Directorate General of Foreign Trade

       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 Policy relating to EOUs, EHTPs, STPs and BTPs Schemes is given in Chapter 6 of FTP.

 
         
Application/Approval/ Renewal of approval    

6.2.1 For setting up an EOU, three copies of application as in Appendix 14-I-A may be submitted to DC.

 
         
      6.2.2 Applications for setting up units under EOU scheme other than proposals for setting up of unit in service sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by Units Approval Committee within 15 days, as per criteria indicated in Appendix 14-I-B and sector specific conditions relating to approval as in Appendix 14-I-C. In other cases, approval may be granted by DC after clearance by BoA.  
         
      6.2.3 Proposals for setting up EOU requiring industrial licence may be granted approval by DC after clearance of proposal by
BoA (as per Appendix 14-I-D) and Department of Industrial
Policy and Promotion within 45 days on merits.

6.2.4 STP / EHTP complexes can be set up by Central Government, State Government, Public or Private Sector Undertakings or any combination thereof, duly approved by Inter-Ministerial Standing Committee (IMSC) in Ministry of Communication and Information Technology (Department of Information Technology - DoIT). Application for setting up EHTP / STP unit shall be in format prescribed by DoIT and shall be submitted to officer designated by DoIT.

6.2.5 BTP can be set up by Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. Application for setting up of BTP shall be submitted to Department of Bio-Technology (DoBT) and such
applications which meet guidelines prescribed by DoBT will
be approved and recommended to DGFT for notification.
Application for setting up of BTP unit shall be submitted to
officer designated by DoBT.
 
         
      6.2.6 LoP / LoI shall specify item(s) of manufacture / service activity, annual capacity, projected annual export for first five years in dollar terms, Net Foreign Exchange (NFE) earnings, limitations, if any, regarding sale of finished goods, by-products and rejects in DTA and such other matter as may be necessary and also impose such conditions as may be required.

6.2.7 LoP/LoI issued to EOU / EHTP / STP / BTP units by
concerned authority would be construed as an authorization
for all purposes. Standard format for LoP for EOU is given in
Appendix 14- I-E.

6.2.8 EOUs shall have separate earmarked premises for separate LoP. Similarly, EOUs may be approved on leased premises provided 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 date of LUT and DC shall satisfy himself of
genuine nature of lease.

6.2.9 On completion of approval period as provided for in para 6.6 of FTP, it shall be open to unit to continue under scheme or
opt out of scheme. Where unit opts to continue, DC will extend
approval period. If no intimation in this regard is received
from unit within a period of six months of expiry of approval
period, DC will take action, suo moto, to cancel approval
under EOU scheme and take further action in this regard. Where
units give their option to continue after expiry of six months as
stipulated above, DC will grant extension after obtaining
approval of BoA.
 
         

Legal Undertaking (LUT)

   

6.3.1 Approved EOU / EHTP / STP / BTP unit shall execute an LUT with DC / Designated Officer concerned as in Appendix 14- I-F.

 

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

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

 
         
      6.4.2 EOUs shall be permitted to export jewellery on basis of a
notional rate certificate issued by nominated agency. This rate
will be based on prevailing Gold / US$ rate and US$ / INR
rate in notional rate certificate. Certificate issued by nominated
agency should not be older than 7 working days of date of
shipment.

6.4.3 Exporter shall have flexibility to fix price and repay gold loan within 180 days from date of export. Price shall be
communicated to nominated agencies who will issue a certificate
showing final confirmation of rate to bank negotiating
document, to ensure export proceeds are realized at this rate.

6.4.4 Gems & 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 value of imported or indigenously procured goods to DTA against valid Gems &
Jewellery REP as applicable on payment of appropriate duty
is also permitted.
 
         

Import / Domestic Procurement of Goods

 

   

6.5.1 Goods permitted to be imported / procured from DTA shall include:

(a) Raw materials, components, consumables, intermediates, spares and packing materials;

(b) Capital goods, whether new or second-hand, including inter-alia 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, teleconference equipment, Servo Control System, Air-conditioners / Airconditioning system, panel for electricals and special data transmission cable.

