eou presetation

7/31/2019 EOU Presetation

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Presentation OnPresentation On

EXPORT ORIENTED UNITSEXPORT ORIENTED UNITS(EOU’s)(EOU’s)

Presented ByPresented By

Dhawal ShuklaDhawal Shukla

CV SmitaCV Smita

Deependra SodhiyaDeependra Sodhiya



INDEXINDEX

IntroductionIntroductionMonitoring & Administrative controlMonitoring & Administrative control

Custom Bonding of EOU’sCustom Bonding of EOU’s

General Conditions of Duty Free ImportGeneral Conditions of Duty Free Import

Import and Export ProcedureImport and Export Procedure

DTA SaleDTA Sale

Inter Unit Transfer Inter Unit Transfer

Special Provisions Relating Gems & JewellerySpecial Provisions Relating Gems & JewellerySupervision of EOUs by the Customs/ CentralSupervision of EOUs by the Customs/ CentralExciseExcise

De-Bonding or Exit from EOU’sDe-Bonding or Exit from EOU’s



IntroductionIntroduction Introduced in the year 1980, vide Ministry of Commerce resolution dated 31stIntroduced in the year 1980, vide Ministry of Commerce resolution dated 31st

December 1980.December 1980.Purpose - boost exports by creating additional production capacity.AttractingPurpose - boost exports by creating additional production capacity.Attracting

Investors, creating employment, encouraging export. Launched well beforeInvestors, creating employment, encouraging export. Launched well before

SEZ.SEZ.

Introduced as a complementary scheme to the Free Trade Zones/ ExportIntroduced as a complementary scheme to the Free Trade Zones/ Export

Processing Zone (EPZ).Processing Zone (EPZ).

Exporters showed willingness to set up units with long term commitment toExporters showed willingness to set up units with long term commitment to

exports under Customs bond operations provided they had the freedom toexports under Customs bond operations provided they had the freedom to

locate them in places of their choice.locate them in places of their choice.

These units may be engaged in the manufacture, services, development of These units may be engaged in the manufacture, services, development of

software, trading, repair, remaking, reconditioning, re-engineering includingsoftware, trading, repair, remaking, reconditioning, re-engineering including

making of gold/silver/platinum jewellery and articles etc. The EOUs canmaking of gold/silver/platinum jewellery and articles etc. The EOUs can

export all products except prohibited items of exports in ITC (HSexport all products except prohibited items of exports in ITC (HS).).

INDIAN TRADE CLASSIFICATION (HARMONISED SYSTEM)INDIAN TRADE CLASSIFICATION (HARMONISED SYSTEM)



units are allowed to import or procure locally without payment of dutyunits are allowed to import or procure locally without payment of dutyall types of goods including capital goods, raw materials, components,all types of goods including capital goods, raw materials, components,packing materials etc.packing materials etc.

The EOUs are required to achieve the minimum NFEP (Net ForeignThe EOUs are required to achieve the minimum NFEP (Net ForeignExchange Earning as a Percentage of Exports) and the minimum EPExchange Earning as a Percentage of Exports) and the minimum EP(Export Performance) as per the provisions of EXIM Policy.(Export Performance) as per the provisions of EXIM Policy.

The EOUs are licensed to manufacture goods within the bondedThe EOUs are licensed to manufacture goods within the bonded

premises for the purpose of export.premises for the purpose of export.

the period of bonding is initially for five years, which is extendable tothe period of bonding is initially for five years, which is extendable toanother five years by the Development Commissioner.another five years by the Development Commissioner.

The imported capital goods are allowed to be warehoused for a periodThe imported capital goods are allowed to be warehoused for a periodof 5 years extended further by the Commissioner / Chief Commissioner of 5 years extended further by the Commissioner / Chief Commissioner of Customs extended on application.of Customs extended on application.



