Scheme

6.1

The Policy relating to Export Oriented Units (EOUs) Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-technology parks(BTPs) Scheme is given in Chapter 6 of the Foreign Trade Policy.

Definitions

6.2

For the purpose of Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTPs) , Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) unless the context otherwise requires, the words and expressions shall have the meanings attached to them as given in the Policy.

Approval/ Application and renewal of Application

6.3.1

For setting up an EOU, three copies of the application in the form given in Appendix- 14-IA may be submitted to the Development Commissioner.

6.3.2

Applications for setting up of units under EOU scheme other than proposals for setting up of unit in the services sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by the BOA), shall be approved or rejected by the Units Approval Committee within 15 days as per the criteria indicated in Appendix-14-IB and sector specific conditions relating to the approval given in Appendix-14-IC. In other cases, approval may be granted by the Development Commissioner after clearance by the Board of Approval.

6.3.3

Proposals for setting up EOU requiring industrial licence may be granted approval by the Development Commissioner after clearance of the proposal by the Board of Approval (as per Appendix-14-ID) and Department of Industrial Policy and Promotion within 45 days on merits.

6.3.4.1

Software Technology Park (STP)/Electronics Hardware Technology Park (EHTP) complexes can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof, duly approved by the Inter-Ministerial Standing Committee (IMSC) in the Ministry of Communication and Information Technology (Department of Information Technology).

Application for setting up EHTP/STP unit shall be in the format prescribed by the Ministry of Communication and Information Technology (Department of Information Technology) and shall be submitted to the officer designated by the Department of Information Technology.

6.3.4.2

Bio Technology Park (BTP) can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof.

Application for setting up of BTP shall be submitted to the Department of Bio Technology and such applications which meet the guidelines prescribed by the Department of Bio Technology will be approved and recommended to the DGFT for notification . Application for setting up of BTP unit shall be submitted to the Officer designated by the Department of Bio Technology.

6.3.6

The LOP/LOI shall specify the item(s) of manufacture/service activity, annual capacity, projected annual export for the first five years in dollar terms, Net Foreign Exchange earnings (NFE), limitations, if any, regarding sale of finished goods, by-products and rejects in the DTA and such other matter as may be necessary and also impose such conditions as may be required.

6.3.7

LOP/LOI issued to EOU/EHTP/STP/BTP units by the concerned authority would be construed as a licence for all purposes. Standard format for LOP for EOU units is given in Appendix 14-IE .

6.3.8

EOUs shall have separate ear-marked premises for separate LOP. Similarly, EOUs may be approved on leased premises provided the lease has been obtained from Government Department/ Undertaking/Agency. However, in case lease is obtained from private parties, it shall have a validity period of five years from the date of LUT and the Development Commissioner shall satisfy himself of genuine nature of the lease.

6.3.9

On completion of the approval period as provided for in paragraph 6.6 of Policy, it shall be open to the unit to continue under the scheme or opt out of the scheme. If no intimation in this regard is received from the unit within a period of six months of expiry of the approval period, the Development Commissioner will take action, suo moto, to cancel the approval under the EOU scheme and take further action in this regard. Where the unit opts to continue, the Development Commissioner concerned will extend the approval period.

Legal Undertaking

6.4.1

The approved EOU/EHTP/STP/BTP unit shall execute a legal undertaking with the Development Commissioner/Designated Officer concerned as per the format given in Appendix- 14-IF.

6.4.2

All EOUs/EHTP/STP/BTP should have permanent e.mail address . No LUT for new units shall be executed unless the unit has its permanent e-mail address and digital signature on the said e-mail ID. In the event of an EOU not having permanent e-mail address and digital signature, further imports and DTA sale shall not be permitted by the Development Commissioner.

Export of goods and services  

 6.5.1

Software units may undertake exports using data communication links or in the form of physical exports (which may be through courier service also), including export of professional services

 6.5.2

The EOUs shall be permitted to export jewellery on the basis of a notional rate certificate issued by the nominated agency. This rate will be based on the prevailing Gold/US$ rate and the US$/INR rate in the notional rate certificate. The certificate issued by the nominated agency should not be older than 3 working days of the date of shipment.