(vi) Security Systems.

(vii) Tools, jigs, fixtures, gauges, moulds, dyes, instruments and accessories.

(c) Raw materials for making capital goods for use within 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 and Server.

(e) Spares and consumables for above items.

(f) Any other items not mentioned above with approval of BoA.

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

Conditions of Import

 

    6.6 Import of goods by EOU / EHTP / STP / BTP units shall be
subject to following conditions:

(a) Goods shall be imported into EOU / EHTP / STP /
BTP premises. However, agriculture and allied sectors
and granite sector units in EOU may supply / transfer
capital goods and inputs in farm / fields / quarries with
prior intimation to jurisdictional Customs / Central
Excise authorities, provided ownership of goods rests
with EOUs. Granite sector would also be allowed to
take spares upto 5% of value of Capital Goods to quarry
site.

(b) Procedure as prescribed under Customs / Central
Excise rules for EOUs and units in EHTP / STP / BTP
will be followed and appropriate bond executed with
Customs / Central Excise authorities.

(c) Goods, except capital goods and spares, shall be utilized
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 date of import.
Similarly, export obligation against import of items
{covered by Chapter 9 of ITC(HS)} and coconut oil shall be fulfilled within a period of 90 days from the
date on which first import consignment is cleared by
Customs Authorities.However, in case of import of
spices for VA purpose like crushing / grinding /
sterilization or for manufacture of oils and oleoresins of
pepper, cardamom and chillies (and not for simple
cleaning, grading, re-packing etc.), EO shall be fulfilled
within 120 days from the date of importation of first
consignment. However, for imports completed up to
31.12.2008, export obligation period shall be 150 days
from the date of clearance. In case of import of spices
(other than pepper, cardamom and chillies) for
manufacture of spice oils and oleoresins, EO shall be
fulfilled within 12 months.

(d) Goods already imported / shipped / arrived before issue
of LoP / LoI are also eligible for duty free clearance
under EOU / EHTP / STP / BTP scheme, provided
customs duty has not been paid and goods have not
been cleared from Customs.

(e) Consumption of inputs by the EOU / EHTP / STP /
BTP unit shall be based on the Standard Input Output
Norms (SION) provided that:

(i) where no SION have been notified, generation
of waste, scrap and remnants upto 2% of input
quantity shall be allowed;

(ii) where additional items other than those given in
SION are required as inputs or where generation
of waste, scrap and remnants is beyond 2% of
input quantity, use of such inputs shall be allowed
by the jurisdictional DC within a period of three
months from the date of and based on self
declared norms, with the unit undertaking to
adjust self-declared / ad hoc norms in
accordance with norms as finally fixed by Norms
Committee in DGFT;

(iii) in case of any difficulty in fixation of SION as
above, BoA in consultation with Norms
Committee in DGFT, will decide on a case to
case basis.
 
         

Fax Machines , laptop computers outside approved premises

 

    6.7.1 EOU / EHTP / STP / BTP units may install one fax machine at  a place of its choice, premises of unit, subject to
 intimation of its location to concerned Customs / Central Excise  authorities.
 
         
      6.7.2 EOU / EHTP / STP / BTP units may, temporarily take out of premises of unit, duty free laptop computers and video
projection systems for working upon by authorized employees.

6.7.3 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 DoR guidelines.

6.7.4 For IT and IT enabled services, persons authorized by software units may access facility installed in EOU / EHTP / STP / BTP unit through communication links.
 
         
Leasing out of Capital Goods     6.8 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 purpose of calculation
of NFE as defined in FTP.
 
         

Net Foreign Exchange (NFE) Earnings

 

    6.9.1 EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner. NFE earnings shall be calculated cumulatively in the block period as per para 6.5 of FTP, according to the formula given below. Items of manufacture for export specified in LoP / LoI alone shall be taken into account for calculation of NFE.
 

