De-Bonding of 100% EOU

[SAKTHIVEL PONNUSWAMY]

Dear All,

We are in the process of De-bonding of our 100% EOU unit. On De-bonding is it required to pay duty for capital assets acquired, during the period under bonding, from DTA by paying Central Excise duty? Similarly on raw material stock which is purchased from DTA by paying applicable Excise Duty.

Regards,

SAKTHIVEL

[KASTURI SETHI]

Procedure for de-bonding has been laid down in Board's circular No.8/04-Cus dated 28.1.04 as amended vide Circular No.55/04-Cus dated 14.10.2004. Duty involved on the capital goods and raw material has to be paid. Penalty is likely to be imposed for non-performance of export obligation.

[SAKTHIVEL PONNUSWAMY]

Dear Sir,

We are having Duty paid Stock and also Duty paid Capital Assets procured from DTA. Is it required to pay duty on the same while de-bonding? My understanding is that we need to pay duty, on de-bonding, on capital assets and stock which were procured without payment of duty i..e through issue of CT3 or PC (Precurement Certificate) is it Correct?

Regards,

SAKTHIVEL

[Ganeshan Kalyani]

It is logical to reverse as you said provided you have proper books of accounts segregating the assets duty paid and under bonding. similarly for RM.

[Ganeshan Kalyani]

Sir if it is 100% EOU then while purchasing capital asset it would have been duty free. Is my understanding right?

AI Summary

Debonding 100% EOU: Duty Required on Duty-Free Capital Assets and Raw Materials from DTA During Bonding Period. A discussion on the de-bonding process of a 100% Export Oriented Unit (EOU) raised questions about the requirement to pay duty on capital assets and raw material stock acquired from the Domestic Tariff Area (DTA) during the bonding period. It was clarified that duty must be paid on these items, especially if they were initially procured duty-free through CT3 or Procurement Certificates. Proper accounting records are necessary to distinguish between duty-paid and duty-free assets. Additionally, there is a possibility of penalties for failing to meet export obligations.