APPENDIX-14 E

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Guidelines for monitoring the performance of EOU/EPZ/SEZ/STP/EHTP units

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(1) The annual review of performance of each operational unit and its compliance with the conditions of approval shall be undertaken by the Development Commissioner before the end of the first quarter of the following financial year;

(2) A summary of annual performance review will be sent by each Development Commissioner to the Ministry of Commerce for information under the three formats indicated below latest by 31st July every year;

Proforma I: Comparative statement of performance and monitoring as compared to previous year;

Proforma II: Summary of annual performance of the EOU/EPZ/SEZ units, sector - wise with sectoral sub - totals.

Proforma III: Unit-wise statement on NFE and NFEP showing the result of review.

PART(A)

3. CRITERIA FOR ANNUAL MONITORING:

The criteria for keeping the unit under watch or initiating penal action in respect of EOU/EPZ units would be as follows :

i) Watch - If there is shortfall in achieving the NFE/NFEP and/or Export Performance (as per norms in Exim Policy) at the end of 1st and IInd year;

ii) Penal action -If at the end of 3rd or subsequent year the NFE/NFEP/EP are not achieved as per Exim Policy, Show Cause Notice will be issued. After consideration of reply of unit, if it is noted that the unit has not achieved NFEP/EP as per policy the Development Commissioner would initiate penal action under the FT(D&R) Act, 1992;

iii) If penal action has been initiated against a unit on account of shortfall in NFE/NFEP/EP as stated above in a particular year and it defaults again in subsequent year(s), fresh penal action will be initiated against the unit. If however, during the adjudication proceedings, it comes to light that unit has improved performance and now fulfilling NFE/NFEP/EP as per policy, DC concerned would consider that fact before taking a decision.

4. METHOD OF MONITORING:

i) In all cases of debonding where the unit has imported inputs and failed to fulfil the conditions of LOP with regard to NFE/NFEP/EP, appropriate steps are to be taken for penal action after issuing Show Cause Notice to the units. Steps may also be initiated for cancellation of LOP/LOA of units which is not operating for more than a year;

ii). The Minimum export obligation expressed as minimum FOB value of exports shall be as per the norm for the 5 year period for various sectors given in the Exim Policy from time to time;

(iii) NFE/NFEP is to be calculated as per Paras 6.5, 6.22 & 7.4 of Exim Policy & Paras 6.5, 6.22 & 7.4 of the Handbook of Procedures(Vol.I). For purpose of uniformity, guidelines for calculation of NFE/NFEP/EP given in Exim Policy, may be followed.

5. MONITORING PERIOD

Units which have not completed one year, from the date of commencement of commercial production, will not be monitored In case a unit has completed less than five years from the date of commencement of commercial production it will be monitored for the number of completed years. Annual monitoring in the cases of old units which have completed more than five years will be undertaken for only such number of years which fall in the second block of five years

6. OTHER CONDITIONS

Development Commissioner will monitor Foreign Exchange realization/remittance of EOU/EPZ/SEZ units in coordination with the concerned General Manager of RBI as per instructions issued on the subject vide RBI circular No. COEXD. 3109/05.62.05/99-2000 dated 21.2.2000.

PART B: SCHEME SPECIFIC CONDITIONS

7. Concurrent joint monitoring of EOU / EPZ units:

(a) The performance of EOU / EPZ units would be jointly reviewed by the Development Commissioners of EPZs and concerned Customs / Central Excise Officers on six monthly basis i.e. April - September each year to be completed in the following quarter on the basis of QPRs furnished by the EOUs and for the full financial year on the basis of APR to be completed in the following quarter. The formats of QPR/APR have been prescribed in the LUT at Appendix 14D.

(b) Joint review of EP/NFEP of the EOUs would be conducted by the DC / JDC and jurisdictional Deputy Commissioner/Asstt. Commissioner of Customs and Central Excise in the office of Commissioner of Customs/Central Excise where representative of units would also be invited. This will help them to understand the scheme and clear the doubts about operation. The Development Commissioner are advised to identify the number of Customs and Excise Commissioners where the meetings are to be held and work out a scheduled for visiting each of these places. It is suggested that at least two places should be visited each month, so that all places are covered within a period of three months. Some places may be covered by JDC and in the next six months, these could be interchanged between JDC and DC. For EPZ/SEZ units, this review will be done in the Zone itself.