Positive NFE = A – B> 0
Where

‘NFE’ is Net Foreign Exchange;
‘A’ is FOB value of exports by EOU / EHTP / STP / BTP unit;

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

 
         
      6.9.2 If any goods are obtained from another EOU / EHTP / STP / BTP / SEZ unit, or procured from an international exhibition held in India, or bonded warehouses or precious metals procured from nominated agencies, value of such goods shall be included under ‘B’.  
         
      6.9.3 If any capital goods are imported duty free or leased from a leasing company, received free of cost and / or on loan basis
or transfer, CIF value of capital goods shall be included prorata,
under ‘B’ for period it remains with units.
6.9.4 For annual calculation of NFE, value of imported capital goods and lump sum payment of foreign technical know-how fee shall be amortized as under:
1st – 10th year : 10%
Provided that above amortization rates would be applicable
only if an undertaking is given by a unit that it will not exit to
DTA in the first 10 years. For existing units, proportionate
Customs and excise duty must be paid where NFE is less than
depreciation already claimed, before exit.
 
         

Maintenance of accounts

    6.10.1 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-I-F to DC /
Designated Officer in DoIT / DoBT and Customs and Central
Excise authorities.

6.10.2 Unit shall be able to account for 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, units shall be required to correlate every import consignment with its exports, transfer to other SEZ /
EOU / EHTP /STP / BTP units, sales in DTA and balance in
stock. Any matter for clarification as to whether goods are
homogenous or not shall be decided by Units Approval
Committee.
 
         
Monitoring of NFE     6.11 Performance of EOUs shall be monitored by Units Approval Committee as per guidelines given in Appendix 14-I-G. Performance of EHTP / STP / BTP shall be monitored by
DoIT / DoBT jointly with jurisdictional Central Excise /
Customs authority.
 
         

Conversion of Scrap /dust / sweeping of Gold /silver / platinum into / standard Bars

 

    6.12 Scrap / dust / sweeping of gold / silver / platinum may be sent  Gold / to Government of India Mint / private mint from EOU / EHTP/ STP units and returned to them in standard bars in accordance with procedure prescribed by Customs authorities, or may be permitted to be sold in DTA on payment of applicable customs duty, on basis of gold / silver / platinum content, as may be notified by Customs authorities.  
         
DTA Supplies     6.13 Notwithstanding provision of DTA sales in para 6.8 of FTP, such DTA sales shall not affect 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 importer may be subject to under other laws or
regulations.
 
         

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

   

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

   

6.15 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-I-C.

 
         

Supply of precious / semiprecious / Synthetic  stones from DTA

 

    6.16 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 rates and for items
mentioned in HBP v1. Procedure for submission of application
for grant of Replenishment Authorisation as contained in relevant
Chapter of HBP v1 shall be applicable. However, application
shall be made to DC concerned. Such supplies to EOUs are
not treated as deemed exports for purpose of any of deemed
export benefits.
 
         
Application for grant of entitlements    

6.17 Application for grant of all entitlements may be made to DC concerned.

 
         
Export through other exporters    

6.18 An EOU / EHTP / STP / BTP unit may export goodsmanufactured / software developed by it through other exporter, or any other EOU / EHTP / STP / BTP / SEZ unit subject to condition that:
(a) Goods shall be produced in EOU / EHTP / STP / BTP
unit concerned.
(b) Level of NFE or any other conditions relating to imports
and exports as prescribed shall continue to be discharged by EOU / EHTP / STP / BTP unit concerned.
(c) Export orders so procured shall be executed within parameters of EOU / EHTP / STP / BTP schemes and goods shall be directly transferred from unit to port of shipment.

(d) Fulfillment of NFE by EOU / EHTP / STP / BTP units
in regard to such exports shall be reckoned on basis of
price at which 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 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

 

    6.19.1 FOB value of export of an EOU / EHTP / STP / BTP unit can be clubbed with FOB value of exports of its parent company in DTA or vice versa for the purpose of according Export House and Trading House status.