Monitoring & AdministrativeMonitoring & Administrative

ControlControl EOUs basically function under the administrative control of the DevelopmentEOUs basically function under the administrative control of the DevelopmentCommissioner of the Export Processing Zones, whose jurisdiction has been notifiedCommissioner of the Export Processing Zones, whose jurisdiction has been notified

by the Ministry of Commerce.by the Ministry of Commerce.

The Development Commissioners of the EPZs/SEZs are the Licensing Authorities inThe Development Commissioners of the EPZs/SEZs are the Licensing Authorities in

respect of units under the EOU Scheme.respect of units under the EOU Scheme.

Customs and Central Excise law in respect of the EOUs are administered by theCustoms and Central Excise law in respect of the EOUs are administered by the

Commissioners of Customs and Central Excise, who work under the control of Commissioners of Customs and Central Excise, who work under the control of

Central Board of Excise & Customs.Central Board of Excise & Customs.

For setting up of an EOU, three copies of the application in the prescribed form areFor setting up of an EOU, three copies of the application in the prescribed form are

required to be submitted to the Development Commissioner & permission from BOA.required to be submitted to the Development Commissioner & permission from BOA.

all decisions relating to the EOUs are taken by the Board of Approvals (BOA), set upall decisions relating to the EOUs are taken by the Board of Approvals (BOA), set up

under the Ministry of Commerce. The BOA is chaired by the Secretary, Ministry of under the Ministry of Commerce. The BOA is chaired by the Secretary, Ministry of Commerce and includes the Chairman, C.B.E.C. or his nominee as a member Commerce and includes the Chairman, C.B.E.C. or his nominee as a member



Custom Bonding of EOU’sCustom Bonding of EOU’s

The premises of EOU are approved as a Customs bondedThe premises of EOU are approved as a Customs bonded

warehouse under the warehousing provisions of thewarehouse under the warehousing provisions of the

Customs ActCustoms Act

The manufacturing and other operations are carried outThe manufacturing and other operations are carried out

under customs bond and the unit bearing appropriateunder customs bond and the unit bearing appropriate

charges for officers on cost recovery basis.charges for officers on cost recovery basis.

The EOUs are required to execute a multipurpose bondThe EOUs are required to execute a multipurpose bond

with surety/ security with jurisdictional Customs/ Centralwith surety/ security with jurisdictional Customs/ Central

Excise officers.Excise officers.



General Conditions of Duty FreeGeneral Conditions of Duty Free

ImportImport The goods are required to be imported into the EOU premises directlyThe goods are required to be imported into the EOU premises directly

Prior to undertaking import / local procurement duty free, the unit isPrior to undertaking import / local procurement duty free, the unit isrequired to get their premises customs bondedrequired to get their premises customs bonded

The goods, except capital goods and spares, are required to be utilizedThe goods, except capital goods and spares, are required to be utilized

within a period of one year or within such period as may be extended bywithin a period of one year or within such period as may be extended bythe Customs authorities.the Customs authorities.

The importer is required to maintain a proper account of the import,The importer is required to maintain a proper account of the import,consumption and utilization of all imported/locally procured materialsconsumption and utilization of all imported/locally procured materialsand exports made and submit them periodically to the Developmentand exports made and submit them periodically to the DevelopmentCommissioner/ CustomsCommissioner/ Customs

importer is required to achieve minimum NFEP/export performance asimporter is required to achieve minimum NFEP/export performance asper the provisions of EXIM Policy.per the provisions of EXIM Policy.

The importer is required to abide by the terms and conditions of theThe importer is required to abide by the terms and conditions of theLetter of Permission/Letter of Intent /Industrial License issued to theLetter of Permission/Letter of Intent /Industrial License issued to theunit.unit.



