EXIT From EOU scheme

[Desikan Srinivasan]

We want to exit from EOU scheme. We have some export proceeds not realised yet but the NFE is positive excluding this unrealised export proceeds. The customs are not issuing the NOC till the realisation of the full export proceeds . They are asking to pay the duty on the duty free raw material used in the sales for which proceed not realised yet to issue the NOC. As per the FTP para 6.18 no such clause is there for exit for EOU scheme . Can anyone clarify on this please whether we need to pay duty on the Raw Materail used in unrealised export proceeds eventhough NFE is positive ?

AI Summary

Duty liability on raw material may arise on EOU exit, though the export realisation period limits immediate duty demands.
Exit from the EOU scheme requires payment of excise and customs duties, including the differential customs duty on raw materials used in exports; taxpayers can claim Cenvat credit, apply Advance Authorisation for inputs, or convert capital goods liability into the EPCG scheme. The realisation regime grants a limited period for export proceeds to be realised, constraining the department from demanding immediate duty deposit during that period, though an undertaking to deposit duty if proceeds remain unrealised is often tendered to avoid dispute.