Exit from EOU Scheme

6.18

(a) With the approval of the Development Commissioner, EOU units may opt out of the scheme. Such exit from the scheme shall be subject to payment of Excise and Customs duties and the industrial policy in force at the time of exit.

(b) If the unit has not achieved the obligations under the scheme, it shall also be liable to penalty at the time of exit.

(c) In the event of a gem and jewellery unit ceasing its operation, gold and other precious metals, alloys, gem and other materials available for manufacture of jewellery, shall be handed over to an agency nominated by the Ministry of Commerce and Industry (Department of Commerce) at the price to be determined by that agency.

(d) An EOU//EHTP/STP/BTP unit may also be permitted by the Development Commissioner, to exit from the scheme on payment of duty on capital goods under the prevailing EPCG Scheme as a one time option. This will be subject to fulfilment of the eligibility criteria under that Scheme and standard conditions indicated in Handbook (Vol-I).

(e) The unit proposing to exit out of the EOU scheme shall intimate the Development Commissioner and Customs and Central Excise authorities in writing. The unit shall assess the duty liability arising out of debonding and submit the details of such assessment to customs and Central Excise authorities. The Customs and Central Excise authorities shall confirm the duty liabilities on priority basis. After payment of duty and clearance of all dues the unit shall obtain “No Dues Certificate” from the Customs and Central Excise authorities. On the basis of No dues certificate so issued by the Customs and Central Excise authorities, the unit shall apply to the Development Commissioner for final debonding. In case there is no proceeding pending under FT(DR) Act 1992, the Development commissioner shall issue final debonding order within a period of 7 working days. During the period between “No dues certificate” issued by the Customs and Central Excise authorities and the final debonding order by the Development Commissioner, the unit shall not be entitled to claim any exemption for procurement of capital goods or input. The unit can however, claim Advance License/ DEPB / Duty Drawback.

(f) In cases where a unit is initially established as DTA unit with machine procured from abroad after payment of applicable import duty or from domestic market after payment of excise duty and the unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA after debonding would be without payment of duty. Similarly, in cases where a DTA unit imported capital goods under the EPCG Scheme and after completely fulfilling the export obligation under the EPCG scheme gets converted into EOU, the unit would not be charged customs duty on capital goods at the time of removal of such capital goods in DTA at the time of debonding.