Import and Export ProcedureImport and Export Procedure

With regard to clearance of import cargo, the EOUs are placed in aWith regard to clearance of import cargo, the EOUs are placed in aspecial category, eligible for fast track or green channel clearancespecial category, eligible for fast track or green channel clearancethrough the Customsthrough the Customs

Clearance of import consignments is allowed at the gateway portClearance of import consignments is allowed at the gateway port

In general, the EOU cargo is not examined at the gateway portIn general, the EOU cargo is not examined at the gateway port

The imported cargo so cleared and brought into the unit’s premises isThe imported cargo so cleared and brought into the unit’s premises isexamined by the jurisdictional Customs/Central Excise officials. After examined by the jurisdictional Customs/Central Excise officials. After examination (percentage check only), the goods are allowed to be usedexamination (percentage check only), the goods are allowed to be used

for export production.for export production.

On the export side, the units having status of a Super Star TradingOn the export side, the units having status of a Super Star TradingHouse, Star Trading House, Trading House, and Export House areHouse, Star Trading House, Trading House, and Export House areallowed the facility of self-sealing of their export containers.allowed the facility of self-sealing of their export containers.



DTA SaleDTA Sale

The EOUs ( other than gems & jewellery units) areThe EOUs ( other than gems & jewellery units) are

allowed to sell goods (including rejects and byproducts)allowed to sell goods (including rejects and byproducts)

manufactured by them in DTA up to 50% of FOB value of manufactured by them in DTA up to 50% of FOB value of

exports on payment of concessional duty subject toexports on payment of concessional duty subject to

achievement of prescribed NFEP .achievement of prescribed NFEP .

the DTA sale facility is not available for certain productsthe DTA sale facility is not available for certain products

such as motor car, alcoholic liquor, tea (except instantsuch as motor car, alcoholic liquor, tea (except instant

tea), books etc.tea), books etc.



Inter Unit Transfer Inter Unit Transfer

An EOU is allowed to transfer imported or An EOU is allowed to transfer imported or manufactured goods to another manufactured goods to another EOU/EPZ/STP/EHTP/SEZ unit.EOU/EPZ/STP/EHTP/SEZ unit.

The officers in charge of the EOU supplying theThe officers in charge of the EOU supplying thematerial and the EOU receiving the material arematerial and the EOU receiving the material are

expected to keep a watch on the movement of expected to keep a watch on the movement of material between the EOUsmaterial between the EOUs



Special Provisions RelatingSpecial Provisions Relating

Gems & JewelleryGems & Jewellery The items of gem and jewellery to be taken out temporarily into DTAThe items of gem and jewellery to be taken out temporarily into DTA

without payment of duty for the purpose of display and to bewithout payment of duty for the purpose of display and to be

returned thereafter returned thereafter

export of jewellery including branded jewellery for display and saleexport of jewellery including branded jewellery for display and sale

in the permitted shops setup abroad, or in the showroom of their in the permitted shops setup abroad, or in the showroom of their distributors or agents provided that items not sold abroad within 180distributors or agents provided that items not sold abroad within 180

days, shall be re-imported within next 45 days;days, shall be re-imported within next 45 days;

Gem and jewellery units to remove parts & tools of machineGem and jewellery units to remove parts & tools of machine

temporarily without payment of duty for the purpose of repair andtemporarily without payment of duty for the purpose of repair and

return thereof.return thereof.

Removal of moulds, tools, patterns, and drawings into the DTA for Removal of moulds, tools, patterns, and drawings into the DTA for

job work without payment of duty and to be returned to the unit job work without payment of duty and to be returned to the unit

thereafter.thereafter.

For availing of the above mentioned facilities, prior permission of For availing of the above mentioned facilities, prior permission of

Assistant Commissioner / Deputy Commissioner is required. Assistant Commissioner / Deputy Commissioner is required.



