Sub-Contracting

6.14

(a)(i) EOU/EHTP/STP/BTP units, including gem and jewellery units, may on the basis of annual permission from the Customs authorities, subcontract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in the DTA.

(ii)These units may also subcontract upto 50% of the overall production of the previous year in value terms for job work in DTA with the permission of the Customs Authorities.

(b)(i) EOU may, on the basis of annual permission from the Customs authorities, undertake job work for export, on behalf of DTA exporter, provided that the goods are exported directly from EOU and export document shall jointly be in the name of DTA/EOU. For such exports, the DTA units will be entitled for refund of duty paid on the inputs by way of All Industry Rates of drawback/ Brand Rate of duty drawback.

(ii) Duty free import of goods for execution of export order placed on EOU by Foreign Supplier on job work basis would be allowed subject to the condition that no DTA clearance shall be allowed.

(iii) 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 unit.

(iv) Subcontracting of part of production process may also be permitted abroad with the approval of the Development Commissioner.

(c) Scrap/waste/remnants generated through job work may either be cleared from the job worker’s premises on payment of applicable duty on transaction value or destroyed in the presence of Customs/ Excise authorities or returned to the unit. Destruction shall not apply to gold, silver, platinum, diamond, precious and semi precious stones.

(d) Sub-contracting/exchange by gems and jewellery EOUs through other EOUs or SEZ units or units in DTA shall be as per procedure indicated in Handbook (Vol-I).