6.19.2 Sectoral norms as notified by Government shall apply to FDI in service activities.

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

6.19.4 Export of iron ore shall be subject to decision of Government. Requirements of other conditions of exports like minimum export price / export in consumer pack etc. as per ITC(HS) shall apply in case raw materials are sourced from DTA and exported without further processing / manufacturing by EOU. Export of textile items shall be covered by bilateral agreements. Wood based units shall comply with direction of 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 regard to use of timber / other wood.
 
         

Sub-Contracting

 

    6.20.1 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 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 said jewellery.

(d) EOUs shall be eligible for wastage as applicable as per
para 4A.2 of HBP v1 for sub-contracting and against
exchange.

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

 
         
      6.20.2 Facility of getting job work done from DTA unit will be available even when job worker is not registered with Central Excise authority, subject to condition that goods are brought back to premises of unit on completion of job work.

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

6.20.4 EOUs may be permitted to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns and drawings to premises of sub-contractors, subject to condition that these
shall be brought back to premises of units on completion of
job work within a stipulated period. Raw materials may or
may not be sent along with these goods.
 
         
      6.20.5 In case of sub-contracting of production process abroad,
goods may be exported from sub-contractor premises subject
to conditions that at the time of clearance of goods, the EOU
/ EHTP / BTP / STP unit shall declare
(i) the transaction value of the finished goods to be cleared from the sub-contractor’s premises abroad;
 (ii) job work charges to be paid to the subcontractor abroad; and
(iii) value of intermediate goods; supported with documents like (a) sale price contract / or invoice for the finished goods,
 (b) job work contract and
(c) the basis of arriving at the value of intermediate goods. The EOU / EHTP / BTP / STP unit shall also ensure full repatriation of foreign exchange declared as the transaction value of the
finished goods cleared from the sub-contractor’s premises
abroad.
 
         

Contract Farming

 

    6.21 EOUs engaged in production / processing of agriculture /
horticulture / aquaculture products may, on basis of annual
permission from Customs authorities, take out inputs and
equipments (specified in Appendix 14-I-J) to DTA farm subject
to following conditions:-
(a) Supply of inputs by EOUs to contract farm(s) shall be
subject to input-output norms approved by DGFT / BoA.
(b) There shall be contract farming agreement between
EOU and DTA farmer(s).
(c) 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 duty foregone on capital goods / inputs proposed to be taken out, to Deputy / Assistant Commissioner of Customs / Central Excise, till unit completes two years.
 
         

Export through Exhibitions / Export Promotion tour

 

   

6.22 EOU / EHTP / STP / BTP units may export goods for holding  / participating in exhibitions abroad, with permission of DC,subject to following conditions:-

(a) Unit shall produce to Customs authorities letter in
original, or its certified copy containing approval of DC.
For gems and jewellery items, a self certified photograph
of products shall also be submitted.

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

(c) Items not sold abroad shall be re-imported within 60
days of close of exhibition. However, in case exporter
is participating in more than one exhibition within 45
days of close of first exhibition, then 60 days shall be
counted from date of close of last exhibition. In case of
exhibition in USA, the time period shall be 90 days
instead of 60 days mentioned above.

(d) In case of personal carriage of goods and for holding /
participating in overseas exhibitions, value of such gems
and jewellery shall not exceed US $ 5 million

 

 
         

Personal Carriage of gems and jewellery  for Export promotion tours

   

6.23 Personal carriage of gold / silver / platinum jewellery, cut and polished diamonds, precious, semi-precious stones, beads and articles as samples upto US $ 1 million for export promotion tours, and temporary display / sale abroad by EOUs, is also permitted with approval of DC subject to following conditions:-

(a) EOU shall bring back goods or repatriate sale proceeds
within 45 days from date of departure through normal
banking channel.
(b) Unit shall declare personal carriage of such samples to
Customs while leaving country and obtain necessary
endorsement.

