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CHAPTER-6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS
HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY
PARKS (STPs) SCHEME AND BIO-TECHNOLOGY PARKS(BTPS).
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Scheme |
6.1 |
The Policy relating to Export Oriented Units
(EOUs), |
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Definitions |
6.2 |
For the purpose of Export Oriented Units (EOUs),
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Approval/Application and
renewal of Application |
6.3.1 |
or setting up an EOU, three copies of the
application in the form given in Appendix- 14-IA may be submitted to the
Development Commissioner. |
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6.3.2 |
Applications for setting up of units under
EOU scheme other than proposals for setting up of unit in the service
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 sectorspecific 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. |
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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. |
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6.3.4.1 |
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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. |
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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. |
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6.3.7 |
LOP/LOI issued to EOU/EHTP/STP/BTP units by
the concerned authority would be construed as an authorization for all
purposes. Standard format for LOP for EOU units is given in Appendix
14-IE . |
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6.3.8 |
EOUs shall have separate earmarked 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. |
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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. |
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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 |
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6.4.2 |
All EOU/EHTP/STP/BTP units 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 |
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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. |
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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 |
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6.5.3 |
The exporter shall have the flexibility to
fix the price and repay the gold loan within 180 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. |
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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. |
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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, (b)
spares and packing materials: (c)
Capital goods, whether new or second-hand,
including inter-alia the following and their spares:
i.
DG sets, captive power plants, transformers
and
ii.
accessories for all above.
iii.
Pollution control equipment.
iv.
Quality assurance equipment.
v.
Material handling equipment, like fork lifts
and overhead cranes, mobile cranes,crawler cranes, hoists and stackers.
vi.
Un-interrupted Power Supply System (UPS),
Special racks for storage, storage systems, modular furniture, computer
furniture, anti-static carpet, teleconference equipment, Servo Control
System, Air-conditioners / Airconditioning system, panel for electricals
and special data transmission cable .
vii.
Security Systems.
viii.
Tools, jigs, fixtures, gauges, moulds, dyes,
instruments and accessories. (d)
Raw material for making capital goods for
use within the unit. (e)
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. (f)
Spares and consumables for all the above
items. (g)
Any other items not mentioned above with the
approval of Board of Approval. |
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6.6.2 |
EOUs may import plain/studded gold/platinum
or silver jewellery for export after repairs/remaking. |
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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 farm/ fields/ quarries with prior intimation to the
jurisdictional Customs/ Central Excise authorities, provided the
ownership of the goods rests with EOU units. The granite sector would
also be allowed to take spares upto 5% of the value of the Capital Goods
to the quarry site. (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. However, imported
tea shall be utilized within a period of 6 months from the date of
import. Similarly, export obligation against import of items (covered by
chapter 9 of the ITC (HS) Classifications of Export & Import Items,
2004-09) shall be fulfilled within a period of 90 days from the date of
receipt of the first import consignment i.e. the date on which the first
import consignment is cleared by the 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. |
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Fax
machines / laptop computers outside approved premises
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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. |
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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 authorized employees. |
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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. |
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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. |
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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. |
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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. |
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6.10.2 |
If any goods are obtained from another EOU /
EHTP / STP / SEZ / BTP unit, or procured from an international
exhibition held in |
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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. |
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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% |
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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. |
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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 correlate 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 Units Approval
Committee. |
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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 Biotechnology
jointly with the jurisdictional Central Excise / Customs Authority. |
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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/LOI/IL. |
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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. |
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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. |
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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. |
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Transfer
of Power from one unit to another |
6.16 |
Transfer of power from Captive Power plants
(DG Sets) from one unit of EOU/EHTP/STP/BTP to another is permitted as
prescribed in sector specific condition in Appendix 14 IC. |
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Supply
of precious/ semiprecious/ Synthetic 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 Authorisation at the rates and for the items mentioned
in the Handbook (Vol.I). The procedure for submission of application for
grant of Replenishment Authorisation 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. |
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Application
for grant of entitlements |
6.18 |
Application for grant of all the
entitlements may be made to the Development Commissioner concerned. |
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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. |
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Other
Entitlements |
6.20.1 |
The FOB value of export of an EOU/ EHTP /
STP / BTP unit can be clubbed with FOB value of exports of its parent
company in the DTA or vice versa for the purpose of according Star
Export House status. |
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6.20.2 |
Sectoral norms as notified by the Government
shall apply to FDI in service activities. |
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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. |
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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. |
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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
semiprecious 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 as per para 4A.2 of Handbook 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. |
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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. |
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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 worker’s 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. |
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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. |
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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. |
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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 engaged in export of agriculture/horticulture /aquaculture products shall furnish bank guarantee equivalent to the duty foregone on the capital goods/inputs proposed to be taken out to the Deputy / |