6.5.3

The exporter shall have the flexibility to fix the price and repay the gold loan within 60 days from the date of export. The price shall be communicated to the nominated agencies who will issue a certificate showing the final confirmation of the rate to the bank negotiating the document, to ensure export proceeds are realized at this rate

6.5.4

Gem & Jewellery and Jewellery EOUs may re-export imported goods and export domestically procured goods, including goods generated out of partial processing/ manufacture. Besides, supply of unsuitable/ broken cut and polished diamonds, precious and semi-precious stones upto 5% of the value of imported or indigenously procured goods to the DTA against the valid Gem & Jewellery REP as applicable on payment of appropriate duty is also permitted.

Import /domestic procurement of goods

6.6.1

Goods permitted to be imported /procured from Domestic Tariff Area shall include:

(a)

Raw materials, components, consumables, intermediates, spares and packing materials:

(b)

Capital goods, whether new or second-hand, including inter-alia the following and their spares:

(i)

DG sets, captive power plants, transformers and accessories for all above.

(ii)

Pollution control equipment.

(iii)

Quality assurance equipment.

(iv)

Material handling equipment, like fork lifts and overhead cranes, mobile cranes, crawler cranes, hoists and stackers.

(v)

Un-interrupted Power Supply System (UPS), Special racks for storage, storage systems, modular furniture, computer furniture, anti-static carpet, tele-conference equipment, Servo Control System, Air-conditioners / Air-conditioning system, panel for electricals and special data transmission cable .

(vi)

Security Systems.

(vii

Tools, jigs, fixtures, gauges, moulds, dyes, instruments and accessories;

(c)

Raw material for making capital goods for use within the unit

(d)

others including:

(i)

Prototypes and technical samples for existing product(s) and product diversification, development or evaluation.

(ii)

Drawings, blue prints, charts, microfilms and technical data;

(iii)

Office equipment, including PABX, Fax machines, projection system, Computers, Laptop, server.

(e)

Spares and consumables for all the above items

(f)

any other items not mentioned above with the approval of Board of Approval.

6.6.2

EOUs may import plain/studded gold/platinum or silver jewellery for export after repairs/remaking.

Conditions of Import

6.7

The import of goods by EOU/EHTP/STP/BTP units shall be subject to the following conditions:

(a)

The goods shall be imported into the EOU/EHTP/STP/BTP premises. However, agriculture and allied sectors and granite sector units in EOU may supply/ transfer the capital goods and the inputs in the farms/fields/quarries with prior intimation to the jurisdictional Customs/ Central Excise authorities, provided the ownership of the goods rests with EOU units.

(b)

The procedure as prescribed under Customs/Excise rules for EOUs and units in EHTP/STP/BTP will be followed and appropriate bond executed with Customs/ Excise authorities

(c)

The goods, except capital goods and spares, shall be utilised by EOU/EHTP/STP/BTP units within a period of three years or as may be extended by Customs authorities.

(d)

Goods already imported/shipped/arrived before the issue of LOP/ LOI are also eligible for duty free clearance under the EOU/EHTP/STP/BTP scheme provided customs duty has not been paid and the goods have not been cleared from Customs.

Fax machines/lap- top computers outside approved premises

6.8.1

EOU/EHTP/STP/BTP units may install one fax machine at a place of its choice, outside the premises of the unit, subject to intimation of its location to the concerned Customs/Central Excise authorities.

6.8.2

EOU/EHTP/STP/BTP units may, temporarily take out of the premises of the unit duty free laptop computers and video projection systems for working upon by authorised employees.

6.8.3

EOU/EHTP/STP/BTP units may install personal computers not exceeding two in number, imported/procured duty free in their registered/administrative office subject to the guidelines issued by Department of Revenue in this behalf.

6.8.4

For IT and IT enabled services, persons authorized by the software units may access the facility installed in the EOU/EHTP/STP/BTP unit through communication links

Leasing of Capital Goods

6.9

The value of imported capital goods financed through leasing companies or obtained free of cost and/or on loan/lease basis shall also be taken into account for the purpose of calculation of NFE as defined in the Policy.

Net Foreign Exchange Earnings (NFE)

6.10.1

EOU/EHTP/STP/BTP unit shall be a positive net foreign exchange earner. Net Foreign Exchange Earnings (NFE) shall be calculated cumulatively for a block of five years from the commencement of production according to the formula given below. Items of manufacture for export specified in the Letter of Permission (LOP)/ Letter of Intent (LOI) alone shall be taken into account for calculation of NFE.

