs are also provided various flexibilities in the matter of taking out the materials for job work, inter-unit transfer. The EOUs/ EHTPs/ STPIs/ BTPs are required to be positive net foreign exchange earner except for sector specific provision of Appendix 6 B of FTP where a higher value addition shall be required as per the provisions of FTP. NFE earnings is calculated cumulatively in blocks of 5 years from the commencement of commercial production according to a prescribed formula as per para 6.10 of HBP. 4.3 The EOUs are licensed to manufacture goods within the premises for the purpose of export. The period of LOP is initially for five years after the unit has commenced production, which is extendable by another five years by the Development Commissioner. On completion of the LOP period, it is for the unit to decide whether to continue under, or to opt out, of the scheme. Where unit opts to continue, DC will extend approval period. If no intimation in this regard is received from unit within a period of six months of expiry of approval period, DC will take action, suo motu, to cancel approval under EOU scheme and take further action in this regard. Where units give their option to continue after expiry of six months as stipulated above, DC will grant extension after obtaining approval of BOA. 4.4 Inputs imported or procured duty free are required to be accounted for in accordance with SION. For the items having no SION, consumption of inputs is allowed subject to generation of waste, scrap and remnants up to 2% of input quantity. However, if any item in addition to those given in SION are required as input or where generation of waste, scrap and remnants is beyond 2% of the input quantity, consumption is allowed on the basis of self-declared norms for a period of three months till the jurisdictional Development Commissioner fixes ad hoc norms subject to an undertaking by the unit that the self-declared/ ad hoc norms shall be adjusted in accordance with norms as finally fixed by the Norms Committee in DGFT for the unit. Further, a provision has also been made to consider such cases by the Board of Approval for appropriate decision in case of difficulty in fixation of SION by the Norms Committee. The norms fixed by the Norms Committee shall be applicable to the specific unit. [Refer Circular No. 12/2008-Cus dated 24-7-2008]