1. Foreign Trade Policy [FTP]

2. Chapter 6-Export Oriented Units 3. Legal FrameworkForeign Trade Policy andHandbook of Procedures Vol.I [Chapter 6]From Approval to Exit provisions Central Excise Act, 1944Customs Act, 1962and Duty free imports under Central Excise Rules, 2002.Section 25DTA Sales [Section 3 of CE Act, 1944] of the Customs Act, 1962 Local Procurement [Section 5A ofWarehousing ProvisionsCE Act, 1944] 4. About EOU The EOU Scheme is introduced in 1981 To facilitate the Units which intend to export a majority of their production To generate Foreign Exchange To increase employment and boost exports of the country The Development Commissioner of the SEZ is the governing & monitoring Authority for EOU units 5. EligibilityUnits undertaking to export their entire production/services (except permissible sales in the DTA), can beset up under Export Oriented Unit (EOU) Scheme.Electronic Hardware Technology Parks (EHTPs),Software Technology Parks (STPs) or Bio-TechnologyParks (BTPs) are also covered under EOU scheme. Theseare product specific units availing the same benefits asEOUs. 6. Purpose Units can be set up for any of the following purposes: manufacture of goods repair re-making reconditioning re-engineering rendering of services NOTE: Trading to the extent of 5% of FOB value is permitted subject to the prime condition that such goods should be related to manufactured goods. 7. Investment Criteria Projects having a minimum investment of Rs.1 crore in plant and machinery can only be considered for establishment as EOU. Minimum Investment criteria is not applicable to existing EOU units and units in EHTP/STP/BTP and following sector: Handicrafts Agriculture Floriculture Aquaculture Animal Husbandry 8. Investment Criteria Information Technology Services Brass Hardware and Handmade jewellery Board of Approval (BoA) can however, allow establishment of EOUs with a lower investment criteria. 9. Administrative Control Unit Approval Committee Jurisdictional Development Commissioner The provisions of the Customs and Central Excise Law in respect of the EOUs are administered by the Commissioners of Customs and Central Excise, who are under the control of Central Board of Excise & Customs [CBEC]. 10. Benefits 11. Benefits Reimbursement/ExemptionsOthers Refund 12. ExemptionsIndustrialDirect Tax Indirect Tax State TaxesLicensing for As per Section Customs duty VATmanufacture10Bon import ofof items inputs and CGs, Stamp Dutyreserved forExtended foretc.SSI sectorthe Financial [Subject toyear 2010-11 Excise Duty on provisions in goods procured the state laws][CBDT Cir. No. 1 from DTADtd. 06.01.2005-for convertedunits] 13. Reimbursement/Refund Refund of CSTDrawback by wayand of Brand Rate inInterest @ 6% on case EOU worksdelayed refunds as Job-workerfor DTA exporter 14. OtherCENVATExport 100% of 100% FDIExports made Creditproceeds can export investmentby EOUs wouldFacilitybe realizedearningpermitted also get within 12can be through benefits underMonthsretainedAutomaticFMS & FPS in EEFCRoute Schemesaccount provided directtax benefits arenot availed. 15. Formalities forsetting up of EOU 16. Formalities for setting up of EOU Preparation of a detailed project report andLocational clearances.Making application for Letter of Intent (LOI) /Letter of Permission (LOP) toDevelopment Commissioner (DC).Acceptance of LOP/LOI when granted.Execution of Legal Undertaking and attestationof capital goods / inputs and obtaining Green Card. 17. Making application for declaration of a place (unit) as warehousing station under Section 9 ofCustoms Act, 1962 (if required), in case the location is not covered under various notificationsissued by customs for warehousing purpose. Application for setting up of private bonded warehousefor EOU purpose with customs / excise authorities asthe case may be. (Warehousing licence under Sections 58 (for issue of warehouse licence) and 65 (for manufacture in bond) of Customs Act, 1962. Execution of B-17 bond supported by security or Bank Guarantee (BG). Registration with the customs authorities at the port of import. 