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TMI BlogEXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-TECHNOLOGY PARKS (BTPs).X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the conditions indicated in ITC (HS). 1 [ In respect of an EOU, permission to export a prohibited item may be considered, by BOA, provided such raw materials are imported and there is no procurement of such raw material from DTA. ] (ii) Procurement and supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc. upto a maximum value limit of 1.5% of FOB value of previous years exports shall also be allowed. (b) An EOU / EHTP / STP / BTP unit may import and /or procure, from DTA or bonded warehouses in DTA / international exhibition held in India, without payment of duty, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Any permission required for import under any other law shall be applicable. Units shall also be permitted to import goods including capital goods required for approved activity, free of cost or on loan / lease from clients. Import of capital goods will be on a self certification basis. Goods imported by a unit shall be with actual user condition and shall be utilized for export production. (c) State Trading regime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods, without any age limit, may also be imported duty free. 6.4 Leasing of Capital Goods (a) An EOU / EHTP / STP / BTP unit may, on the basis of a firm contract between parties, source capital goods from a domestic / foreign leasing company without payment of customs / excise duty. In such a case, EOU / EHTP / STP / BTP unit and domestic / foreign leasing company shall jointly file documents to enable import / procurement of capital goods without payment of duty. (b) An EOU / EHTP / BTP / STP unit may sell capital goods and lease back the same from a Non-Banking Financial Company (NBFC), subject to the following conditions: (i) The unit should obtain permission from the jurisdictional Deputy / Assistant Commissioner of Customs or Central Excise, for entering into transaction of Sale and Lease Back of Assets , and submit full details of the goods to be sold and leased back and the details of NBFC; (ii) The goods sold and leased back shall not be removed from the unit s premises; (iii) The unit should be NFE positive at the time when it enters into sale and lease back transaction with NBFC; (iv) A joint undertaking by the unit and NBFC should be given to pay duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E or to abide by any of the terms and conditions of LoP / LoI / IL / LUT shall render the unit liable to penal action under provisions of the FT (D R) Act and Rules and Orders made thereunder, without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL. 6.6.2 Investment Criteria Only projects having a minimum investment of Rs. 1 Crore in plant machinery shall be considered for establishment as EOUs. However, this shall not apply to existing units and units in EHTP / STP / BTP, Handicrafts / Agriculture / Floriculture / Aquaculture / Animal Husbandry / Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BoA may also allow establishment of EOUs with a lower investment criteria. 6.7 Application Approvals (a) Applications for setting up of units under EOU scheme, other than proposals for setting up of units in services sector (except R D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by the Units Approval Committee within 15 days as per criteria indicated in HBP v1. (b) In other cases, approval may be granted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in DTA in any mode, including on line data communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of foreign exchange earned, where payment of such services is received in foreign exchange. (c) Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA, subject to fulfillment of positive NFE. In respect of sale of plain jewellery, recipient shall pay concessional rate of duty as applicable to sale from nominated agencies. In respect of studded jewellery, duty shall be payable as applicable. (d) Unless specifically prohibited in LoP, rejects within an overall limit of 50% may be sold in DTA on payment of duties as applicable to sale under sub-para 6.8(a) on prior intimation to Customs authorities. Such sales shall be counted against DTA sale entitlement. Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE. (e) Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than in an EOU, subject to the condition that they have not used duty paid imported inputs in excess of 3% of the FOB value of exports of the preceding year and they have achieved positive NFE. Once this option is exercised, the unit will not be allowed to import any duty free inputs for any purpose. 