Positive NFE = A - B > 0

Where

NFE is Net Foreign Exchange Earning.

‘A’is the FOB value of exports by the EOU/EHTP/STP/BTP unit; and

‘B’is the sum total of the CIF value of all imported inputs and the CIF value of all imported capital goods, and the value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings/ high sea sales during the first five year period or any other charges. "Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials

6.10.2

If any goods are obtained from another EOU/EHTP/STP/SEZ/BTP unit, or procured from an international exhibition held in India, or bonded warehouses or precious metals procured from nominated agencies the value of such goods shall be included under B.

6.10.3

If any capital goods imported duty free or leased from a leasing company, received free of cost and/or on loan basis or transfer, the CIF value of the capital goods shall be included pro-rata, under B for the period it remains with the units.

6.10.4

For annual calculation of NFE the value of imported capital goods and lumpsum payment of foreign technical know-how fee shall be amortized as under:

1st – 10th year: 10%

Maintenance of accounts

6.11.1

EOU/EHTP/STP/BTP unit shall maintain proper account, and shall file digitally signed quarterly and annual report as prescribed in Annexure to Appendix-14-IF to the Development Commissioner/ Designated Officer in the Ministry of Information & Technology/Department of Bio-Technology and Customs and Central Excise authorities.

6.11.2

The unit shall be able to account for the entire quantity of each category of homogenous goods imported/procured duty free, by way of exports, sales/supplies in DTA or transfer to other SEZ/EOU/EHTP/STP/BTP units and balance in stock. However, at no point of time the units shall be required to co-relate every import consignment with its exports, transfer to other SEZ/ EOU/ EHTP/STP/BTP units, sales in the DTA and balance in stock. Any matter for clarification as to whether goods are homogenous or not shall be decided by Unit Approval Committee.

Monitoring of NFE

6.12.1

The performance of EOU units shall be monitored by the Units Approval Committee as per the guidelines given in Appendix –14-IG. Performance of EHTP/STP/BTP shall be monitored by Ministry of Information & Technology/ Deptt. of Bio-technology jointly with the jurisdictional Central Excise /Customs Authority.

6.12.2

Failure to ensure positive NFE or to abide by any of the terms and conditions of the LOP/LOI/IL/LUT shall render the unit liable to penal action under the provisions of the Foreign Trade (Development & Regulation) Act, 1992 and the Rules and Orders made there under without prejudice to action under any other law/rules and cancellation or revocation of LOP/LOP/IL.

Conversion of Scrap/dust /sweeping of gold/silver/platinum into standard Bars.

6.13

Scrap/dust/sweeping of gold/silver/ platinum may be sent to the Government of India Mint/Private Mint from the EOU/EHTP/STP units and returned to them in standard bars in accordance with the procedure prescribed by the Customs authorities or may be permitted to be sold in the DTA on payment of applicable Customs duty, on the basis of gold/silver/platinum content, as may be notified by Customs authorities.

DTA supplies

6.14

Not withstanding the provision of DTA sales in Para 6.8 of Policy , such DTA sales shall not affect the application to any goods of any other prohibition or regulation affecting import thereof in force at the time when such goods are imported. This also does not confer any immunity, exemption or relaxation at any time from any commitment or compliance with any requirements to which the importer may be subject to under other laws or regulations.

Supplies to other EOU/EHTP/STP/ SEZ /BTP units

6.15

Supplies to other EOU/SEZ/ EHTP/ STP/BTP units shall be counted towards NFE provided that such goods are permissible for procurement by these units.

Transfer of Power from one unit to another

6.16

Transfer of power from DG Sets from one unit of EOU/EHTP/STP/BTP to another is permitted.

Supply of precious /semi-precious/synthetics stones from DTA.

6.17

Supplier of precious and semi-precious stones, synthetic stones and processed pearls from DTA to EOUs shall be eligible for grant of Replenishment Licence at the rates and for the items mentioned in the Handbook (Vol.I). The procedure for submission of application for grant of Replenishment Licence as contained in the relevant Chapter of the Handbook (Vol-I)shall be applicable. However, the application shall be made to the Development Commissioner concerned. Such supplies to EOUs are not treated as deemed exports for the purpose of any of the deemed export benefits.