18. Step-1A: Preparation of a detailed projectreportPreparation for Project Report: Project report shouldnormally consist of: Introduction and importance of items for which theunit is to be established. Promoters profile including that of the Directorsand various divisions of promoting company. Export promotion effortsundertakenby thecompany/ promoters Potential of the item/items for export Advantage of new unit over existing units 19. Step-1A: Preparation of a detailed projectreport Land location Building, Plant & Machinery Power & Water Supply Process of Manufacture Raw material, requirement and sources Indian & World Scene Projections for five years Manpower Requirements Marketing Potential and Selling Arrangements Cost of project and means of finance Financial Forecasts Summary and Conclusions 20. Step-1B: Locational clearances Locational Clearance is required either from Industrial Development Corporation of the concerned State or from Local Gram Panchayat. If the EOU unit is being set up in urban area, the location should be in an Industrial Area/Estate designated/Set up prior to issuance of Ntfn No. 477 (E) Dtd. 25.07.1991 for clearance under automatic route; otherwise the case would be refer to Board of Approval, New Delhi. If the item of manufacture is subject to Pollution then NOC from Pollution Control Board. The locations which are beyond 25 kms from the periphery of standard urban area limit of city having population above 1 million, according to 1991 Census, are acceptable for setting up of EOU. 21. Step-2: Making application for LOI / LOP toDCApplication in Appendix 14-I-A is to be made to theConcerned Development Commissioner in three copiesalongwith following documents: Demand Draft/Pay Order for Rs.5,000/- drawn in favour of thePay & Accounts Officer, Ministry of Commerce & Industry,Department of Commerce, payable at the Central Bank ofIndia, Udyog Bhavan, New Delhi. Project Report Self certified copy of PAN Self certified copy of Ground Plan Copy of IEC [if available] Copy of RCMC [if available] Copy of SSI Registration or IEM issued by SIA, Ministry ofCommerce and Industry, New Delhi, as the case may be. 22. Step-2: Making application for LOI / LOP toDC Copy of Memorandum and Articles of Association in case ofcompany. Copy of Manufacturing Process Flow Chart. List of Machineries to be imported. List of Raw Materials and Components to be imported. List of Spares and Consumables to be imported. List of Machinery and equipment, consumables, packingmaterials to be indigenously procured without payment ofCentral Excise Duty. Chartered Accountant Certificate for last three years exports,if any. 23. Step-2: Making application for LOI / LOP toDC Affidavit in duplicate on Rs. 50/- Stamp Paper duly notarised. Directors Residential Proof/Passport/Ration Card/DrivingLicence/Voter identity card, or any other proof. Self Certified copy of Central Excise Registration Certificate. Copy of Board Resolution / Authority letter. Proof of Premises - Possession/Allotment Letter/Sales deed/Lease Agreement, etc. Copy of Passport of the Applicant. Income Tax Return & all Directors/Promoters for last threeyears. Digital Certificate. 24. Step-2: Making application for LOI / LOP toDC Loan sanction copy of External Commercial Borrowing, if any. Details of sources of finance Indian and foreign. Memorandum of Understanding (MoU) [executed/signed copyof MOU for export tie-up, if any]. Copy of NOC issued by the Component Authority for setting upa unit (EOU) [MIDC/Gram Panchayat] . (If any) List of Directors with their residential address, telephone nos.and e-mail address on Letter Head. E-mail ID of company. Website details. 25. Step-3: Acceptance of LOP/LOI when grantedAcceptance of LOP/LOI needs to be conveyed within 45days which is a confirmation that principal permission givenby DC is accepted by the applicant for execution.Before submission of acceptance letter one has to verifythe following: Conditions mentioned in LOP/LOI Complete/accurate address of the unit Description and approved capacity of product to bemanufactured and exported under the EOU unit. Value of required imported capital goods for the proposedproject. 26. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card The approved EOU unit executes a legal undertaking [LUT] with the DC concerned as per the format given in Appendix- 14-I-F of HBPv1. [on Rs. 150 Stamp Paper, duly notarized] LUT binds EOU to fulfill the conditions of LOP/LOI. If EOU fails to abide by such conditions, it will be liable to pay penalty under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and/or under any other Law for the time being in force. 27. