Sub-contracting - CBEC's Customs Manual 2023 - Customs

26. Sub-contracting: 26.1 EOUs, including Gems and Jewellery units, are allowed to sub-contract their production process to DTA. These units may also sub-contract upto 50% of the overall production of previous year in value terms for job work in DTA. For this, permission is to be obtained from the jurisdictional Customs authorities. Sub-contracting of both production and production process are also allowed to be undertaken through another EOU or SEZ unit on the basis of records maintained by the unit. The units are also allowed to sub-contract part of the production process abroad and also export therefrom with the permission of Assistant/ Deputy Commissioner of Customs/ Central Excise having jurisdiction over the unit. The intermediate goods so removed to sub- contractor abroad shall be allowed to be cleared under export documents [Refer Circular No. 12/2008-Cus., dated 24-7-2008] 26.2 To help utilize the idle capacity, an EOU can undertake job work for export, on behalf of DTA exporter, provided the goods are exported directly from EOU's premises and export documents are prepared jointly in the name of DTA/EOU. For such exports, the DTA unit is entitled for refund of duty paid on the inputs by way of Brand rate of duty Drawback. 26.3 Sub-contracting by EOU Gems and Jewellery units through other EOUs, or SEZ units, or units in DTA shall be subject to following conditions:- (i) Goods, finished or semi finished, including studded jewellery, taken out for sub- contracting shall be brought back to the EOU within 90 days. (ii) No cut and polished diamonds, precious and semiprecious stones (except precious, semi-precious and synthetic stones having zero duty) shall be allowed to be taken out for sub-contracting. (iii) Receive plain gold/ silver/ platinum jewellery from DTA/ EOU/ SEZ units in exchange of equivalent quantity of gold/ silver/ platinum, as the case may be, contained in said jewellery. (iv) EOUs shall be eligible for wastage as applicable as per para 4.60 of HBP for subcontracting and against exchange. (v) DTA unit undertaking job work or supplying jewellery against exchange of gold/ silver/ platinum shall not be entitled to deemed export benefits. [Refer Circulars No. 65/2002-Cus. dated 7-10-2002 and No. 26/2003-Cus dated 1-4-2003]