(c) For publicising the scheme, advertisement in the local papers may be arranged before the date of such meetings. Promotion program may be organised in collaboration with local industry, Association on any other organisation which has good presence in the area. General Manager of District Industries Center may be associated.

(d) For each existing unit, review should be done at length to understand their problems and their possible resolution. Efforts should be made to identify the reasons for shortfall / poor performance and unit-wise action plan should be prepared for removal of bottlenecks. It should be ensured that the unit should have an export promotion strategy as well tentative targets for next few years, so that it has an idea as to what is to be achieved by them. Effective action should be taken against erring units to discourage any misuse of the scheme.

(e) For units under implementation, separate review beheld so that their issues could be resolved.

(f) At such places, if any infrastructure gaps are noticed, District Administration may be advised to prepare projects which can be routed through State Government to the Ministry for approval under Scheme for central Assistance for Developing export infrastructure and other allied activities (ASID).

(g) Based on the joint review Development Commissioner concerned would prepare a report for information of the Department of Commerce and CBEC and suggest corrective measures to enable the defaulting units to fulfill their obligation as per Exim Policy / Customs Notifications.

8. QUARTERLY AND ANNUAL MONITORING OF SEZ UNITS

(a) The performance of the SEZ units shall be monitored by a Committee as provided for in the Exim Policy.

(b) The performance of the SEZ units to be monitored each quarter period on the basis of reports received on formats prescribed in HBOP.

(c) Annual monitoring would be undertaken on the basis of APR prescribed in Annexure III of Appendix 14-D. However, penal action is to be initiated only if NFE achieved is negative at the end of 3rd or subsequent years. In case of existing EPZ units converting into SEZ scheme, the date of commencement of commercial production under the EPZ scheme will be the date for reckoning the number of years completed by the units for the purpose of monitoring.

(d) During the joint review, efforts should be made to identify the reasons for shortfall/poor performance and unit-wise action plan should be prepared for removal of bottlenecks through such a review.

(e) Based on the joint review, Development Commissioner concerned would prepare a report for the information of the Department of Commerce and CBEC and suggest corrective measures to enable the defaulting units to fulfil their obligations as per Exim Policy/Customs Notifications

PROFORMA-I

I. APPROVAL AND IMPLEMENTATION OF EOUS / EPZ UNITS:

No. of valid approved units	:
No. of units cancelled	:
No. of units finally debonded	:
No. of exporting units	:
No. of units under implementation	:
No. of units yet to be implemented	:

II. result of monitoring :

EOU/EPZ units	2000 - 2001	1999 - 2000
a. Units with shortfall in NFEP and/or EP (as per norms in Appendix - I.) at the end of 1st and 2nd year. b. Units which have failed to achieve NFEP / EP as per Appendix-I at the end of 3rd or subsequent years. c. Details of outstanding export proceeds (where the period of realisation is not extended by the competent authority) beyond 180 days at the end of financial year. d. Revenue contributions by the units (a)Excise duty on DTA sale during the financial year (b)Income tax paid, if any, during the year (c)State taxes, cess duties & levies(including CST paid on domestic procurement). a. SEZ UNITS: Units which are operational for more than 1 year. b. Units with negative NFE at the end of 3rd or subsequent years. c. Details of outstanding export proceeds (where the period of realisation is not extended by the competent authority) beyond 360 days at the end of financial year. d. Revenue contributions by the units (a)Excise duty on DTA sale during the financial year (b)Income tax paid, if any, during the year (c)State taxes, cess duties & levies(including CST paid on domestic procurement). App-142

PROFORMA-II

EXPORT PROCESSING ZONE/SEZ

Summary of Annual Performance Report for the year 2002-3 Sector Wise

Sl. No.	Name of Unit with ID No. in Case of EOU	Date of Commen -cement of production	Item of Manufacture	Value of capital goods imported	Value of RM compo -nents etc.	Other outflow of FE towards knowhow, Commission etc	Total investment made	Employment Generated so far
1	2	3	4	5	6	7	8	9