 
         

Export through  show-rooms abroad / duty free shops

 

   

6.24 Export of goods is also permitted for display / sale in permitted shops set up abroad or in showrooms of their distributors / agents. Items not sold abroad within 180 days shall be re imported within 45 days.

 
         

Sale through showrooms / retail outlets at International Airports

 

   

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

 
         

Personal carriage of Import / export Parcels including through foreign bound passengers

 

   

6.26.1 For Personal carriage of jewellery by foreign bound passenger, following documents shall be submitted by EOUs as proof of  exports:

(a) Copy of shipping bill filed by EOUs;
(b) A copy of Currency Declaration Form filed by Foreign
buyer with Customs at time of his arrival; and
(c) Foreign Exchange Realisation / Encashment Certificate
from Bank.

6.26.2 In addition to this, Personal Carriage by foreign bound
passenger on Document Against Acceptance (DA) / Cash On
Delivery (COD) basis is also allowed. EOUs will have to furnish
following documents as proof of exports:-
(a) Copy of Shipping Bill;
(b) Bank Certificate of Export and Realisation.

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

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

(a) Permission letter from Customs for exports.

(b) Invoice with value (for payment or free of charge).

 
         

Replacement / Repair of imported / indigenous goods

 

   

6.27.1 Units may send capital goods abroad for repair with permission  of Customs authorities. Any foreign exchange payment for this purpose will also be allowed. However, no permission will be required for sending capital goods for repair within country.

6.27.2 EOU / EHTP / STP / BTP units may, on 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 Customs for return of goods. However,
if goods have been consumed / destroyed in process
of testing etc. a certificate from laboratory / institution
to this effect be furnished to Customs.

 
         
Samples     6.28.1 EOU / EHTP / STP / BTP units may on basis of records
maintained by them, and on prior intimation to Customs
authority, supply or sell samples in DTA for display / market
promotion on payment of applicable duties.

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

6.28.3 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. For statutory requirement of Stability &
Retention sample with manufacturer, an EOU / EHTP / BTP /
STP unit may re-import without payment of duty, those samples,
which were exported by it, under intimation to Custom
Authorities, and FOB value of such samples shall not be
counted for NFE purpose and other export benefits, if any.

6.28.4 An EOU, on basis of records maintained by them and on prior intimation to Customs authorities, may send samples to other EOUs for display on returnable basis within a period of 30
days.
 
         

Donation of Computer  and Computer peripherals

 

    6.29 EOU / EHTP / STP / BTP unit may be allowed by Customs authorities concerned to donate imported / indigenously
peripherals procured (bought or taken on loan) computer and computer peripherals, including printer, plotter, scanner, monitor,
keyboard and storage units without payment of duty, two years
after their import / procurement and use by units, to a school
run by 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 Central Government or, Government
of a State or, a Union Territory or local body; an Adult
Education Center run by Central Government or, Government
of a State or, a Union Territory or a local body; or an
organization of Central Government or, a Government of a
State or, a Union Territory as per Customs / Central Excise
notification.
 
         
Distinct Identity     6.30 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
imports and exports or supplies effected by EOU / EHTP /
STP / BTP units from those made by other units of enterprise.
 
         
 

Unit Approval Committee for EOUs
 


   

6.31.1 Powers and functions of 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 services sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA). Items of manufacture requiring industrial licence under Industrial (Development & Regulation) Act, 1951 shall be considered by BoA.

(b) to consider and permit conversion of units in SEZ to EOU;

(c) to monitor performance of units;

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

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

(f) to perform any other function delegated by Central Government or its agencies;

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

(h) to grant all approvals and clearances for establishment and operation of EOUs.

 
         

Approval of  EHTP / STP / BTP units

    6.31.2 In case of units under EHTP / STP scheme, necessary approval / permission shall be granted by officer designated by DoIT/ Director (STPI). Designated officer shall also exercise powers of adjudication under Section 13 read with Section 11 of FT (D&R) Act, 1992 in respect of STP / EHTP as mentioned in
Gazette Notification No. S.O. 106 (E) dated 30-1-2006.
Similarly in case of units under BTP, necessary approval /
permission shall be granted by officer designated by DoBT.
However, designated officers shall adopt criteria for automatic
approval of new units as laid down in Appendix 14-I-B.
 
