TaxTMI 
TaxTMI 
Changes/amendments in the EOU/EHTP/STP and Gems and Jewellery Export Promotion Schemes-reg.
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.... time to time, wherever necessary. Further, a few procedural changes have also been made in order to simplify procedures and to bring about uniformity in their implementation. The various changes effected are briefly explained as follows: EXPORT ORIENTED UNDERTAKING SCHEMES 1. Net Foreign Exchange Earnings (NFE) In terms of Para 6.5 of FTP, a unit shall have to be positive net foreign exchange earner except for the sector specific provision of Appendix 14-I-C of HBP. The manner of computation of NFE is defined under Para 6.10.1 of HBP and the manner of calculation is explained in Annexure-I to Appendix 14-I-G of HBP. The unit has to achieve positive NFE in the block of five years starting from the date of commencement of production. The term NFE has been defined for the purpose of notifications No. 52/2003-Customs and No. 22/2003-Central Excise, both dated 31.03.2003 (EOU notifications) on the same lines as defined in FTP. The changes to this effect have been made in the EOU notifications vide notifications No. 76/2007-Customs and 26/2007-C.E. both dated 06.06.2007. 2. Rationalization of calculation of NFE with rate of depreciation allowed on the capital good....
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.... been amended to allow exit from EOU scheme to Export Promotion Capital Goods scheme only when EOU has fulfilled positive NFE criteria on the date it wishes to de-bond or migrate to EPCG scheme. The EOU notifications have been suitably amended by notifications No. 47/2008-Cus and No. 24/2008-C.E. both dated 11.04.2008 so as to allow clearance or debonding of capital goods in event of exit from the EOU scheme to the EPCG scheme provided the EOU has fulfilled the positive NFE criteria. Thus, if a unit has not achieved NFE taking into consideration rate of depreciation allowable, it cannot exit to the EPCG scheme. 5. Exit from EOU scheme to Advance Authorization Scheme A new Para 6.18 (g) has been inserted in the FTP to allow a unit to exit to Advance Authorization scheme as a one time option subject to fulfillment of positive NFE criteria. The EOU notifications have been suitably amended by notifications No. 76/2007-Customs and No. 26/2007-C.E, both dated 06.06.2007 so as to allow clearance or debonding of goods other than capital goods at the time of exit from EOU as a one time option provided the unit ha....
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....h Standard Inputs-Output Norms (SION) In terms of para 6.8 (e) of FTP as existing prior to its amendment made on 11.04.2008 while issuing Annual Supplement, 2008 to FTP, only scrap/ waste/ remnants arising out of production process or in connection therewith was required to be sold in the DTA as per the Standard Input-Output Norms (SION) notified under the Duty Exemption Scheme. It was viewed that SION should be applicable not only for waste cleared in DTA on payment of duty but also for accounting of input consumption for manufacture of export products. Inputs consumed in excess of SION cannot be taken as duly accounted for and consequential action is to be initialed. To implement this, notifications No. 84/2007-Cus and No. 29/2007-C.E., both dated 06.07. 2007 have been issued to amend EOU notifications so as to introduce a system of accounting of inputs/raw material based on the SION. Items which are not covered under SION can be used subject to generation of upto 2% waste, scrap or remnants of the input quantity. Now, for accounting of inputs as per SION, suitable provisions have been incorporated under para 6.7 (e) of HBP and para 6.8 (e) of FTP has also been suitab....
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.... FOB value of exports which can be cleared at concessional rate of duties. Accordingly, para 6.8 (a) of FTP has been amended suitably. To exemplify, if a unit manufactures products 'A' and 'B' and exports product 'A' worth Rs 10 lakh and product 'B' worth Rs 15 laks, the unit was earlier allowed to sell goods worth of Rs 12.5 lakh (i.e 50% of the FOB value of exports of Rs 25 laks) into the DTA. Within this entitlement, the unit could sell into DTA products in proportion to the value of export of individual products i.e. for product 'A' worth Rs 5 lakhs and for product 'B' worth Rs 7.5 lakhs. In terms of amendment now carried out in para 6.8 (a) of FTP, the unit would be able to sell into DTA, the product 'A' upto a value of Rs 7.5 lakhs or product 'B' upto a value of Rs 11.25 lakhs provided the total value of sale by the unit (of A&B together) into DTA under concessional duty rate does not exceed Rs 12.5 lakhs. 9. Payment of duty on DTA clearances on monthly basis. In terms of Rule 17 of the Central Excise Rules, 2002, units are presently required to pay duty on the goods manufactured and cleared into DTA on consignment basis before each removal. As a measure of trade fac....