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green CardAt the time of execution of LUT, a list of exemption material asper Annexure I to Appendix 14-I-F has to be submitted to DC. Thelist contains description of Plant, Machinery and Equipment to be imported. Raw Materials, Components and Consumables to be imported. Plant, Machinery and Equipment and Raw Material, Components and Consumables to be indigenously produced and purchased without payment of Central excise Duties. This list should be attested by the DC to enable the unit clearance of imported items as well as local procurement of items.Following Documents are to be submitted: Application in Appendix 14-IF on stamp paper of Rs. 150/- Self certified copy of LOP/LOI issued by DevelopmentCommissioner or Designated Officer. 28. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green Card Copy of IEC, if any List of Directors with their residential address, telephone nos.and e-mail address on Letter Head. Copy of Board Resolution. List of Machineries to be imported (on ledger paper 3copies). List of Raw Materials and Components to be imported (onledger paper 3 copies). List of Spares and Consumables to be imported (on ledgerpaper 3 copies). List of Machinery and equipment, consumables, packingmaterials to be indigenously procured without payment ofCentral Excise Duty (on ledger paper 3 copies). Copy of Ground Plan. 29. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green CardOther conditions of the LUT are as under: The export obligation [EO] on the unit under EOU scheme shall be in addition to any other EO which is imposed under different schemes such as Advance Authorisation or EPCG Authorisation. The unit under implementation will submit quarterly progress report to the concerned DC. The unit will intimate date of commencement of production for exports within one month to the DC. 30. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green CardThe unit shall, after the commencement of production, submitquarterly progress report [QPR] to the DC within 30 days of theclose of the quarter.The unit shall submit annual progress report [APR] to the DC within90 days of the close of financial year [April-March].The unit shall not dispose its production into DTA except in termsof FTP and/or when specifically allowed by the competentauthority.The unit shall be bound by the decisions, if any, to changes in theprovisions of the EOU scheme.The unit shall maintain e-mail address and have an operationalwebsite. 31. Step-4: Execution of Legal Undertaking and attestationof Capital Goods/inputs and obtaining Green CardThe unit has to intimate any change in its address, telephonenumbers, e-mail addresses, website, Bank address andpassport nos. of concerned directors/partners etc. within afortnight of the change.The unit shall comply with the conditions stipulated underthe relevant Customs and Excise duty exemptionnotifications.Green card is issued automatically alongwithacceptance of LUT. 32. Step-5: Making application for declaration of a place(unit) as warehousing station under Section 9 of CustomsAct, 1962 It is required under the Customs Act, 1962 [CA, 1962] that a place is declared as a warehousing station under Section 9 of the Customs Act, before a private warehouse is licensed. The power vests with the Commissioner of Customs.Following Documents are to be submitted for Making Applicationfor Declaration of a Place (Unit) as Warehousing Station UnderSection 9 Of Customs Act, 1962. Copy of project report. Copy of industrial licence, if any. Copy of LOP/LOI issued by DC. Copy of exemption material list duly attested by DC. Copy of Green Card. Copy of Ground Plan. Copy of manufacturing process flowchart. 33. Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WHLic.) and Sec.65 (for manufacture in bond) of CA, 1962.] Since EOUs operate under bond, a licence for setting up private bonded warehouse is required which empowers the EOU to warehouse and manufacture the goods in bond. For this purpose, an application has to be made to the Dy./Asst. Commissioner of Customs / Excise as the case may be depending on location. Public Notice No. 115/99 dtd. 18.08.99 issued by Commissioner of Customs, Pune prescribes documents for such application, which are listed as under: 34. Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WHLic.) and Sec.65 (for manufacture in bond) of CA, 1962.] A Copy of the Notification or the Notification No. wherein the place has been declared as a warehousing station under section 9 of the customs act, 1962. Copies of permission from the ministry of industries, allowing the facilities of 100% EOU to the applicant. Purchase/Sale deed of the land. 7/12 abstract of land records issued by local revenue authorities. Allotment letter from M.I.D.C., if the factory is proposed to be in the industrial area. In other cases, N.O.C from local Grampanchayat. N.O.C. from Pollution Control Board. 35. Step-6: Application for setting up of PBWH for EOU purpose withcustoms / excise authorities [WHg Lic. u/Sec.58 (for issue of WH Lic.)and Sec.65 (for manufacture in bond) of CA, 1962.] Ground plan duly verified by the jurisdictional range superintendent. Stage-wise manufacturing process flow chart along with imported and indigenous raw material required. An undertaking from the applicant, to the effect that they will bear the cost of establishment charges and other charges of the staff posted there. List of imported machinery and indigenous machinery for setting up the 100% EOU. List of Imported/Indigenous raw materials to be used in the manufacture. Copy of LUT, Green card and list of exempted material. 36. Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG):A single all-purpose Bond is required to be furnished by EOUin lieu of the different bonds.The said Bond can be executed with either surety orsecurity as per Notification No. 6/98-CE(NT) dated02.03.1998 as amended.This bond is called B-17 bond and covers liabilities bothunder Customs and Central Excise Acts. 37. Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG):Calculation of Bond amount and Bank Guarantee.Rs. in Lakhs Descriptionof Assessable Rate of Amount of Bond value* goods valuedutyduty A. Capital Goods Imported 100 24.42% 24.42 6.11 Indigenous 100 8.24%8.242.06 B. Raw Material ** Imported 25**24.42% 6.111.53 Indigenous 5** 8.24%0.410.10 Total A+B 39.18 9.8 **Duty on raw materials to be held in stock for three months only. 38. Step-7: Execution of B-17 bond supported bysecurity or Bank Guarantee (BG):Calculation of Bond amount and Bank Guarantee.Hence, Bond amount would be Rs. 9.8 lakhs and BG would beRs. 0.49 lakhs.* Bond amount calculated @25% of duty saved amountPlus Bank Guarantee 5% of Bond amount. 39. Step-8: Registration with thecustomsauthorities at the port of import.Since goods imported by EOU are without payment ofduty, the movement of such goods is under bond fromport to the location of the EOU.To ensure that goods are not diverted otherwise,customs authorities at the port require maintenance ofcertain records to monitor exemption granted to EOUs.The EOUs are, therefore required to registerthemselves with the customs authorities at the port byfollowing the procedure stipulated under StandingOrder No. 7722/2002 dtd. 25.07.2002. 40. Basic Concepts relatedto EOU Scheme 41. LOP / LOI LOP/LOI is granted by the Development Commissioner [DC] LOP/LOI list the conditions of approval. The initial validity of LOP/LOI is 3 years from the issue date during which time the unit should commence commercial production. This validity can be extended for a further period of 3 years. Request for extension beyond 6 years would considered by Board of Approval. After commencement of production, LOP becomes valid for 5 years. LOP/LOI is construed as an authorisation for all purposes. 42. LUT LUT is executed with the DC to ensure positive NFE & to abide by any of the terms and conditions of the LOP/LOI/IL Failure to a fulfill the criteria of positive NFE shall render the unit liable to penal action under the provisions of the Foreign Trade (Development & Regulation) Act, 1992 and may result in cancellation or revocation of LOP/LOI/IL 43. NFE (Net Foreign Exchange Earnings) The unit shall be a positive net Foreign exchange earner. Net Foreign Exchange Earnings = Foreign Exchange Inflow less Foreign Exchange Outflow Shall be calculated cumulatively in blocks of five years, starting from the commencement of production. The performance of EOU/ EHTP/ STP/ BTP units shall be monitored by the DC/Unit Approval Committee. 44. What is Foreign Exchange Inflow?(For NFE) Physical Exports of goods Export of Services Other supplies in DTA Supplies to holders of advance authorisation/ advanceauthorisation for annual requirement/ DFIA/ EPCG scheme Supplies to other EOU/EHTP/STP//BTP/SEZ units Supplies made to bonded warehouses set up under the policyand/ or under section 65 of the customs act and warehousesin Free Trade and Warehouse SEZ, where payment is receivedin foreign exchange, etc. 45. What is Foreign Exchange outflow?