6.8
The entire production of EOU/EHTP/STP units shall be exported subject to the following:
(a) Unless specifically prohibited in the LOP, rejects may be sold in the Domestic Tariff Area (DTA) on payment of duties as applicable to sale under paragraph 6.8(b) on prior intimation to the Customs authorities. Such sales shall be counted against DTA sale entitlement under paragraph 6.8(b). Sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE.
(b) Units, other than gems and jewellery units, may sell goods/ services upto 50 % of FOB value of exports, subject to fulfillment of positive NFE on payment of applicable duties. Sales made to a private bonded warehouse set up under the policy shall also be taken into account for the purpose of arriving at FOB value of exports by EOUs provided payment for such sales are made from EEFC account. No DTA sale shall be permissible in respect of motor cars, alcoholic liquors, tea (except instant tea) and books or by a packaging/ labeling /segregation/ refrigeration unit and such other items as may be notified from time to time.
(c) Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in DTA subject to fulfillment of positive NFE as prescribed in the Policy. In respect of sales of plain jewellery, the recipient shall pay concessional rate of duty to the Customs in Indian rupees as applicable to sale from nominated agencies. In respect of studded jewellery, duty shall be payable in Indian rupees as notified by Customs.
(d) 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 on payment of duties as applicable under paragraph 6.8 (b) within the overall ceiling of 50% of FOB value of exports. Such sales shall not, however, be subject to achievement of positive NFE. Sale of waste/scrap/remnants by units not entitled to DTA sale or sales beyond the DTA sale entitlement, shall be on payment of full duties.
(e) There shall be no duties/taxes on such scrap/waste/ remnants in case the same are destroyed with the permission of Customs authorities.
(f) EOU/ EHTP/ STP units may be permitted to sell finished products which are freely importable under the Policy in the DTA against payment of full duties provided they have achieved the positive NFE as per the Policy.
Such sales may also be permitted in exceptional cases without achievement of positive NFE.
(g) For services, including software units, sale in the DTA in any mode, including on-line data communication, shall be permissible up to 50% of FOB value of exports and/or 50% of foreign exchange earned, where payment for such services is received in free foreign exchange.
(h) By-products included in the LOP may also be sold in the DTA subject to achievement of positive NFE on payment of applicable duties within the overall entitlement of paragraph 6.8(b). Sale of by-products by units not entitled to DTA sales or beyond the entitlements of paragraph 6.8 (b) shall also be permissible on payment of full duties.
Note: In the case of units manufacturing electronics hardware and software, the NFE and DTA sale entitlement shall be reckoned separately for hardware and software.
(Please refer CUS CIR NO.38/2003 DATE 06/05/2003 for Stock Transfer by an EOUs to DTA, Whether Covered under DTA sale of the EXIM Policy - Clarification regarding)
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