100% EOUs - Conversion of ChromeOre Chips and Fines into briquettes in DTA - On job contract basis - Clarification - Customs - F.No. 305/10/88-F.T.T.

100% EOUs - Conversion of Chrome Ore Chips and Fines into briquettes in DTA - On job contract basis - Clarification F.No. 305/10/88-F.T.T. Dated 28-6-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : 100% EOUs - Conversion of Chrome Ore Chips and Fines into briquettes in DTA - On job contract basis - Clarification reg. It is directed to refer to C.C.E. Bhubaneshwar's letter C.No. IV-16-20-TU-100% EOU-88/7270 A dated 22-2-1988 on the above subject. A copy of Ministry's Office Memorandum F.No. 305/10/88-FTT dated 22.3.88 and the clarification received from the Ministry of Commerce vide their Office Memorandum No. 13/27/88-EP dated 21-6-1988 is sent herewith for information and guidance. F. No. 305/10/88-FTT Government of India Ministry of Finance (Department of Revenue) New Delhi , the 22nd March, 1988 OFFICE MEMORANDUM Subject : 100% EOUs - Sub-contract of part of their production for job work to units in the Domestic Tariff Area. With the amendment of the provisions of Appendix 23 of Import and Export Policy 1985-88 (vide Ministry of Commerce Public Notice No. 223-ITC(PN)/85-88, dated 19-10-1987) 100% EOUs are permitted to sub-contract part of their production for job work to units in the Domestic Tariff Area, on a case to case basis. Requests from 100% EOUs in this regard are to be considered by the concerned Collectors of Customs and Central Excise on the basis of relevant factors, such as feasibility of the bonding of operations, satisfactory identification of the goods on return after job work, fixation of input and output norms, furnishing of undertaking/bond by the concerned units etc. It was also provided that adequate safeguards should be taken to ensure that there is no leakage of non-duty paid material/goods to the Domestic Tariff Area. 2. It has been reported by the Collector of Central Excise and Customs, Bhubaneswar that one of the 100% EOU has come up with a request to permit them to clear a part of their chrome ore imported duty free under Notification No. 13-Cus dated 9-2-1981, to its other unit in Domestic Tariff Area for conversion into briquettes on job contract basis and these briquette they will use as raw material for manufacture of charge chrome in their 100% EOU. It will thus be seen that in the instant case chrome ore is proposed to be coverted into briquettes in their own unit in Domestic Tariff Area and these briquettes will be used as raw materials in the 100% EOU of the same party for manufacture of final product. The Collector has expressed a doubt whether transfer of raw materials from the 100% EOU to party's own unit in DTA for job work could be considered as "sub-contract". 3. It may be pointed out that public Notice No. 223-ITC(PN) 85-88 dated 19-10-1987 allows 100% EOUs to sub-contract part of their production for job work to units in the DTA on a case to case basis and subject to certain factors stipulated therein. This obviously mean that only part of the production can be sub-contracted for job work to units in the DTA. It is thus evisaged that the 100% EOUs will undertake some manufacturing process themselves before they transfer the some finished goods for job work to the units in the DTA. Accordingly it is considered that it will not be permissible for a 100% EOU to transfer raw material imported duty free under the Scheme to a unit in the DTA for manufacture of certain goods, which will subsequently undergo further manufacture in the 100% EOUs. Such cases will not qualify to be termed as "job work" under the aforesaid ITC Public Notice. It is further apprehended that transfer to raw materials from 100% EOU to the units in DTA will create certain problems for their accountability, and chances of their substitution cannot be entirely ruled out. 4. Before, however, a clarification is issued to the Collectors of Customs/Collectors of Central Excise on the above lines, Ministry of Commerce are requested to kindly favour us with their views in the matter. Sd/- (R.K. Kapoor) Under Secretary to the Government of India . Tele. No. 3014182. Mrs. C.G. Lal, Deputy Secretary, Ministry of Commerce, Udyog Bhawan, New Delhi (COPY) 13/27/88-EP Ministry of Commerce (E.P. Section) New Delhi, the 21st June, 1988 OFFICE MEMORANDUM Subject : Permitting 100% EOUs in sub-contract part of their production for job work to units in the Domestic Tariff Area. Ministry of Finance (Deptt. of Revenue) may kindly refer to the D.O. Letter No. 305/10/88-FTT dated 10-6-1988 addressed to Mrs. C.G. Lal, Deputy Secretary, on the above mentioned subject. The matter has been examined in this Ministry and it is felt that transfer of raw materials to DTA units for conversion into briquettes, cannot be deemed as constituting job-work and is hence outside the purview of the dispensation of the Public Notice dated 19-10-1987. Sd/- (W.D. Morrison) Deputy Director Shri R.K. Kapoor Under Secretary, Ministry of Finance (Deptt. of Revenue) North Block, New Delhi.