TMI BlogEOU/EHTP/STP/ SEZ Schemes-Amendments in Exim Policy and Handbook of Procedures Vol-1, 2002-2007X X X X Extracts X X X X X X X X Extracts X X X X ..... EOU/EHTP/STP on payment of concessional rate of duty were governed by eight notifications. Besides, there were several notifications exempting goods manufactured in EOUs from payment of duties under section 3 of Central Excise Act, 1944, additional duty of excise leviable thereon under section 3 of Additional Duty of Excise (Goods of Special Importance) Act, 1957 and additional duty of excise leviable thereon under section 3 of Additional duty of Excise (Textiles and Textile Articles) Act, 1978. 3. Implementation and understanding of such a large number of notifications was proving to be difficult for the trade and industry as well as Departmental officers. In line with the recommendation of the Kelkar's Task Force on indirect taxes, it was, therefore, decided to consolidate all the notifications governing EOU/STP/EHTP schemes. 4. Accordingly, all notifications governing EOU/EPZ/STP/EHTP Schemes have been replaced by four notifications, namely, 22/2003-CE, dated 31-3-2003 providing for duty free procurement of goods from indigenous sources; 52/2003-Cus, dated 31-3-2003 providing for duty free import of goods, 23/2003-CE, dated 31-3-2003 providing for DTA clearance of goods by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exempt from payment of Sales Tax/ Value Added Tax ( VAT) levied by the State Governments. It may be noted that the said exemption is only available in respect of goods manufactured and produced in EOU/EHTP/ STP/SEZ units and brought to any other place in India and it will not be available to imported goods cleared without subjecting it to a process amounting to manufacture. The exemption has been allowed w.e.f. 1-4-2003 vide notification Nos. 26/2003-CE, dated 31-3-2003 23/2003-CE, dated 31-3-2003 ( Ref: Sl. No. 1 of the Table). (ii) Duty Exemption to HSD/LDO for boilers in EOUs Hitherto only furnace oil was allowed to EOUs for use in the boilers because of the specific entry at Sr. No. 12 in the erstwhile notification No. 53/97 dated 3-6-97. However, at some places, the EOUs use LDO / HSD in their boilers. These units were being denied the benefit of exemption on the ground that it is available to furnace oil only, and not to HSD/LDO. The trade and Industry were requesting to allow duty free HSD/LDO to EOUs alongwith furnace oil. Considering the bonafide requirements of EOUs, the specific entry in the notifications providing for duty free import/procurement of "furnace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2007 effective from 1-4-2002 , EOUs in Agriculture Sector were allowed to send specified micro-irrigation equipments and seeds, fertilizers etc. to the fields and farms of contract farmers. This provision was allowed vide erstwhile notification Nos. 126/94-Cus, 3-6-1994 and 136/94-CE, dated 10-11-1994. (b). In order to provide further fillip to export of agricultural products, the EOUs engaged in the processing of agricultural products, have now been allowed to import/procure duty free more items ( mentioned in the following paragraph) in addition to the items allowed earlier and send the same to the fields and farms of their contract farmers subject to fulfillment of the condition mentioned in the notification No. 52/2003-Cus, and 22/2003-Central Excise, both dated 31-3-2003. ( c) The additional items allowed to be procured/ imported duty free by such units for the purpose of contract farming are as under:- Crates drums and preservation media (such as acetic acid and vinegar). Grading Tables. Green house equipment, accessories, heated rooting tables, propagation trays, seeding machines. Plants and parts thereof, seeds, saplings, tubers, bulbs, Rhizomes r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods that have been used in export production or have been already exported, is very unfair. It was further argued that the provision does not take into consideration the quantity of goods utilised in production of finished product, which have been cleared in to DTA on payment of duty. (b) In view of above, it was suggested that in case of failure to achieve NFE (EP being deleted in the new Policy), the demand of duty alongwith interest should be in direct proportion to the default as already provided in case of SEZ Scheme. Since the concept is already in existence in case of SEZ Scheme, it has been decided to incorporate the same in EOU/STP/EHTP Scheme also. To implement this, a suitable provision has been incorporated in the notifications Nos. 22/2003-CE and 52/2003-Cus, both dated 31-3-2003, governing duty free procurement and import by EOUs and STP/EHTP. (viii) Import and export through post parcel and personal baggage (a) Presently, import of goods by EOUs/STP/EHTP/SEZ is not allowed by Post. Considering the fact that this dispensation, if allowed, would help in reduction of the transaction cost of the unit, it has been decided that EOU/STP/EHTP/SEZ unit may be allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% Depreciation of Capital Goods In the notifications governing EOU/STP/ETHP, an important change has been made regarding depreciation to be allowed on capital goods cleared into DTA after use in the unit. It has been specifically provided in the notification that in case of clearance of capital goods into DTA, duty has to be paid (customs or excise depending on whether the goods are imported goods or locally procured goods) either on the depreciated value thereof or on the transaction value, whichever is higher. Further, such duty is to be calculated at the rate in force on the date of payment of such duty. The rate of depreciation would be at the rate of 20% per annum or part there of, of the original value in respect of IT products and 10% per annum or part there of, in case of other capital goods. There will be no upper cap of such depreciation and depreciation upto 100% can be allowed. Earlier instructions issued by the Board in this regard stand modified to this extent. For the purpose of calculating the depreciation, the period of depreciation shall be from the date of commencement of commercial production of the unit or where such goods have been received after ..... 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