Application for grant of entitlement

6.18

Application for grant of all the entitlements may be made to the Development Commissioner concerned.

Export through other exporters

6.19

An EOU/EHTP/STP/BTP unit may export goods manufactured/software developed by it through other exporter or any other EOU/ EHTP/STP/SEZ/BTP unit subject to the condition that:

(a)

Goods shall be produced in the EOU/EHTP/STP/BTP unit concerned.

(b)

The level of NFE or any other conditions relating to the imports and exports as prescribed shall continue to be discharged by the EOU/EHTP/STP unit concerned.

(c)

The export orders so procured shall be executed within the parameters of EOU/EHTP/STP/BTP schemes and the goods shall be directly transferred from the unit to the port of shipment.

(d)

Fulfillment of NFE by EOU/ EHTP/STP/BTP units in regard to such exports shall be reckoned on the basis of the price at which the goods are supplied by EOUs to other Exporter or other EOU/ EHTP/ STP/BTP/SEZ unit.

(e)

All export entitlements, including recognition as Status Holder would accrue to the exporter in whose name foreign exchange earnings are realized. However, such export shall be counted towards fulfillment of obligation under EOU/EHTP/STP/BTP scheme only.

Other Entitlements

6.20.1

Clubbing of FOB value of export of an EOU/ EHTP/STP/BTP units with FOB value of export of its parent company in the DTA or vice versa for the purpose of according Export House, Trading House, Star Trading House or Super Star Trading House status is permitted.

6.20.2

Sectoral norms as notified by the Government shall apply to FDI in services activities.

6.20.3

Software units may also use the computer system for training purpose (including commercial training) subject to the condition that no computer terminal shall be installed outside the bonded premises for the purpose.

6.20.4

Export of iron ore shall be subject to the decision of the Government from time to time. Requirements of other conditions of exports like minimum export price/export in consumer pack etc. as per ITC(HS) shall apply in case the raw materials are sourced from DTA and exported without further processing/manufacturing by the EOU. Export of textile items shall be covered by bilateral agreements. Wood based units shall comply with the direction of Hon'ble Supreme Court contained in its order dated 12.12.1996 in Writ (civil) No, 202 of 1995- T.N.Godavarman Thirrumulppad v/s Union of India and others with WP(Civil) no 171 of 1996 in regards to use of timber/other wood.

Sub-Contracting

6.21.1

Sub-contracting by EOU gems and jewellery units through other EOUs or SEZ Units or units in DTA shall be subject to following conditions:-

(a)

Goods, finished or semi finished, including studded jewellery, taken out for sub- contracting shall be brought back to the unit within 90 days.

(b)

No cut and polished diamonds, precious and semi-precious stones (except precious, semi-precious and synthetic stones having zero duty) shall be allowed to be taken out for sub-contracting.

(c)

Receive plain gold/silver/platinum jewellery from DTA/EOU/SEZ units in exchange of equivalent quantity of gold/silver/ platinum, as the case may be, contained in the said jewellery

(d)

EOUs shall be eligible for wastage as applicable for sub-contracting and against exchange.

(e)

The DTA unit undertaking job work or supplying jewellery against exchange of gold/silver/platinum shall not be entitled to deemed export benefits.

6.21.2

The facility of getting job work done from DTA unit will be available even when the job worker is not registered with the Central Excise Authority subject to the condition that the goods are brought back to the premises of the Unit on completion of the job work.

6.21.3

Export of finished goods from the job worker's premises may be permitted provided such premises are registered with the Central Excise authorities. Where the job worker is SEZ/EOU/ EHTP/STP/BTP unit, no such excise registration is required and export may be effected either from the job workers’ premises or from the premises of the unit. Export of such products from the job worker's premises shall not be allowed through third parties as provided in the Policy.

6.21.4

EOUs may be permitted to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns and drawings to the premises of sub-contractors subject to the conditions that these shall be brought back to the premises of the units on completion of the job work within a stipulated period. The raw materials may or may not be sent along with these goods.

6.21.5

In case of sub-contracting of production process abroad, the goods may be exported from the sub-contractor premises subject to the conditions that job work charges shall be declared in the export declaration forms, invoices etc. and full repatriation of foreign exchange.