(For NFE) Import of Inputs / Capital Goods Any other payment in Foreign Exchange like: Interest payment Payment to foreign technicians Payment of Royalty / technical know-how fees Repatriation of Dividend Commission on exports Foreign travel 46. Operations of EOU 47. Imports Local ProcurementOperations of EOUExports DTA Sales Sub-contracting 48. Inter-Unit Transfer Export through others Other Sale of unutilisedActivities materials Refund of CST Re-import / Re-export 49. Import/Local Procurement under EOU SchemeEOU unit may import and/or procure from DTA/bondedwarehouses in DTA / international exhibition held inIndia without payment of duty all types of goods,including capital goods, required for its activities,provided they are not prohibited items of import inthe ITC (HS).Import of goods free of cost or on loan / lease fromclients is also permitted. 50. Export under EOU scheme What can be Exported under EOU Scheme: EOUs can export all kinds of goods and services except itemsthat are prohibited in ITC (HS). Export of Special Chemicals,Organisms, Materials, Equipment and Technologies (SCOMET)shall be subject to fulfillment of the conditions indicated inITC(HS). Procurement and supply of export promotion material likebrochure / literature, pamphlets, hoardings, catalogues,posters etc. upto a maximum value limit of 1.5% of FOB valueof previous years exports shall also be allowed. 51. Export under EOU scheme EOU units can export to Russian Federation in INR againstrepayment of State Credit / Escrow Rupee Account of buyersubject to RBI clearance. Procurement and export of spares/components upto 5% of FOBvalue of exports can also be exported to sameconsignee/buyer, subject to the condition that it shall not becounted for NFE and direct tax benefits. 52. Export under EOU scheme There are certain relaxations for the EOUs in respect of their export activities, as follows: State trading regime does not apply. It is permitted to send capital goods abroad for repair andreturn and any foreign exchange payment for this is allowed. The export proceeds can be realized within 12 months ofexport. The time limit can be extended by RBI. Items of manufacture for export specified in Letter ofPermission (LoP) / Letter of Intent (LoI) alone can be takeninto account for calculation of NFE. 53. Sale of Finished goods in DTA Units may sell goods upto 50% of FOB value of exports Conditions: Permission from Development commissioner Based on yearly/half yearly/quarterly exports Upon fulfillment of positive NFE and on payment ofconcessional duties Permission will be granted for its products similar to the goodswhich are exported or expected to be exported from the units 54. Sale of Finished goods in DTAMaximum sale of a single product can be to the extent of 90% ofits export value. However, within overall ceiling of 50%.May sell finished products in the DTA under intimation to theDevelopment Commissioner against payment of full dutiesprovided they have achieved the positive NFE.In case of new EOUs, advance DTA sale will be allowed based onits estimated exports for the first year.An amount equal to Anti Dumping duty under section 9A of theCustoms Tariff Act, 1975 leviable at the time of import, shall bepayable on the goods used for the purpose of manufacture orprocessing of the goods cleared into DTA from the unit. 55. Sale of Finished goods in DTASubject to import restriction on inputs upto 3% of FOBvalue of exports of the previous year, EOU intextiles/granite sector can make DTA sale on payment ofexcise duty alone. 56. Sale of Rejects in DTAMay sell rejects in DTA unless specifically prohibited inthe LOP On prior intimation to customs/excise authority On payment of duties as applicable Sale of rejects upto 5% of FOB value of exports shall notbe subject to achievement of NFE 57. Sale of scrap in DTA Scrap/ waste/ remnants arising out of production process or in connection therewith may be sold in the DTA: As per the Standard Input-Output norms notified under the Duty Exemption Scheme. Wherever norms are not available they should be got approved first from DC and subsequently from Norms Committee. On payment of concessional duties as applicable [as per CE Ntfn No. 23/2003-CE Dtd. 31.03.2003] Within