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....he relevant portion of the amendment is reproduced as below: "77. Amendment of Act 51 of 1975. - In the Customs Tariff Act, 1975 (hereinafter referred to as the Custom Tariff Act),- (i) in the section 9A, for sub-section (2A), the following sub-section shall be substituted, namely:- (2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), shall not apply to articles imported by a hundred per cent, export-oriented undertaking unless,- (i) specifically made applicable in such notifications or such impositions, as the case may be; or (ii) the article imported is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, and in such cases anti-dumping duty shall be levied on that portion of the article so cleared or so used as was leviable when it was imported into India." Accordingly, an amount equal to anti dumping duty foregone on the goods at the time of import shall also be paid on the equivalent quantity of goods used for manufacture of any goods whic....
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....TA supplier, these benefits can be claimed by an EOU/STP/EHTP/BTP unit. Keeping in view the fact that the goods supplied by one EOU/STP/EHTP/BTP to another have already been treated as imported goods for the purpose of payment of duty on DTA sale by second unit under para 6.13 (c) of FTP, it has been decided with the concurrence of Deptt. of Commerce that the goods supplied to EOU/STP/EHTP/BTP unit under claim of deemed export benefits are also to be treated as imported goods for the purpose of payment of duty on DTA sale. Accordingly, notification No. 23/2003-C.E. dated 31.03.2003 has been amended by notification No. 29/2007-C.E. dated 06.07.2007 and goods supplied to EOU/STP/EHTP/BTP unit from Domestic Tariff Area under claim of deemed export benefits are regarded as imported goods. As a result, goods manufactured out of such goods by EOU/STP/EHTP/BTP unit cannot be considered as goods manufactured wholly out of indigenous raw material to be eligible to avail benefits on clearances into DTA by payment of only central excise duty. 13. Supplies of accessories like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export by EOUs Trade h....
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....setting up an EOU for export of services out of India and for which payment is received in freely convertible foreign currency in view of Export of Services Rules, 2005 (Refer para 11 of notification No. 52/2003-Cus dated 31.03.2003). Now, this provision under para 6.9 (f) of FTP has been deleted and the FTP has been aligned with the legal provisions governing Service Tax. A service unit under EOU/STP/EHTP/BTP scheme can be set up for the services which are produced in India for export out of India in terms of Export of Service Rules, 2005. 16. Exemption for the goods required for production of services within the unit A unit under EOU/STP/EHTP/BTP scheme is allowed duty free import/procurement of goods specified in the Annexure-I to the EOU notifications. Apart from the specified goods, if these units require any other item for production of goods for export within the unit, the import or procurement of such items is allowed with the prior approval of the Board of Approval. However, there was no parallel provision to allow non-specified items required for production of services. This put service units in a disadvantageous position and increased the cost ....
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.... been increased upto 5% from 1.5%. Further, the condition of export within warranty period has been waived. Now, a unit can procure spares and components upto 5% of FOB value of manufactured articles exported by the unit in the preceding year for the purpose of supply of such spares/components to the same consignor or buyer to whom manufactured articles were exported. The export value of such spares and components shall not be considered for fulfillment of NFE but the CIF value of imported spares/components shall be counted towards NFE obligation. Amendments to above effect have been made under para 6.2 (h) of FTP and in the EOU notifications by notifications No. 47/2008-Cus and 24/2008-C.E., both dated 11.04.2008. 19. Direct supply of goods to buyer from sub-contractor abroad It was represented that the existing provisions of sub contracting abroad under EOU notifications require permission from the Board of Approval. This facility was available only for the processes which were not available in India. Another requirement was that the goods so processed abroad to be returned to the unit before being exported. Fulfilling these requirement....