Contract farming

6.22

EOUs engaged in production/processing of agriculture/horticulture/aquaculture products, may on the basis of annual permission from the Customs authorities take out inputs and equipments (specified at Appendix-14-IJ) to the DTA farm subject to the following conditions:

(a)

Supply of inputs by the EOUs to the contract farm(s) shall be subject to the input-output norms approved by the DGFT/BOA.

(b)

There shall be contract farming agreement between the EOU and the DTA farmer(s);

(c)

The unit has been in existence for at least two years and engaged in export of agriculture/horticulture/aquaculture products; otherwise it shall furnish bank guarantee equivalent to the duty foregone on the capital goods/inputs proposed to be taken out to the Deputy/Assistant Commissioner of Customs/Central Excise till the unit completes two years.

Export through Exhibitions/

Export Promotion tours

6.23

EOUs/EHTP/STP/BTP may export goods for holding/ participating in exhibitions abroad with the permission of Development Commissioner subject to the following conditions:-

(a)

The unit shall produce to the Customs authorities the letter in original or its certified copy containing approval of the Development Commissioner. For gems and jewellery items, a self certified photograph of the products shall also be submitted.

(b)

In case of re-import, such items, on arrival shall be verified along with the export documents before clearance.

(c)

Items not sold abroad shall be re-imported within 60 days of the close of the exhibition. However, in case the exporter is participating in more than one exhibition within 45 days of close of the first exhibition, then the 60 days shall be counted from the date of close of the last exhibition.

(d)

In case of personal carriage of goods and for holding/participating in overseas exhibitions, the value of such gems and jewellery shall not exceed US $ 2 million.

Personal Carriage of gems and jewellery for Export promotion tours

6.24

Personal carriage of gold/silver/platinum jewellery, cut and polished diamonds, precious, semi-precious stones, beads and articles as samples upto US $ 100,000 for export promotion tours and temporary display/sale abroad by EOUs is also permitted with the approval of the Development Commissioner subject to the following conditions:

(a)

EOU shall bring back the goods or repatriate the sale proceeds within 45 days from the date of departure through normal banking channel.

(b)

The unit shall declare personal carriage of such samples to the Customs while leaving the country and obtain necessary endorsement.

Export through show-rooms abroad/duty free shops

6.25

Export of goods is also permitted for display/sale in the permitted shops set up abroad or in the show rooms of their distributors/agents. The items not sold abroad within 180 days shall be re-imported within 45 days.

Sale through showrooms/ retail outlets at International Airports.

6.26

EOUs may set up show rooms/retail outlets at the International Airports for sale of goods in accordance with the procedure laid down by the Customs authorities. The items remaining unsold after a period of 60 days shall be exported or returned to the respective EOUs.

Personal carriage of import/export parcels including through foreign bound passengers

6.27.1

Import/ export through personal carriage of gem and jewellery items may be under-taken as per the procedure prescribed by Customs. The export proceeds shall, however, be realized through normal banking channel. Import/export through personal carriage, other than gem and jewellery units, shall be allowed provided the goods are not in commercial quantity.

6.27.2

For Personal carriage of jewellery by foreign bound passenger, the following documents shall be submitted by EOU units as proof of exports.

(a)

Copy of the shipping bill filed by the EOUs ;

(b)

A copy of the Currency Declaration Form filed by the Foreign buyer with the Customs at the time of his arrival; and

(c)

Foreign Exchange Realisation/ Encashment Certificate from the Bank.

6.27.3

In addition to this, Personal Carriage by foreign bound passenger on Document Against Acceptance (DA)/Cash On Delivery (COD) basis is also allowed. The EOUs will have to furnish the following documents as proof of exports:-

(a)

Copy of Shipping Bill;

(b)

Bank Certificate of Export and Realisation.

6.27.4

The procedure for personal carriage of import parcels will be the same as for import of goods by airfreight except that the parcels shall be brought to the Customs by the EOUs/ foreign national for examination and release. Instructions issued by the Customs authorities in this regard should be followed mutatis mutandis.

6.27.5

Personal carriage of parts by foreign bound passengers shall be allowed in case the same are required for repairs of exported goods at customer site. The following documents should be submitted as proof of exports:-

1. Permission letter from customs for exports.
2. Invoice with value (for payment or free of charge).

Replacement/ Repair of imported/ indigenous goods

6.28.1

The units may send capital goods abroad, for repair and return. Any foreign exchange payment for this purpose will also be allowed.