Supervision of EOUs by theSupervision of EOUs by the

Customs/ Central ExciseCustoms/ Central Excise Operational flexibility has been provided to EOUs by amendment of Operational flexibility has been provided to EOUs by amendment of

"Manufacture and Other Operations in Warehouse Regulations,"Manufacture and Other Operations in Warehouse Regulations,

1966". The EOUs no longer carry out manufacturing1966". The EOUs no longer carry out manufacturing operations under operations under

physical supervision of Customs officers. The procedure for locking of physical supervision of Customs officers. The procedure for locking of

the warehouse, control over the issue of imported goods etc. hasthe warehouse, control over the issue of imported goods etc. has

been abolished.been abolished.

All the movements from and to the unit like clearance of raw materials/ All the movements from and to the unit like clearance of raw materials/

component to the job workers premises, return of goods from the job-component to the job workers premises, return of goods from the job-

workers’ premises, clearance to other EOUs, export and sale in DTAworkers’ premises, clearance to other EOUs, export and sale in DTA

are allowed to be made by the unit subject to maintenance of theare allowed to be made by the unit subject to maintenance of the

recordsrecords

As physical control has been abolished greater stress is given on As physical control has been abolished greater stress is given on

proper maintenance of prescribed records & accounts and non-proper maintenance of prescribed records & accounts and non-

maintenance of the accounts by the units is viewed seriouslymaintenance of the accounts by the units is viewed seriously



The Chief Commissioner is empowered to order The Chief Commissioner is empowered to order

special audit of the unit by Cost Accountantspecial audit of the unit by Cost Accountant

nominated by him in this regard. Cost audit isnominated by him in this regard. Cost audit is

employed as a tool to check the correctness of employed as a tool to check the correctness of raw materials, quantity used, finished goodsraw materials, quantity used, finished goods

produced or other such situation.produced or other such situation.



De-Bonding or Exit from EOU’sDe-Bonding or Exit from EOU’s

An EOU may debond into a normal DTA unit subject to An EOU may debond into a normal DTA unit subject to

the approval of the Development Commissioner andthe approval of the Development Commissioner and

following of prescribed procedure & fulfilling the laid downfollowing of prescribed procedure & fulfilling the laid down

conditions.conditions.

The duty payable in terms of the relevant notifications byThe duty payable in terms of the relevant notifications by

the units seeking debonding is as under:the units seeking debonding is as under:

1.1. Semi-finished and finished goods lying in stock at the time of de-Semi-finished and finished goods lying in stock at the time of de-

bonding can be cleared on payment of the excise dutybonding can be cleared on payment of the excise duty2. Used packing materials such as cardboard boxes, polyethylene2. Used packing materials such as cardboard boxes, polyethylene

bags of a kind unsuitable for repeated use can be cleared withoutbags of a kind unsuitable for repeated use can be cleared without

payment of duty.payment of duty.



Capital goods, material handling equipment, office equipment and captiveCapital goods, material handling equipment, office equipment and captive

power plants can be cleared on payment of an amount equal to the customspower plants can be cleared on payment of an amount equal to the customs

duty leviable on such goods on the depreciated value thereof and at theduty leviable on such goods on the depreciated value thereof and at the

rates in force on the date of payment of such duty.rates in force on the date of payment of such duty.

Goods including containers suitable for repeated use other than those atGoods including containers suitable for repeated use other than those at

above can be allowed clearance on payment of customs duty on their valueabove can be allowed clearance on payment of customs duty on their value

at the time of import and at the rate of duty in force on the date of paymentat the time of import and at the rate of duty in force on the date of paymentof such duty.of such duty.

At the time of debonding, the EOUs are entitled for depreciation on At the time of debonding, the EOUs are entitled for depreciation on

imported/indigenous capital goods.imported/indigenous capital goods.

In the event of a gem and jewellery unit ceasing its operation, gold and other In the event of a gem and jewellery unit ceasing its operation, gold and other

specious metals, alloys, gem and other materials available for manufacturespecious metals, alloys, gem and other materials available for manufacture

of jewellery are handed over to a nominated agencyof jewellery are handed over to a nominated agency

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