Reversal of Custom duty as per para 6.08 FTP 2023 for DTA sales done by EOU unit

[Dashrath Walkoli]

Sir,            

We operate as an Export Oriented Unit (EOU) and currently benefit from import duty exemption on inputs under Notification No. 52/2003 Customs dated 31.03.2003, which are used in the production of our final finished goods. We also procure indigenous goods for the same production process.

As per FTP Para 6.08, we occasionally make DTA (Domestic Tariff Area) sales of our finished products.

My question is regarding the reversal of customs duty on these DTA sales. Specifically, should we reverse the customs duty only on the imported inputs consumed in the production of the finished goods sold in DTA, or should the reversal apply to the customs duty equivalent of both imported inputs AND indigenous goods that went into the production of those final finished products?

[Shilpi Jain]

Reversal of customs duty is required for the imported inputs

[YAGAY andSUN]

In addition to aforesaid revert, Circular No.13/2017-Cus dtd. 10th April, 2017 is relevant in connection with DTA clearance of goods procured by EOUs/EHTP/STP units from indigenous sources – charging of Duty – reg.

Summary of Circular No. 13/2017-Cus (dated 10 April 2017):

The Circular clarifies the procedure for DTA (Domestic Tariff Area) clearance of goods procured by EOUs/EHTP/STP units from indigenous sources where deemed export benefits have been availed. It states that such goods should be treated as imported goods, and applicable Customs Duty must be paid upon their clearance or exit. In such cases, there is no need to obtain a certificate from the Development Commissioner confirming the refund or non-availment of deemed export benefits, as required earlier by Circular No. 74/2001-Cus.

However, EOUs/EHTP/STP units still have the option to clear goods on payment of Central Excise Duty under Notification No. 22/2003-CE, provided they submit a certificate from the Development Commissioner confirming that deemed export benefits were either not availed or have been refunded. Accordingly, Circular No. 74/2001-Cus is modified to reflect this updated compliance procedure and reduce practical difficulties in obtaining such certificates.

[Dashrath Walkoli]

Sir, it menas that Customs Duty has to be reversed on DTA clearance of goods procured from indigenous sources if deemed export benefits were availed. Am i right sir?

AI Summary

Reversal of customs duty required on imported inputs for DTA sales; domestic procurements can be treated as imports when deemed benefits availed Reversal of customs duty is required on imported inputs consumed in finished goods cleared to DTA from an EOU under para 6.08. Circular guidance specifies that domestically procured inputs on which deemed export benefits were availed are to be treated as imported goods for DTA clearance and attract customs duty unless the unit opts to clear on payment of Central Excise and submits a Development Commissioner certificate confirming non availment or refund of deemed export benefits.