6.28.2

EOU/EHTP/STP/BTP units may, on the basis of records maintained by them and prior intimation to Customs authorities

(a)

Transfer goods to DTA/abroad for repair/replacement, testing or calibration and return.

(b)

Transfer goods for quality testing/R&D purpose to any recognised laboratory/ institution upto Rs.5 lakhs per annum without payment of duty, on giving suitable undertaking to the customs for return of the goods. However, if the goods have been consumed/destroyed in the process of testing etc. a certificate from the laboratory/ institution to this effect be furnished to the Customs.

Samples

6.29.1

EOU/EHTP/STP/BTP units may on the basis of records maintained by them, and on prior intimation to Custom authority supply or sell samples in the DTA for display/market promotion on payment of applicable duties.

6.29.2

Remove samples without payment of duty, on furnishing a suitable undertaking to Customs authorities for bringing back the samples within a stipulated period.

6.29.3

An EOU may export free samples, without any limit, including samples made in wax moulds, silver mould and rubber moulds through all permissible mode of export including through courier agencies/post.

Donation of Computer and Computers peripherals

6.30

EOU/EHTT/STP/BTP unit may be allowed by customs authorities concerned to donate imported/ indigenously procured (bought or taken on loan) computer and computer peripherals, including printer, plotter, scanner, monitor, key-board and storage units without payment of duty, two years after their import/ procurement and use by the units, to a school run by the Central Government, or Government of a State or, a Union Territory or, a local body, an Educational Institution run on non-commercial basis by any organization , a Registered Charitable Hospital, a Public Library, a Public Funded Research and Development Establishment , a Community Information Center run by the Central Government or, Government of a State or, a Union Territory or local body, an Adult Education Center run by the Central Government or, Government of a State or, a Union Territory or a local body, or an organization of the Central Government or, a Government of a State or, a Union Territory as per Custom /Central Excise notification issued in this regard.

Destruction of goods

6.31

No duty shall be payable in case capital goods, raw material, consumables, spares, goods manufactured, processed or packaged, and scrap/waste/ remnants/rejects are destroyed within the Unit after intimation to the Custom authorities or destroyed outside the Unit with the permission of Custom authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi precious stones.

Distinct Identity

6.32

If an industrial enterprise is operating both as a domestic unit as well as an EOU/EHTP/STP/BTP unit, it shall have two distinct identities with separate accounts, including separate bank accounts. It is, however, not necessary for it to be a separate legal entity, but it should be possible to distinguish the imports and exports or supplies affected by the EOU/EHTP/STP/BTP units from those made by the other units of the enterprise.

Unit Approval Committee for EOUs

6.33.1

The powers and functions of the Unit Approval Committee of EOUs shall be as under:-

(a)

To consider applications for setting up EOUs other than proposals for setting up of unit in the services sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by the BOA), Item of manufacture requiring industrial licence under the Industrial (Development & Regulation) Act, 1951 shall be considered by the BOA.

(b)

to consider and permit conversion of units in SEZ to EOU;

(c)

to monitor the performance of the Units;

(d)

to supervise and monitor permission, clearances, licences granted to the units and take appropriate action in accordance with law;

(e)

to call for information required to monitor the performance of the unit under the permission, clearances, licenses granted to it;

(g)

to perform any other function delegated by the Central Government or its agencies;

(h)

to perform any other function as may be delegated by the State Governments or its agencies; and

(i)

to grant all approvals and clearances for the establishment and operation of EOUs.

Approval of EHTP/STP/BTP units.

6.33.2

In the case of units under EHTP/STP scheme, necessary approval/permission shall be granted by the officer designated by the Ministry of Communication and Information Technology, Department of Information Technology/Director(STPI). Similarly in case of units under BTP, necessary approval/permission shall be granted by the officer designated by the Department of Bio-Technology. However, the designated officers shall adopt the criteria for automatic approval of new units as laid down in Appendix 14-IB.

Administration of EOUs/Power of DC/ Designated Officer

6.34

(1)

The Development Commissioner/Designated Officer shall have the following powers in respect to the units. Jurisdiction of Development Commissioners is given in Appendix- 14-IK.

