TMI BlogChanges/amendments in the EOU/EHTP/STP and Gems and Jewellery Export Promotion Schemes-reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 goods Under para 6.10.4 of HBP, the value of imported capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositive 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 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplement, 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 suitably amended. To have uniformity in approach by field formations, the relevant provisions in the EOU notifications have been suitably amended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 facilitation and keeping in view that domestic manufacturer is already extended the facility of monthly payment of duty, the EOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 which are cleared into DTA or on such quantity of goods which are cleared as such into DTA. 11. New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 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, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overning 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 violations, invoking penal provision and/or on account of fraud or collusion 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 consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing 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 negotiation/collection. The scheme for import of gold, silver and platinum by the Nominated Agencies under various gold, silver and platinum jewellery export promotion scheme is 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 20.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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