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....ity of a unit. This proposal has been considered. An amendment to this effect and conditions to be followed for this scheme has been incorporated under para 6.4 (b) of the FTP. To implement the above provision, following conditions, safeguards and procedures are required to be observed by the unit undertaking sale and lease back of assets: i. The unit should obtain permission from the jurisdictional Dy/Asstt. Commissioner of Customs or Central Excise for entering into transaction of 'Sale and Lease Back of Assets' and submit full details of the goods to be sold and leased back and the details of NBFC; ii. the unit should be positive NFE at the time when it enters into sale and lease back transaction with NBFC; iii. the unit should undertake to pay duty on the goods in case of violation or contravention of any provision of the notification No. 52/2003-Cus or 22/2003-CE read with the Customs Act, 1962 or the Central Excise Act, 1944 or the Finance Act, 1994 covering Service Tax, as the case may be; iv. the unit and NBFC should undertake jointly that the lien on the goods shall remain with the Customs/ Central Excise Department, which will have the fi....
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....In order to obviate difficulties of trade, the cases of change of location and/ or additional location of EOU/STP/EHTP/BTP unit outside the territorial jurisdiction of the original Development Commissioner/Designated officer shall be considered by the Board of Approval. A new provision to this effect has been inserted under para 6.34 A of HBP. 24. Parameter for 'unblemished track record' to be observed for EOU/STP/EHTP/BTP unit Many facilities like waiver of Bank guarantee, permission for self bonding, issue of pre-authenticated procurement certificate/CT-3, etc. have been extended to units who have unblemished track record. It has been brought to the notice of the Board that different parameters have been adopted by the field formations in determining whether a unit has an unblemished track record. In order to adopt a uniform practice in this regard, following parameters are being laid down to determine whether a unit has an unblemished track record. The unit should have: (i) achieved NFE/ export obligation wherever applicable; (ii) not been issued a show cause notice or a demand confirmed, during the preceding 3 years, on grounds other than procedural v....
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....sion under para 4A.32.1 of HBP has been deleted. It has been brought to the notice of the Board that there is a difficulty in arriving at the export turnover in the preceding year for the purpose of allowing 2% rejected jewellery. In order to resolve this difficulty, it is decided to accept Chartered Accountant's certificate for export performance of preceding year. Amendment to this effect has also been made in para 4A.32 of HBP. 27. Monitoring the foreign exchange realization/remittance in respect of export made out of the duty free gold/silver/platinum Exporters of gold/ silver /platinum jewellery and articles thereof were submitting proof of exports by furnishing EP copy of shipping bill, Customs attested invoice and Bank certificate of export as in Appendix 22A showing that documents have been sent for negotiation/collection in terms of para 4A.8 of HBP. This caused difficulties in monitoring the export realization for the exports. Accordingly, an amendment has been made under para 4A.8 of HBP for furnishing Bank certificate of realization in Appendix 22A instead of Bank certificate of export showing that documents have been sent for negot....
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....iew of this, the control on export and re-import for certification and grading of cut and polished diamonds under this notification has been dispensed with by rescinding notification No. 55/2001-Cus dated 16.05.2001 through notification No. 59/2008-Customs dated 05.05.2008. The provisions governing this scheme under para 4A.2 and 4A.2.1 of FTP have also been deleted. 31. Export by Post In view of increase in gold prices, the value limit for exports of jewellery parcels through Foreign Post Office (including via Speed Post) has been increased to $ 75,000 from $ 50,000 but without any change in the weight of 20 Kgs. by amending para 4A.17 of FTP. 2. Wide publicity may please be given to these instructions by way of issuance of Trade/ Public Notice. Difficulties, if any, in implementation of these instructions, may be brought to the notice of the Directorate General of Export Promotion, New Delhi. 3. This issues with the approval of CBEC. 4. Receipt of this circular may kindly be acknowledged. &nbs....