the overall ceiling of 50% of FOB value of exports Scrap can also be destroyed with the permission of Customs /Excise authorities 58. Entitlement for DTA units supplying to EOUsSupplies from the DTA to EOU/EHTP/STP/BTP units willbe regarded as "deemed exports and will get thefollowing benefits Advance Authorisation/DFIAorDeemed Export Drawback Terminal Excise duty refundSupplies from the DTA to EOU/EHTP/STP/BTP units willbe counted for discharge of export obligation, if any,on the supplier 59. Sub-Contracting EOU units may sub-contract production process to DTA through job work which may also involve change of form or nature of goods. Annual permission from the Customs authorities is to be obtained. Goods sent for Jobwork are to be returned to the unit within 90 days. Subcontracting of both production and production processes may also be undertaken without any limit through other EOU/EHTP/STP/SEZ/BTP units on the basis of records maintained in the units. Subcontracting of part of production process abroad may also be permitted with the approval of the Development Commissioner. 60. Sub-Contracting (take-up job work) EOU units may take up job-work for export on behalf of DTA exporter On the basis of annual permission from the Customs authorities The goods are exported directly from EOU And export documents shall be filed jointly in the name of DTAand EOU The DTA exporter will be entitled for refund of duty paid onthe inputs by way of All Industry Rate of Drawback/ Brand Rateof duty drawback 61. Sub-Contracting EOU/EHTP/STP/BTP units may take up job-work for export on behalf of foreign supplier provided that no DTA clearance shall be allowed Scrap/waste/remnants generated through job work May either be cleared from the job workers premises onpayment of applicable duty on transaction value or; Destroyed in the presence of Customs/ Excise authorities or; Returned to the unit 62. Export through Others An EOU unit may export goods manufactured through another exporter or other EOU/EHTP/STP/SEZ unit subject to following conditions: Goods shall be produced in EOU. Export orders so procured shall be executed within parametersof EOU scheme and goods shall be directly transferred fromunit to port of shipment. 63. Sale of Un-utilised Material Un-utilised material / Obsolete or Surplus Capital goods can be disposed of as under: Transferred to another EOU unit Disposed off in the DTA with the approval of theCustoms authorities on payment of applicable duties Exported Benefit of depreciation, as applicable, will beavailable in case of disposal in DTA only when theunit has achieved positive NFE taking intoconsideration the depreciation allowed. 64. Sale of Un-utilised Material No duty shall be payable in case of destruction withinunit after intimation to Customs authorities or destroyedoutside with permission of Customs authorities. Disposal of used packing material will be allowed onpayment of duty on transaction value. 65. Refund of CST EOUs are entitled to reimbursement of Central Sales Tax (CST) paid by them on purchases made from the DTA, for production of goods and services on the specified terms and conditions. The disbursing authority for the claimof reimbursement is Development Commissioner. 66. Re-import/Re-export and SalesReturn/Purchase Returns by EOUs GoodsProcured Re-import Goods sold Re-export from DTAof goods in DTA areof goods and to beexportedReturned importedReturned tobackDTA unit 67. Replacement/ RepairOf Goods procured or soldThe general provisions of the Policy relating to exportof replacement/repair of goods would also applyequally to EOU unitsCases not covered by these provisions shall beconsidered on merits by the Development Commissioner 68. Exit from EOU Scheme Guidelines for Exit of EOU scheme is given under Appendix 14 I-L: Following points are to be taken into consideration during Exit from EOU Scheme: r With approval of DC, an EOU may opt out of scheme, subject to payment of Excise and Customs duties. r If unit has not achieved positive NFE, it shall be liable to penalty at the time of exit. 69. Fast Track Clearance Status Holder EOUs eligible for the Fast Track Clearance Procedure Benefits: No examination of import cargo at port Imports through pre-authenticated procurement certificate DG set can be procured under intimation to DC & Excise No DTA sales permission required No Bank Guarantee required Removal of capital goods and parts thereof for repairs under priorintimation to AC/DC of Customs/Excise. Time bound disposal of applications. 