EOU/EPZ units - Sale in DTA of goods made out of wholly indigenous raw materials - Clarifications - Customs - F. No. 305/95/2002-FTT

EOU/EPZ units - Sale in DTA of goods made out of wholly indigenous raw materials - Clarifications F. No. 305/95/2002-FTT Dated 25-11-2002 An instance has come to the notice of the Board where an 100% Export Oriented Unit sold goods, which were manufactured out of wholly indigenous raw material, in DTA in terms of Paragraphs 6.8(f) of the Exim Policy 2002-2007 [Paragraph 9.9(e) of the old Policy] after availing of benefit of exemption under Notification No. 8/97-C.E., dated 1-3-97. 2. The matter has been examined by the Board. It may be noted that paragraph 6.8(f) of the Exim Policy provides that EOU/EPZ/EHTP/STP units may be permitted to sell finished products which are freely importable under the Policy in the DTA over and above the levels permissible under sub-paragraph 6.8(b) against payment of full duties provided that they have achieved the NFEP and EP as per Appendix -I of the Policy. Further, it may be noted that Notification No. 8/97-C.E., dated 1-3-97 allows clearance of goods into DTA by EOUs and EPZ units, manufactured out of wholly indigenous raw materials, on payment of effective rate of Central Excise duty as chargeable under Section 3 of the Central Excise Act, 1944, provided such clearance is made in terms of sub paragraphs (a), (b), (d) and (h) of paragraphs 6.8 of the Exim Policy 2002-2007. As paragraph 6.8(f) is not specified in the said notification, therefore, the clearance of goods, manufactured out of wholly indigenous raw materials and cleared in DTA in terms of paragraph 6.8(f) of the Policy is not eligible for exemption under the said notification. In such cases i.e., where goods manufactured by EOUs or EPZ/STP/EHTP units are sold in DTA in terms of paragraph 6.8(f) of the Policy, excise duty should be recovered under the proviso to Section 3(1) of the Central Excise Act, 1944, i.e., excise duty equivalent to the aggregate of duties of Customs leviable on similar goods if imported. 3. In view of the above position, I am directed to request that you may kindly examine all the DTA clearance of goods manufactured by EOU/EPZ/STP/EHTP units made under paragraph 6.8(f) of the Exim Policy in your jurisdiction and recover the differential duty if any. The details of such cases, if any, and consequential action taken, may be furnished to the Board on priority. Kindly acknowledge receipt of this letter.