         

Administration of EOUs / Powers of  DC / Designated Officer

 

   

6.32 DC / Designated Officer shall have following powers in respect to units. Jurisdiction of DC is given in Appendix 14-I-K.

(1) Conversion of sick / closed DTA unit into EOU;

(2) Conversion of EOU to STP / EHTP / BTP and viceversa as per prescribed procedure;

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

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

(5) Permit broad-banding for similar goods and activities mentioned in LoP or to provide for backward or forward linkages to existing line of manufacture;

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

(7) Permit change of location from place mentioned in LoP to another and / or include additional location provided that no change in other terms and conditions of approval
is envisaged and that new location is within territorial
jurisdiction of DC / Designated Officer;

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

(9) Cancel LoP wherever warranted;

(10) Permit merger of two or more units into one unit provided
units fall within jurisdiction of same DC / Designated
Officer subject to condition that activities are covered
under provision of broad banding;

(11) Exercise powers of adjudication under Section 13 read
with Section 11 of FT (D&R) Act, in respect of EOUs
as mentioned in Gazette Notification No. SO. 194(E)
dated 6.3.2000;

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

(13) 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

 

    (14) Function as a Registering authority for EOU / EHTP /
 STP / BTP unit. A separate Registration cum-
Membership Certificate shall not be required in their
cases as provided for in paragraph 2.44 of FTP except
in case of spices. In case of spices, it would be
mandatory for units to get themselves registered with
Spices Board also.
 
         

Importer Exporter Code No.

   

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

 
Green Card     (16) Issue of Green Card automatically after execution of LUT;

(17) 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 DTA;

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

Change of location /inclusion of additional location with BoA approval

   

6.33 BoA may consider change of location of EOU / EHTP / STP/ BTP unit from place mentioned in LoP to another and / or to include additional location outside territorial jurisdiction of  original DC / Designated Officer, subject to such conditions as BoA may decide.

 

 

Clearance of Capital Goods in DTA

 

   

6.34 Clearance of capital goods, including second hand, in DTA shall be allowed as per FTP on payment of applicable duty and import policy in force on date of such clearance.

 

 

Depreciation norms

 

   

6.35.1 Depreciation up to 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

 

   

6.35.2 Depreciation for computers and computer peripherals shall  be as follows:-

10% for every quarter in first year;

8% for every quarter in second year;

5% for every quarter in third year;

1% for every quarter in fourth and fifth year.

 
         
Depreciation norms for other Capital goods    

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

4% for every quarter in first year;

3% for every quarter in second and third year;

2.5% for every quarter in fourth and fifth year;

2% for every quarter thereafter.

 
         
Conversion     6.36.1 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 scheme for plant, machinery and
equipment already installed. On conversion, they would get
Income Tax concessions but limited to period of 10 years from
original commencement of manufacture or that prescribed under
Section 10 of Income Tax Act whichever is earlier. For this
purpose, DTA unit may apply to DC / Designated Officer
concerned in same manner as applicable to new units. In case
there is an outstanding export commitment under EPCG
scheme / Advance Authorization Scheme, it will follow the
procedure laid down in Appendix 14-I-O of HBP v1.

6.36.2 Existing EHTP / STP / BTP units may also apply for conversion/ merger to EOU and vice-versa. In such cases, units will continue to avail permissible exemption in duties and taxes as applicable under relevant scheme. EHTP / STP / BTP units
desiring conversion as an EOU may apply to DC concerned
through Officer designated by DoIT / DoBT in same manner
as applicable to new units. Likewise, EOU desiring conversion
into EHTP / STP / BTP may apply to officer designated by
DoIT / DoBT through DC concerned.

