De-bonding of goods/ exit from EOU scheme - CBEC's Customs Manual 2023 - Customs

36. De-bonding of goods/ exit from EOU scheme: 36.1 An EOU can clear any capital goods to any other place in India or de-bond in accordance with FTP with the permission of the Development Commissioner and on payment of duty, taxes and cess but for exemption on the depreciated value. 36.2 Clearance or deboning of capital goods are allowed on payment of duty but for exemption on the depreciated value thereof, if the unit has fulfilled the positive NFE criteria taking into consideration the depreciation allowable on the capital goods at the time of clearance or deboning. In case of failure to achieve the said positive NFE, the depreciation shall be allowed on the value of capital goods in the same proportion as the achieved portion of NFE. 36.3 Clearance/ deboning of capital goods on the depreciated value proportionate to the NFE achieved by the unit which is arrived at after taking into consideration the rate of depreciation allowable on such capital goods is allowed. In case the unit has not achieved positive NFE in the above manner, the duty foregone at the time of import shall be paid on such value of goods in proportion to the non-achieved portion of NFE. 36.4 Clearance or de-bonding of capital goods in the event of Exit from EOU scheme to Export Promotion Capital Goods scheme is also allowed only when EOU has fulfilled positive NFE criteria on the date it wishes to de-bond or migrate to EPCG scheme. Thus, if a unit has not achieved NFE taking into consideration rate of depreciation allowable, it cannot exit to the EPCG scheme. 36.5 A unit is also allowed clearance or de-bonding of capital goods in the event of Exit to Advance Authorization scheme as a one time option provided the unit has fulfilled NFE criteria. Thus, if a unit has not achieved positive NFE taking into consideration rate of depreciation allowable on capital goods, it cannot exit to the Advance Authorization scheme. [Refer Circular No. 12/2008-Cus., dated 24-7-2008] 36.6 The depreciation of computers and capital goods shall be allowed in straight line method as specified below: (i) For computer and computer peripherals: For every quarter in the first year @ 10% For every quarter in the second year@ 8% For every quarter in the third year@ 5% For every quarter in the fourth and fifth year@ 1%. (ii) For capital goods other than computer and computer peripherals: For every quarter in the first year@ 4% For every quarter in the second year@ 3% For every quarter in the third year@ 3% For every quarter in the fourth and fifth year@ 2.5 % and thereafter for every quarter@ 2% 36.7 For the purpose of computing rate of depreciation for any part of a quarter, a full such quarter is taken into account. There is no upper limit for such depreciation and depreciation upto 100% could be allowed. 36.8 Raw materials, semi-finished and finished goods including empty cones, containers suitable of repeated use lying in stock at the time of de-bonding can also be cleared on payment of duty but for exemption 36.9 Used packing materials such as cardboard boxes, polyethylene bags of a kind unsuitable for repeated use can be cleared without payment of duty. 36.10 As per para 6.18(e) of FTP and 6K of Appendices and ANFs, an EOU can opt out of the scheme after taking approval of the Development Commissioner. Such exit is permitted subject to payment of the duties and the industrial policy in force at the time of exit. The Development Commissioner first gives permission for in principle de--bonding then unit is required to pay all pending Customs/ Central Excise duties to obtain no-dues certificate from Central Excise Customs authorities. Thereafter the Development Commissioner permits final de-bonding. 36.11 If the unit has not achieved the export obligation, it is also liable to pay penalty under Foreign Trade (Development and Regulation) Act at the time of exit. 36.12 After obtaining in principle de-bonding order, the unit is required to assess the duty liability by itself and submit such details to jurisdictional Customs/ Central Excise authority. The Assistant/ Deputy Commissioner of Central Excise and Customs is required to confirm the duty liability within 15 days of the receipt of the details of assessment from the unit and issue No dues Certificate to the unit. In case of any discrepancy, it has to be conveyed to the unit within 15 days. [Circular No. 07/2006-Customs dated 13.01.2006]