70. Obligation of EOU Achieve Positive NFE cumulatively for a block period of five years Fulfill the terms & conditions of the LOP & LUT Quarterly performance report (QPR) to be submitted within 1 month from the end of every quarter Annual Performance report certified by CA to be submitted within 3 months from the end of the financial year (i.e., on or before 30th June every year) The procedure for bonding as per Customs and Central Excise Rules to be followed Commercial Registers are to be maintained Proper accounts books to be kept as required under the respective laws under which it is registered as an entity 71. When EOU is most beneficial?Raw materials/components are mainly importedNew capital goods or second hand capital goods are to beimported/purchased and installedWhere the orientation of the company is towards export and nottowards DTA sale as under the new policy DTA sale permission islimited to 50% of physical exports in value terms and therefore inorder to enjoy the benefits of DTA the company must exportphysically.IT benefits for Conversion of DTA into EOU (as per CBDT CircularNo. 1 Dtd. 06.01.2005) are to be considered.When hassle free operations are desired. (Since there is no need ofapplying for licences like Advance Licence etc.) 72. Major Changes effected in New FTP 2009-14 CENVAT Credit facility for the component of SAD and Education Cess on DTA sale by EOU. EOUs have been allowed to sell products manufactured by them in DTA upto a limit of 90% instead of existing 75%, without changing the criteria of similar goods, within the overall entitlement of 50% for DTA sale. During this period of downturn, Board of Approvals (BOA) to consider, extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs. 73. Deemed Exports 74. Deemed Exports This is a special facility provided for supplies of indigenous products which can be consumed ultimately in the production of goods to be exported. The conditions are that supplied goods as it is do not leave the country but get consumed in the process of manufacture, payment for which is received in Indian Rupees or in foreign exchange. The categories eligible for deemed exports benefits are given in Para 8.2 of Foreign Trade Policy which are listed here below: 75. Deemed Exports Supplies toSupplies to MarineSupplies toAuthorisationFreightEOUS/ Supplies to Supplies toHolderContainers byEHTPs/ ProjectsFertilizer [Adv. Autho. 100% EOUs STPs/ Plant/AAL/(Domestic BTPsDFIA/EPCG] Freight ContainersManufacturers) 76. Deemed Export BenefitsAdv. Authon/ Adv. AuthonDeemed Refund of TED/for Annual ORExports + ExemptionRequirement/Drawbackfrom TEDDFIA. 77. Important ProvisionsAs far as (a) and (b) are concerned, these are mutually exclusivebecause if exemption from duty is claimed, refund cannot beclaimed.Hence, deemed exporter will either claim Advance Authorisationfor Intermediate supply / Advance Authorisation for deemedexports / DFIA or deemed exports duty drawback.Deemed exports duty drawback can be claimed on the basis of AllIndustry rate or on the basis of Brand rate following theprocedure for fixation of brand rate.The deemed exports duty drawback is refunded by DGFT. 78. Important ProvisionsAs far as claiming of refund of Terminal Excise Duty (TED) isconcerned, the same principle applies.Terminal Excise Duty need not be paid by the deemed exportssupplier if the supplies are given to EOU units under exemptionnotification no. 22 dtd. 31.03.2003 (which is commonly known asCT-3 procedure) or when supplies are made to Advance Licenceholder under excise notification no. 44 dtd. 26.06.2001.In all other cases, deemed export suppliers have to pay TerminalExcise duty and claim refund, except when supplies are madeagainst international competitive bidding.If the recipient units take CENVAT credit of terminal excise duty,then also the Govt. will not grant refund. 79. Important ProvisionsIn case of deemed exports duty drawback as well asrefund of terminal excise duty, both are to be claimedfrom licensing authorities alone.Deemed exports, per se, are monitored by DGFT andExcise and not by Customs.In case of EOU, Refund of Terminal Excise Duty andDuty Drawback must be claimed from the concernedDevelopment Commissioner. 