6.36.3 An EOU may be shifted to SEZ with approval of DC provided EOU has achieved pro-rata obligation under EOU scheme.
 
         

Revival of Sick units

 

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

6.38 FAST TRACK CLEARANCE PROCEDURE

 
         
Eligibility     6.38.1 EOUs having a status holder certificate under FTP shall be eligible for Fast Track Clearance Procedure.  
         
Examination of
 import cargo
    6.38.2 Status holder units shall be exempted from examination of
 import cargo at port of import. However, jurisdictional
Commissioner of Customs / Central Excise may examine
consignments at unit’s place on random basis.
 
         
Domestic procurement and import of goods     6.38.3 Units having physical export turnover of Rs. 15 crores and  above in preceding financial year shall be allowed to import
goods without payment of duty on basis of pre-authenticated
procurement certificate issued by jurisdictional Customs /
Central Excise Authority.
 
         
Installation of Fax Machine / Computers    

6.38.4 Eligible EOUs may install one fax machine and two computers  in their administrative / registered office outside bonded premises under prior intimation to jurisdictional Asstt. / Deputy Commissioner of Customs or Central Excise.

 

 
Procurement of DG sets    

6.38.5 Procurement of DG set of capacity commensurate with actual requirement of unit shall be permitted under intimation to DC and jurisdictional Central Excise authority.

 

 
Temporary removal of Capital Goods    

6.38.6 Eligible EOU may remove their capital goods or parts thereof for repairs under prior intimation to jurisdictional Asstt. / Deputy Commissioner of Customs or Central Excise.

 

 

Personal carriage of samples

   

6.38.7 Personal carriage of samples of Gems & Jewellery by status holder EOUs are allowed subject to limit fixed in para 6.23 without a need for prior permission from DC / Customs / Central Excise.

 
         

Activities which do not require permission

   

6.38.8 In respect of following activities of a status holder, permission will not be required from DC or jurisdictional Central Excise  authority:

DTA sale of finished products in terms of para 6.8(a) of FTP; Participation in exhibition and personal carriage of Gems & Jewellery for export promotion tours subject to fulfillment of conditions of para 6.23 of HBP v1. However, prior intimation thereof needs to be given.

 

 
Time bound disposal of applications     6.39 DC shall dispose off applications expeditiously. Following time schedule shall normally be followed to dispose off applications provided application is complete in all respects and is accompanied with prescribed documents.  
         

S. No

Category of Application

Time limit for disposal (days)

      1

Issue of LoP / LoI

15  
      2

Conversion of LoP / LoI

15  
      3

Acceptance of LUT

3  
      4

Renewal of LUT

3  
      5

Permission for broad banding / diversification

3  
      6

Permission for change in locations

7  
      7

Permission for Advance DTA sale

2  
      8

Permission for merger of units

7  
      9

Permission for enhancement of production capacity

3  
      10

Cancellation of LoP

3  
      11

Permission for debonding / exit

7  
      12

Permission for DTA sale

2  
      13

Eligibility certificate for employment visa for lower level technicians

2  
      14

Issue of Green Card

2  
      15

Renewal of Green Card

same day  
      16

Permission to lease CG

1  
      17

Permission for disposal of scrap / waste

2  
      18

Permission for change in name

2  
      19

Inter Unit Transfer

2  
      20

Wastage Norms, ad-hoc

2  
      21

Permission for re-import

same day  
      22

Permission for re-export

same day  
      23

Permission for replacement / repair of goods

same day  
      24

Allotment of I.E. Code

1  
      25

Authorization of softex form

1  
      26

Reimbursement of CST claims

7  
      27

Issue of GSP Certificate

same day  
      28

Permission for conversion of EOU to STPI, EPCG

5  
      29

Permission of final exit of EOU

5  
      30

Permission of extension of EOU

2  
      31

Permission to allow increase in value of CG

2  
      32

Permission for export through exhibition / tour

2  
      33

Reimbursement of Duty Drawback / TED

7