(2)

Conversion of sick/closed DTA unit into EOU;

(3)

Conversion of EOU to STP/EHTP/BTP and vice versa as per the prescribed procedure;

(4)

To allow increase in the value of capital goods in terms of Indian Rupees, on account of foreign exchange rate fluctuations;

(5)

To permit capacity enhancement without any limit in case of de-licensed industries only;

(6)

Permit broad-banding for similar goods and activities mentioned in the LOP or to provide for backward or forwarded linkages to the existing line of manufacture;

(7)

Authorize change in name of the company or the implementing agency and change from a company to another provided the new implementing agency/company undertakes to take over the assets and liabilities of the existing unit;

(8)

Permit change of location from the place mentioned in the LOP to another and/or include additional location provided that no change in other terms and conditions of the approval is envisaged and that the new location is within the territorial jurisdiction of the Development Commissioner/Designated Officer;

(9)

Extend validity period of LOP by three years beyond the initial validity period of the LOP (except in case where there is a restriction on initial period of approval, like setting up of oil refinery projects) ;

(10)

Cancel LOP wherever warranted;.

(11)

Permit merger of two or more units into one unit provided the units fall with in the jurisdiction of the same Development Commissioner/Designated Officer subject to the conditions that the activities are covered under the provision of broad banding;

(12)

Exercise powers of adjudication under Section 13 read with Section 11 of Foreign Trade (Development & Regulation) Act, 1992 in respect of EOUs as mentioned in Gazette Notification No. SO. 194(E) dated 6.3.2000

(13)

Do valuation of exports declared on SOFTEX form by EOUs as per RBI A.D. (M.A Series) Circular A P (DIR series Circular No.9 dated 25.10.2001);

(14)

Issue eligibility certificates for grant of employment visa to low level foreign technicians to be engaged by EOUs as per Ministry of Home Affairs' letter No. 25022/7/99-F.1 dated 20.9.1999;

Registration-cum-Membership Certificate

(15)

Function as a Registering authority for EOU/EHTP/STP/BTP. A separate Registration-cum-Membership Certificate shall not be required in their cases as provided for in paragraph 2.44 of the Policy.

Importer Exporter Code No.

(16)

Allot Importer-Exporter Code number for EOUs, if the same has already not been allotted to the entity;

Green Card

(17)

Issue of Green Card automatically after execution of Legal Undertaking;

(18)

Grant/renewal of Status Certificate in respect of EOUs provided it does not involve clubbing of FOB value of exports of its parent company in the DTA;

(19)

Publicity of EOU/EHTP/STP/BTP Scheme under their jurisdiction.

Clearance of capital goods under EPCG Scheme

6.35

Clearance of capital goods imported as second hand shall be allowed as per the Policy under EPCG scheme. In case of second hand capital goods clearance in DTA may be allowed on payment of duty after 2 years from date of import.

Depreciation norms

6.36.1

Depreciation upto 100% is permissible for Computers and Computer peripherals in 5 years and 10 years in case of other items.

Depreciation norms

for Computers and Computer peripherals

6.36.2

Depreciation for computers and computer peripherals shall be as follows:

10% for every quarter in the first year;

8% for every quarter in the second year;

5% for every quarter in the third year;

1% for every quarter in the fourth and fifth year;

Depreciation norms for other Capital goods

6.36.3

For capital goods, other than the above, the depreciation rate would be as follows:

4% for every quarter in the first year;

3% for every quarter in the second and third year; and

2.5% for every quarter in the fourth and fifth year.

2% for every quarter thereafter.

Conversion

6.37.1

Existing DTA units, may also apply for conversion into an EOU/EHTP/STP/BTP unit, but no concession in duties and taxes would be available under the scheme for plant, machinery and equipment already installed. On coversion, they would get Income Tax concessions but limited to the period of 10 year from original commencement of manufacture or that prescribed under Section 10 of Income Tax Act whichever is earlier. For this purpose, the DTA unit may apply to the Development Commissioner/Designated Officer concerned in the same manner as applicable to new units. In case there is an outstanding export commitment under the EPCG scheme, it will be subsumed in the export performance of the unit. If the unit is having outstanding export commitment under the Advance Licensing Scheme, it will apply to the Advance Licensing Committee for reducing its export commitment in proportion to the quantum of duty free material actually utilised for production and permitted to carry forward the unutilized material imported against the Advance Licence, if any, under the EOU/EHTP/ STP/BTP scheme.

