Sub contracting of a EOU material by a DTA to another DTA

[R S Simha]

Our Unit is registered under EOU . We are subcontracting 20 % of the total manufacturing operations to 2 DTA . Currently after the first operation of the goods by the first sub contractor the goods come back to EOU and again we are sending the semi finished goods to second DTA subcontractor for further processing and receive back to EOU . This structure has a impact on the increase In the logistics cost & increasing the manufacturing lead time . Hence is there provision for the first subcontractor after processing the goods sends the semi finished goods to second sub contractor directly and the after second sub contractor completes the operation the semi finished goods comes back to EOU .

[YAGAY and SUN]

Dear R S Simha,

Very simple, obtain permission from the Development Commissioner in this regard.

Regards

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

AI Summary

Subcontracting permission required for direct transfers between DTA subcontractors to and from an EOU; obtain Development Commissioner approval. EOUs using DTA subcontractors for sequential processing must obtain permission from the Development Commissioner before permitting direct transfers of semi finished goods between DTA subcontractors; such administrative authorisation is required for inter DTA movement in a subcontracting chain and to avoid non compliance when bypassing return of goods to the EOU between operations.