EOUs

* Transparent Procedure for operation of units under 53/97-Cus
* 13/81-Cus Rescinded

Circular No.19/1997 date 12/6/97

Sub:  Rescision of Notification No. 13/81-Cus dated 9th Feb., 81 and issue of Notification No. 53/97-Cus. dated 3rd June, 97.

I am directed to enclose a copy of Notification No. 53/97-Cus dated the 3rd June, 1997 for your information and further necessary action.

Notification No. 13/81-Cus. provided for duty free import of goods required by 100% EOUs for the purpose of manufacture of articles for export or for being used in connection with production or packaging of goods for exports. The process of liberalisation of imports and experiences gathered regarding the working of EOU schemes over the years has necessitated certain changes in the above said notification. To make the EOU scheme more attractive certain relaxation were also required to be given to EOU scheme.

Keeping in view the above the Notification No. 13/81-Cus has been rescinded and the Notification No. 53/97 dated the 3rd June, 1997 has been issued retaining the basic features of 13/81 and incorporating the following additional features:

i) Notification No. 13/81-Cus. permitted duty free import of goods required for the manufacture or packaging or production of the articles for export. The present Notification allows duty free import for service activities resulting in earning of foreign exchange. (Para No. 1 of the Notification refers.)

ii) 100% EOUs were not able to take jot work of repair and maintenance or part manufacture of goods imported which can be returned to the overseas suppliers. Para 9.22 of the Exim Policy 1997-2002 also provides for reconditioning, repair and reengineering for exports. The present Notification provides for duty free import of goods to carry out reconditioning, repair and reengineering and return the same to the foreign supplier. (Para 1 of the Notification refers).

iii) There were no provision in the Notification 13/81-Cus. to bond an area only for certain purposes or certain activities of an EOU, e.g. granite processing activities of granite mining industry or processing and packing unit of an aquaculture farm or processing and packaging unit of a poultry farm. Provisions is being made authorising the Commissioner of Customs to allow bonding of an area used only for specified operations. (Para 11 of the Notification refers).

iv) There were no provision for destruction of waste and rejects generated in the EOU which was occupying lot of space and withholding lot of funds. Some of the goods could not be destroyed within the unit because of the restriction imposed by the Municipal Corporation Controlling or governing pollution control. It is proposed to authorise Asst. Commissioner to allow destruction of such goods without payment of duty either inside or outside the 100% EOU wherever necessary. (Para 12 of Notification refers).

v) There was no explicit provision in the Notification enabling EOU to send goodsinto DTA for completing any process of job work. Nevertheless the Department was permitting clearance of goods into DTA for job work. Under the scope of the word "processing" without adequate legal cover. It is proposed to provide explicitly for undertaking these activities by adding the words tests, refining, job work or any other operation necessary for manufacture of final product. (Para 8 of the Notification refers).

vi) Presently Notification No. 13/81-Cus. permitted manufactured or packed goods to be taken out info DTA duty free for processing. It has now been provided to allow partially processed/manufactured goods to be taken out of EOU for the job work in DTA and bringing back-to the EOU. (Para 8(a) of the Notification refers).

vii) Presently inter unit transfer is allowed only for the purpose of manufacture and export or for use within the transferee unit. The transferee unit could not export the goods as such so received nor he could send back the said goods in case he found the goods was not usable or surplus to his requirement. It has now been provided for allowing such transfers. (Para 8(a) of the Notification refer).

viii) Hitherto the spares, fuel, lubricants and other consumables for captive power plants and captive generating sets were required to be approved by the Board of Approvals for duty free import which was presenting difficulties to the trade. It has now been provided that the above said goods only for captive power plants and captive generating sets could be sourced/imported duty free on the approval of the jurisdictional Commissioner of Customs/Central Excise on recommendation of the Development Commissioner.

4. You are, requested to give wide publicity to the above said notification and report difficulties if any experienced in working of this notification by 15th June, 1997. In case no report is received from your Commissionerate by the above said date it will be presumed that the Notification is working in the right perspective.

Sd/-
(O.P.Khanduja)
S.T.O.(FTT)

No. 313/5/97-FTT

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