80. Chapter 9 Definitions[Foreign Trade Policy] 81. Chapter 9 Definitions Accessory Actual User Capital Goods Component Consumables Consumer Goods Drawback Group Company Manufacture Raw Material Service Providers 82. Chapter 9 Miscellaneous Matters [Handbook of Procedures] 83. Chapter 9 Miscellaneous Matters Para 9.1 Change in Name and Constitution An IEC holder must get the change in name / address / constitution incorporated within 90 days of such change. Provided, however, RA issuing IE Code may, condone delay on payment of penalty of Rs. 1000/-. Change in constitution, aforesaid, does not include change in directors of Public Limited Company. 84. Chapter 9 Miscellaneous Matters Para 9.3 - Applications Received After Expiry of Prescribed Date of Receipt Wherever any application is received after expiry of last date for submission of such application, the application can be considered after imposing a late cut in the following manner: Application received after the expiry of last1.2% date but within six months from the last date2. Application received after six months from the 5% prescribed date of submission but not later than one year from the prescribed date3. Application received after twelve months from 10% the prescribed date of submission but not later than two years from the prescribed date 85. Chapter 9 Miscellaneous Matters Para 9.7 Consumption Register Importers are required to maintain a register as in Appendix-23(for 3 years period) of items imported under an Authorisationand separately for items imported with actual user conditionand its consumption. In respect of particular schemes such register shall bemaintained for specified period. 86. Chapter 9 Miscellaneous Matters Para 9.11 - Time Bound disposal of applications The time limit for disposal of application by Regional Authority is prescribed in this para. Para 9.11 A - Date of Shipment/ Dispatch In respect of Imports Date of shipment/dispatch for the purposes of imports will be reckoned as under:- 87. Mode of Date of Shipment / DispatchTransportation(i) By Sea The date affixed on the Bill of Lading(ii) By AirDate of relevant Airway Bill provided this represents date on which goods left last airport in the country from which the import is effected.(iii) From land-locked Date of dispatch of goods by rail, road or othercountriesrecognised mode of transport to consignee in India through consignment basis.(iv) By Post ParcelDate stamp of office of dispatch on the packet or dispatch note(v) By RegisteredDate affixed on Courier Receipt / WaybillCourier Service(vi) MultimodalDate of handing over goods to first carrier in atransportcombined transport Bill of Lading. 88. Chapter 9 Miscellaneous MattersPara 9.12 - Date of Shipment/ Dispatch in respect of ExportsDate of shipment/despatch for the purposes of exports will bereckoned as under:-Mode of Date of Shipment / DispatchTransportation(i) By Sea For bulk cargo, date of Bill of Lading or date of mate receipt, whichever is later. a) For containerised cargo, date of Onboard Bill of Lading, or Received for Shipment Bill of Lading, where the L/C provides for such Bill of Lading. For exports by containers from Inland Container Depot (ICD), date of Bill of Lading issued by shipping agents at the time of loading of export goods in ICD after customs clearance. b) For Lash barges, date of Bill of Lading evidencing loading of export goods on board. 89. Chapter 9 Miscellaneous MattersDate mentioned by appropriate Officer of Customson Shipping Bill, evidencing loading or handing over(ii) By Air of goods to air cargo complex, which are notinternational airports, or by way of rotation of flightnumber and date.(iii) By Post Date stamped on postal receipt.Parcel(iv) By RailDate of RR (Railway Receipt).(v) ByDate affixed on Courier Receipt/ Waybill.RegisteredCourier Service(vi) By RoadDate on which goods crossed Indian border ascertified by Land Customs Authorities. 90. Thought for the Day The Master Key to Success is to set Goals higher than yourself and thento achieve them. 91. Sudhakar Kasture Exim Institute [A Division of Helpline Impex Pvt. Ltd.]Mumbai - Head Off. Pune - Branch Off.A-203, Everest Chambers, EPI Centre, Opp. Indsearch,Next to Star TV Office, Law College Road, Pune 411004.Near Marol Naka, Andheri-Kurla Road,Tel: 020-65246159Andheri (East), Mumbai 400 059.Fax: 020-25465195Tel: 022-28507615/28507329/65769126 Email:Fax: 022-28506419 eximpune@helplineimpex.co.inE-mail: exim@helplineimpex.co.in