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

De-bonding duty obligation requires payment on duty-free capital goods and raw materials, subject to accounting segregation.
De-bonding requires payment of excise duty on capital goods and raw materials obtained duty-free under bond; duty-paid assets and stock purchased from the domestic market are not liable for additional duty if segregated in accounts. Compliance with Board circular procedure and clear accounting segregation is necessary to establish correct treatment and to avoid penalties for non-performance of export obligations.