6.37.2

The existing EHTP/STP/BTP units may also apply for conversion/merger to EOU unit and vice-versa. In such cases , the units will continue avail the permissible exemption in duties and taxes as applicable under the relevant scheme. EHTP/STP/BTP units desiring conversion as an EOU may apply to the Development Commissioner concerned through the Officer designated by the Department of Information Technology/ Department of Bio-Technology in the same manner as applicable to new units. Likewise EOU desiring conversion into EHTP/STP/BTP may apply to the officer designated by the Department of Information Technology /Department of Bio-Technology through the Development Commissioner concerned.

6.37.3

An EOU may be shifted to SEZ with the approval of Development Commissioner provided the EOU unit has achieved pro-rata obligation under the EOU scheme.

Revival of Sick units

6.38

Subject to a unit being declared sick by the appropriate authority, proposals for revival of the unit or its take over may be considered by the Board of Approval. Guidelines on revival of sick units are given in Appendix -14-IM.

Fast Track Clearance

6.39.1

A fast track clearance procedure for EOUs having status holder certificate under the Policy is to facilitate functioning of performing EOUs, the following fast track clearance procedure is notified. The eligible units shall avail of this procedure on self-certification basis during the validity of their status. For this purpose the units will have to get the Authorized Signatories notified from the jurisdictional Development Commissioner. The intimations, wherever, prescribed be sent electronically and digitally signed by these notified authorized signatories.

6.39.2

The units will execute the B-17 bond to facilitate duty free imports/domestic procurement. The B17 Bond in such cases shall be without BG/Security or Surety,

6.39.3

The eligible EOU units shall be allowed clearance of goods on the basis of self certification and eligible for self sealing of containers as contained in Circular No. 426/59/98-CE.

6.39.4

For the purpose of examination of both import and export cargo at Gateway port, the procedures applicable to SEZ units shall apply to status holder EOUs.

6.39.5

Such units shall make clearance of rejects up to 5% into DTA, sale of waste/scrap & DTA sales of all categories without obtaining any permission or requiring any supervision from the Central Excise officers or Development Commissioner. Such clearances shall be undertaken on the basis of prior intimation to Development Commissioner and jurisdictional Central Excise Authorities.

6.39.6

The status holder units shall be exempt from examination of import cargo at port of import and at the unit's premises. However, advance intimation of imports shall be filed to the jurisdictional Central Excise range. The re-warehousing of cargo shall be allowed based on such intimation only.

6.39.7

All the domestic procurements/imports duty free shall be made by the units on the strength of self issued CT3/Procurement Certificates. The Serial No. of the preprinted CT3/Annexure Booklet being put to use shall be intimated in advance to jurisdictional Assistant Commissioner/Deputy Commissioner of Central Excise. The details of the duty free procurement/imports shall be filed every month by the unit to the jurisdictional AC/DC Central Excise.

6.39.8

Export of samples, return of rejected imported/indigenous material will be made by the unit without seeking any permission. However, an advance intimation shall be filed to the jurisdictional Central excise.

6.39.9

Procurement of DG set shall be permitted without the permission from Development Commissioner and the jurisdictional Dy. Commissioner, Central Excise.

6.39.10

The status holder units shall be eligible for factory stuffing without any permission.

6.39.11

The clearance of samples and temporary removal of Capital Goods and parts for repair shall be allowed on self-certification basis.

6.39.12

Sub-contracting shall be based on prior intimation of the process and the details of the sub contractor on annual basis to the jurisdictional Assistant Commissioner/Deputy Commissioner of Central Excise. Provisions of Circular 65/2002-Cus in terms of taking samples, retention of samples and the finished goods received from job-worker and period restriction of 30 days shall not be applicable to the Status Holder EOUs.

6.39.13

In respect of the following activities of a status holder EOU, permission will not be required from the Development Commissioner/jurisdictional Central Excise Authorities and instead unit shall be required to send prior intimation :-

(i) import of capital goods (ii) installation of fax machine (iii) laptop from outside the approved premises (iv) DTA Sale of finished products (v) Inter Unit Transfer (vi) Sub-contracting (vii) Participation in Exhibitions (viii) Personal carriage of Gems & jewellery for export promotion tours (ix) Replacement/repair of imported indigenous goods (x) Supply of sale of samples (xi) Sale of unutilized material.