material rejected by 100 % EOU

[raj nadh]

Dear experts,

My unit is 100 percent EOU. Today I have received material form DTA unit, but the material was rejected by us.Pls tell me procedure to be adopted.

Anand

[YAGAY andSUN]

Dear Anand,

Para 14.1 of Chapter 25 of Supplementary Manual to Customs Act, 1962 is reproduced below:

"14.1   The EOUs can procure goods from DTA without payment of Central Excise Duty on strength of CT-3, which issued by the Superintendent of Central Excise in charge of the EOU.  Such goods are required to be brought directly from the manufacturer /warehouse into the unit's premises under ARE 3 procedure.  To avoid separate permission every time, the EOUs are issued pre authenticated  CT-3 in booklet  form  and against such pre authenticated  CT-3, the EOUs are  allowed to procure capital goods, raw materials, consumables, etc.   Goods procured from DTA and found to be defective returned to the manufacturer as prescribed under Central Excise Law."

It is seen from the above that the Supplementary Manual to Customs Act says that the goods procured from DTA and found to be defective can be returned to manufacturer as prescribed under Central Excise Law. Therefore, according to these Customs instructions also there should be a provision to cover the cases of returning of goods to DTA from EOU in case of total rejection due to quality / damage or for any other reason.

This is for your kind information.

Regards,

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[Guest]

Please refer to Board Circular No 60/99 Cus dt 10.09.99 reproduced below in this connection

Bala

F.No.305/111/99-FTT

Circular No. 60/99-Cus.
dated 10/9/1999

Government of India
Ministry of Finance, Department of Revenue
Central Board of Excise & Customs, New Delhi

Subject : Difficulty being faced by EOU/EPZ/STP units in regard to replacement of goods exported or imported and found damaged or defective or other-wise unfit for use - reg.

    It has been brought to the notice of the Board by the Ministry of Commerce that EOU/EPZ/EHTP/STP units are facing difficulties in sending replacement of goods exported and found defective, damaged or otherwise unfit for use and in getting replacement of goods imported & found defective / damaged or unfit for use.

2.    The matter has been examined. I am directed to say that following instructions may be followed in this regard:

(A)   Goods exported and found defective, damaged or otherwise unfit for use by foreign buyer.

(i) The units may be allowed to make free replacement of the goods exported and found defective, damaged or otherwise unfit for use prior to physical re-import of the such goods subject to grant of GR Waiver by Reserve Bank of India. However, such defective , damaged or otherwise unfit for use goods shall be subsequently brought back to the country.

(ii) The units may be allowed to re-import part consignment / full consignment not necessarily for the purpose of re-export in case of failure of the foreign buyer so take the delivery.

(B)   Goods imported and found defective / damaged or otherwise unfit for use.

 (i) The units may be allowed to receive free replacement of the goods imported and found defective, damaged or otherwise unfit for use, prior to re-export of the same. However, re-export of such defective / damaged or otherwise unfit for use goods may be subsequently made later.

(ii)  In case, the supplier of such defective, damaged or otherwise unfit for use goods does not insist on re-export of such goods, the same may not be re-exported subject to condition that such goods shall be either destroyed  with the permission of Assistant Commissioner of Customs / Central Excise in charge of unit or cleared into DTA on payment of full customs duty.

3.    The instructions may be given wide publicity in the form of Public Notice.

4.    Kindly acknowledge receipt of this Circular.  Difficulties, if any, faced in the implementation of the above changes, may be brought to the notice of the Board immediately.

Sd/
(C.P.Goyal)
Sr. Technical Officer (TU)

AI Summary

Return of defective DTA supplies allows EOUs to replace, re-import or clear goods into DTA subject to conditions. EOUs receiving defective or damaged goods from DTA may return goods to the manufacturer or obtain free replacement under CT-3/ARE 3 procedures; Board instructions allow replacement prior to re-import, re-import of consignments when necessary, destruction with the Assistant Commissioner's permission, or clearance into DTA on payment of duty, subject to conditions such as GR waiver where applicable.