TaxTMI 
TaxTMI 
Changes/amendments in the EOU/EHTP/STP and Gems and Jewellery Export Promotion Schemes-reg.
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....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 goods Under para 6.10.4 of HBP, the value of imported capital goods and payment of foreign technical know-how fee is amortized at the rate of 10....
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....een 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 has fulfilled NFE criteria. Thus, if a unit has not achieved positive NFE taking into consideration rate of depreciation allowable on capital goods, it cannot exit to the Advance Authorization scheme. 6. Recovery of duty in event of non fulfillment of export obligation in the block period of 5 yea....
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....dard 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 suitably amended. To have uniformity in approach by field formations, the relevant provisions in the EOU notifications have been suitably amended to bring them in tune with the changes made in FTP/HBP. As per amending notifications No. 60/2008-Cus and No. 26/2008-C.E, both 05.05.2008, inputs imported or procured duty fre....
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.....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 facilitation and keeping in view that domestic manufacturer is already extended the facility of monthly payment of duty, the EOU/STP/EHTP/BTP units are also allowed to pay duty on the goods removed into DTA on a monthly basis. A new clause (h) in para 6.12 of FTP has been inserted to this effect. Suitable amendment has been made i....
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....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 which are cleared into DTA or on such quantity of goods which are cleared as such into DTA. 11. New optional scheme of payment of excise duty only on DTA clearances for EOUs in textile/granite sector A unit manufacturing goods wholly out of indigenous raw materials is allowed to clear these goods into DTA on payment of excise duty only. It has been represented that un....
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....as 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 has expressed difficulties in executing export orders for supply of goods along with accessories which are not manufactured by the garment exporter. In order to facilitate such exports, EOUs have been allowed to supply tags, labels, printed bags, stickers, belts, buttons or hangers without payment of duty to a unit in DTA for use of these items in the manufacture or processing of goods which are to be ultimately exported. Since the specified goods supplied by EOU have to be ultimately exported and payment of goods along with these items have to be received in free foreign exchange, such supplies by....
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....tifications. 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 of exported services. This issue has been considered by this Department and service units are also allowed similar benefits. Amendment to this effect has been incorporated in the EOU notifications by notifications No. 47/2008-Cus and 24/2008-C.E. both dated 11.04.2008. 17. Duty free re-import of goods by EOU/STP/EHTP/BTP unit from exhibition Representations were received from the Export Promotion Council for EOUs and SEZs that the goods allowed for display in the international exhibitions under para 6.21 of FTP read with Para 6.23 of the HBP were being charged duty on their re-imports. The issue was examined and it was found that there was no provision for goods other than gems & jewellery enabling unit to re-import goods duty free which were exported temporaril....
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....so processed abroad to be returned to the unit before being exported. Fulfilling these requirements was time consuming and also increased the transaction cost for exports. The matter has been considered. In order to obviate difficulties of the units, it has been decided that the unit need not take permission from the Board of Approval for sub-contracting abroad if the processed goods are exported from the foreign location itself after job work provided the intermediate goods sent to subcontractor abroad are included in the Letter of permission by the Development Commissioner. An amendment to this effect has been made under Para 6.14 (b) (iv) of FTP. A new para has been inserted in the EOU notifications by notifications No. 47/2008-Cus and 24/2008-C.E., both dated 11.04.2008. There is no change in the existing provision for subcontracting abroad when goods are not to be exported from sub contractor's premises abroad and permission of Board of Approval is required in such cases. The unit wanting to avail this new procedure can apply for permission to the jurisdictional Asstt./Dy. Commissioner of Customs/Central Excise. This provision shall be applicable only for the goods part....
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....e Department, which will have the first charge in order to enable recovery of sum due to Government under provision of Section 142 (b) of the Customs Act, 1962 read with the Customs (Attachment of Property of Defaulters for Recovery of Govt. Dues) Rules, 1995. 21. Replacement of imported or indigenously procured goods Paragraph 6.17(c) of FTP provides for replacement of imported goods by foreign suppliers or by their authorized agents in India. It is pointed out that no such procedure has been prescribed by the Department of Revenue. The issue has been examined. It is pointed out that there is no provision to supply goods duty free to the EOU/STP/EHTP/BTP unit by the authorized agents in India except from the bonded warehouse. However, the unit can procure duty paid replacement against the defective goods from the authorized agent in India and re-export/return or destroy the defective goods. Amendment to this effect has been made under para 6.17 (c) of FTP. 22. Time bound disposal of application for re-export of goods The Department of Commerce proposed for doing away with the requirement of prior permission for re-export of goods for test, repairs, calibration, replacemen....
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.... or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Customs Act,1962, the Central Excise Act, 1944, the Finance Act, 1994 covering Service Tax, the Foreign Trade (Development & Regulation) Act, 1992, the Foreign Exchange Management Act,1999 or any allied Acts or the rules made thereunder. The above parameters have also been incorporated under para 6.12(f) (iii) of the FTP. GEMS & JEWELLERY EXPORT PROMOTION SCHEME 25. Replenishment Authorization for import of Consumables. Duty free import of specified consumables upto 1% of FOB value of plain or studded jewellery made of gold and platinum and of cut and polished diamonds and upto 2% of FOB value of jewellery made of silver has been allowed against the replenishment authorization issued based on these goods exported during the preceding financial year under the notification No. 41/99-Cus dated 28.04.1999. A new category of rhodium finished silver jewellery has been created to allow duty free import of specified consumables upto 3% of FOB value of rhodium finish jewellery made of silver exported during the preceding financial year. Accordingly, notification No. 41/1999-Cus date....
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.... governed under the Board's circular No. 24/98-Cus dated 20.04.2008. In order to ensure realization for export proceeds of jewellery or articles thereof made out of duty free gold, silver and platinum, the exporter shall furnish the EP copy of the shipping bill and Bank certificate of realization in Appendix 22A to the nominated agencies as a proof of having exported the jewellery made from the duty free goods released to them within a period prescribed in the FTP. The para (xii) of circular No. 24/98-Cus dated 20.04.2008 stands modified to the above extent. 28. Time Period for re-import of unsold stock of branded jewellery Export of branded jewellery is permitted with the approval of Gem & Jewellery Export Promotion Council for display/sale in the permitted shops set up abroad or in the showroom of their distributors/agents. The items not sold abroad within 180 days were required to be re-imported within 45 days. Keeping in view the period of one year for re-import under notification 94/96-Cus dated 16.12.1996, the total period for re-import of unsold stock of branded jeweler has been increased from 180 days to 365 days under para 4A.18 (a) (iii) of HBP. 29. Export on cons....