6.9 Other Supplies Following supplies effected from EOU/EHTP/STP/BTP units will be counted for fulfillment of positive NFE. Such supplies shall not include marble , except if such supply of marble is an inter unit supply as provided at paragraph (c) below: (a) Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for annual requirement / DFIA under duty exemption / remission scheme / EPCG scheme. However, printing sector EOUs (or any other sector that may be notified in HBP v 1), cannot supply goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance Authorisation / Advance Authorization for annual requirement. (b) Supplies effected in DTA against foreign exchange remittance received from overseas. (c) Supplies to other EOU / EHTP / STP / BTP / SEZ units, provided that such goods are permissible for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be eligible for grant of Replenishment Authorisations at rates and for items mentioned in HBP v1. (c) In addition, EOU / EHTP / STP / BTP units shall be entitled to following:- (i) Reimbursement of Central Sales Tax (CST) on goods manufactured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in paragraph 9.10.1 of HBP v1). (ii) Exemption from payment of Central Excise Duty on goods procured from DTA on goods manufactured in India. (iii) Reimbursement of duty paid on fuel procured from domestic oil companies / Depots of domestic oil Public Sector Undertakings as per drawback rate notified by DGFT from time to time. Reimbursement of additional duty of excise levied on fuel under the Finance Acts would also be admissible. (iv) CENVAT Credit on service tax paid. 6.12 Other Entitlements Other entitlements of EOU / EHTP / STP / BTP units are as under: (a) Exemption from Income Tax as per Section 10A and 10B of Income Tax Act. (b) Exemption from industrial licensing for manufacture of items reserved for SSI sector. (c) Export proceeds will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Customs authorities. (b) (i) EOU may, with annual permission from Customs authorities, undertake job work for export, on behalf of DTA exporter, provided that goods are exported directly from EOU and export document shall jointly be in name of DTA / EOU. For such exports, DTA units will be entitled for refund of duty paid on inputs by way of brand rate of duty drawback. (ii)Duty free import of goods for execution of export order placed on EOU by foreign supplier on jobwork basis, would be allowed subject to condition that no DTA clearance shall be allowed. (iii) Subcontracting of both production and production processes may also be undertaken without any limit through other EOU / EHTP / STP / BTP / SEZ units, on the basis of records maintained in unit. (iv)EOU / EHTP / STP / BTP units may subcontract part of production process abroad and send intermediate products abroad as mentioned in LoP. No permission would be required when goods are sought to be exported from subcontractor premises abroad. When goods are sought to be brought back, prior intimation to concerned DC and Customs authorities shall be given. (c) Scrap / waste / remnants generated through job work may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r export in foreign currency. Provisions of paragraphs 6.8, 6.9, 6.10, 6.13, 6.14 of FTP and para 6.28 of HBP v1 shall not, however, apply to such activities. 6.17 Replacement / Repair of imported / Indigenous Goods (a) General provisions of FTP relating to export / import of replacement / repair of goods would also apply equally to EOU / EHTP / STP / BTP units. Cases not covered by these provisions shall be considered on merits by DC. (b) Goods sold in DTA and not accepted for any reasons, may be brought back for repair / replacement, under intimation to concerned jurisdictional Customs / Central Excise authorities. (c) Goods or parts thereof, on being imported / indigenously procured and found defective or otherwise unfit for use or which have been damaged or become defective subsequently, may be returned and replacement obtained or destroyed. In the event of replacement, goods may be brought back from foreign suppliers or their authorized agents in India or indigenous suppliers. The unit can take free of cost replacement (duty paid) from the authorized agents in India of foreign suppliers, provided the defective part is re-exported or destroyed. However destruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after payment of applicable import duty, or from domestic market after payment of excise duty, and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA after debonding would be without payment of duty. Similarly, in cases where a DTA unit imported capital goods under EPCG Scheme and after completely fulfilling export obligation gets converted into EOU, unit would not be charged customs duty on capital goods at the time of removal of such capital goods in DTA when debonding. (g) An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit under Advance Authorization as a one time option. This will be subject to fulfillment of positive NFE criteria. 6.19 Conversion (a) Existing DTA units may also apply for conversion into an EOU / EHTP / STP / BTP unit, and Income Tax benefits under Section 10A and 10B will be available for plant, machinery and equipment already installed. (b) Existing EHTP / STP units may also apply for conversion / merger to EOU unit and vice-versa. In such cases, units will remain in bond and avail exemptions in duties and taxes as applicable. 6.20 Monitoring of NFE Performance of EOU / EHTP / STP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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