Value of exports			NFEP/NFE		Shortfall	Value of Sales made in DTA	Remarks
Obligation for last 5 years of less as applicable	Actual (as against obligation on col. 10)	Shortfall	Norm as per policy	Achieved during the period
10	11	12	13	14	15	16	17

PROFORMA - III
NAME OF THE UNIT

(Rupees in lakhs/ $ in Million): Month of operation CG Import (Actual):

1. Item of manufacture:

2. Industry Norm of NFEP (%)

3. Date of Commencement:

Last 5 years (or less as applicable)
4. Export Obligation for last 5 years or less as applicable	Rs. in lakhs	$ in Million
		Last year             Last 5 years (or less as applicable
5. Export
6. Inter Unity supply		:
7. C. G. debit		:
8. Imported RM/inputs used		:
9. Other outgo of F. E.		:
10. Total Imports		:
11. NFE		:
12. NFEP`
13. Difference in Export Obligation		:
14. DTA Sale		:
15. Details of outstanding export proceeds (where the period of realisation is not extended by the competent authority) beyond 180/360 days at the end of financial year. (180 days for EOU/EPZ units & 360 days for SEZ units)
16. Revenue contributions by the unit (a)Excise duty on DTA sale during the financial year (b)Income tax paid, if any, during the year (c)State taxes, cess duties & levies(including CST paid on domestic procurement).
17. Remarks		:

ANNEXURE - I
CALCULATION OF NFEP/NFE

1. While calculating NFEP/EP achieved, following basic components are to be taken into consideration:

i. Amortised value of capital goods and technical know how fee

ii. Value of import of R. M. (which is consumed during the year and consumables, spares, etc.).

iii. Other outflow of foreign exchange towards royalty, interest on external commercial borrowings etc.

iv. Value of physical exports effected excluding DTA sales but including supplies made under para 6.9and 7.8(c) of the policy.

2. Amortised Value of Capital Goods: For this purpose as much value of CG is taken into account as indicated in para 6.5 for NFEP and 7.4 for NFE of the Hand Book of procedure (Vol.I). The CG imported prior to the 5 years period is not taken into consideration for the purposes of NFEP/NFE if the value of said CG is fully amortized. However where investment in plant and machinery is more than Rs. 5.00 crores, the value of imported CG will be apportioned over a period of 8 years. If any capital goods imported duty free is leased from a leasing company or is taken in loan the CIF value of the capital goods shall be included under the imported inputs. However, on return of such CG its unamortized portion of value would be excluded from the calculation formula.

3. Import of raw material, consumables and spares etc: Whatever R. M. Consumables and spares are imported during the year are taken into account. However, it should be noted that whatever R. M. is in balance at the end of the previous year is added while the RM at the end of the current year is deducted which will give the amount of RM consumed during the year. RM purchased as inter - unit transfer is also included.

4. Other outflow of foreign exchange: All the foreign exchange outflow on account of royalty, dividends, commission on exports, interest on external commercial borrowing etc., during the particular year has to be accounted for while calculating value addition.However outflow on account of know-how fee would be apportioned during a period of five years/eight years as applicable

5. Value of exports: While calculating value of exports, DTA sale made during the year are not to be accounted for. However, supplies made in accordance with the para 6.9 and 7.8(c) of the Policy will be taken into consideration for calculation of NFEP/NFE.

6. Given below are details of a unit so as to calculate the NFEP for the year 1999 - 2000, on the presumption that no imported RM was in balance at the end of previous year as well as at the end of 1999-2000. In this case, the NFEP for 1999-2000 is calculated as below: -

1. Amortised value of CG. of import of CG made during the years 1995-96 to 1999-2000)	(20% (i.e., 20% of Rs. 50.00 lakhs) Rs. 10.00 lakhs
2. Import of R. M. etc	Rs. 100.93 lakhs
3. Other outflow of F. E.	Rs. 10.72 lakhs
4. Value of exports	Rs. 173.13 lakhs

The NFEP comes to	=   173.13 - (10 + 100.93 + 10.72)x 100
					173.13
		      	=  29.73%

(Appendix 14 E has been corrected vide PN No. 16/2002, Dt. 05/06/2002)