Circular No. 50/2018-Customs
F.No. DGEP/EOU/40/2017
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
(Directorate General of Export Promotion)
******
New Delhi, dated 6th December, 2018
To,
All Pr. Chief Commissioners/ Chief Commissioners of Customs/ Customs
(Prev.)
All Pr. Chief Commissioners/ Chief Commissioners of Central Tax/ Central
Excise
All Pr. Commissioners/ Commissioners of Customs/ Customs (Prev.)
All Pr. Commissioners/ Commissioners of Central Tax and Central Excise
Madam/Sir,
Sub: Clarification with respect to amendments to Customs and
Central Excise notifications for EOUs - reg.
EOU/EHTP/STP/BTP schemes are governed by Chapter 6 of Foreign
Trade Policy (FTP), duly supported by the relevant Customs and Central Excise
notifications. These notifications have now been amended in order to align them
with the present Foreign Trade Policy (FTP), 2015-2020, as amended, as well as
to remove redundancies that had crept in over the time on account of
changes/supersession of certain other notifications mentioned therein and legal
developments such as the introduction of GST and exempting the EOUs from
the application of the Customs warehousing provisions. These amendments
have been carried out by Notifications No. 79/2018Customs and No. 23/2018-
Central Excise, both dated 05.12.2018. Further, the B-17 Bond (General
Surety/Security) being submitted by the EOUs has been similarly updated vide
Notification No. 1/2018-Central Excise (N.T.), dated 05.12.2018.
Notification No. 52/2003-Customs, dated 31.03.2003 amended by
Notification No. 79/2018-Customs, dated 05.12.2018
2. The Notification No. 52/2003-Customs, dated 31.03.2003 provides for
exemption from Basic Custom Duty, Additional Duties of Customs, IGST and
Compensation Cess on various goods listed therein, when imported by the
EOUs for specified purposes. This notification has been amended to provide
that:-
(a) imported goods could be temporarily cleared without payment of all
Customs duties, IGST and Compensation Cess not paid at the time of their
import. However, the applicability of GST on supply of such goods shall be
independently governed by GST laws.
(b) when duty has to be paid on the imported goods such as when these are
cleared from the EOU, the same would be the duty/tax for which exemption
was availed at the time of their import. However, in the case of capital goods,
depreciation would be allowed as provided in para 4 of the Notification No.
52/2003-Customs, dated 31.03.2003. Further, for leftover textile fabric or
textile material, such payment of duty would be based on the transaction value
as per existing provisions.
(c) removal/modification/updation of the redundant/old notifications/
provisions of the FTP etc., as follows:-
(i) providing that a job worker would need registration under GST
Act/Rules to enable the EOUs to export of GST goods directly from
its premises.
(ii) replacing the reference to Notification No. 62/2004-Customs,
dated 12.05.2004 with presently valid Notification No. 50/2017-
Customs, dated 30.06.2017 for payment of duty by Gem &
Jewellery EOUs on the gold or silver content in the scrap, dust or
sweeping cleared to DTA or for payment of duty by nominated
agencies in case of failure of export in specified time frame.
(iii) removing the reference to old DGFT Policy Circular No. 77(RE)
2003-2004/9, dated 31.03.2009.
(iv) prescribing that wastage norms for manufacture of jewellery of
gold/silver/platinum would be directly governed by the provisions
of the FTP and Handbook of Procedures.
(v) replacing the references to old FTP, 2004-2009 by the new FTP,
2015-2020 and its Appendix.
(vi) replacing the reference to outdated Notification No. 106/58-
Customs, dated 29.03.1958 by the presently applicable
Notification No. 36/2017-Customs, dated 30.06.2017.
(vii) removing the references to Commissioner of Central Excise/
Central Excise officer as the Customs work relating to the EOUs is
now handled by the jurisdictional Customs officers.
(d) For promoting indigenization and export of electronics, Ministry of
Electronics & Information Technology (MeitY) had recommended that the period
of three years allowed for re-import of goods manufactured and exported by
EOUs for the purposes of repair and reconditioning may be extended to seven
years for specified goods. This was justified on the ground that overseas
customers were otherwise constrained to prematurely scrap the repairable
goods which are more than three years old. Accordingly, Sr.No. 14 of the
Annexure-I of the notification has been amended to list specific goods
manufactured and exported by EOUs that can be re-imported within seven
years. These goods are required to be re-exported within one year of the date of
re-importation.
Notification No. 22/2003-Central Excise, dated 31.03.2003 amended by
Notification No. 23/2018--Central Excise, dated 05.12.2018
3. The Notification No. 22/2003-Central Excise dated 31.03.2003 provides
for exemption from various duties of Excise on the goods listed therein when
procured indigenously by the EOUs for specified purposes. This notification has
been amended to provide for:-
(a) deletion of reference to the Additional Duties of Excise (Goods of Special
Importance) Act, 1957 (58 of 1957) and Additional Duties of Excise (Textile and
Textile Articles) Act, 1978 (40 of 1978) these Acts are not in existence post-GST.
(b) modification of clauses (a) to (e) of the opening para of the said
notification to allow procurement of excisable goods falling under the Fourth
Schedule to the Central Excise Act, 1944 (1 of 1944). Also, Annexures I, II, IV
and V of the said notification which listed various excisable goods that were
allowed to be procured indigenously without payment of Excise duties have
been removed as post GST, most of the goods now fall under GST.
(c) continuation of the facility extended to the EOUs engaged in processing
or manufacture of articles of granite, processing of agricultural products and
production or manufacture or packaging of goods in horticulture, agriculture
and animal husbandry sector to temporarily remove specified goods procured
prior to 30.06.2017 without payment of Excise duty to granite quarries and to
the fields and farms.
(d) clearance of capital goods and goods other than packaging material
unsuitable for repeated use which were procured without payment of Excise
duty prior to 30.06.2017, on payment of Excise duty availed as exemption.
Further, allowing the depreciation on capital goods, as provided, and charging
duty on leftover textile fabric or textile material on the transaction value as at
present.
(e) changes on account of redundant references to old/superseded
notifications/FTP etc., as follows:-
(i) replacement of the reference to old Rule 20 of the Central Excise
Rules, 2002 with the present Rule 16 of the Central Excise Rules,
2017.
(ii) replacement of the reference to outdated Notification No. 106/58-
Customs, dated 29.03.1958 with presently applicable Notification
No. 36/2017-Customs, dated 30.06.2017.
(iii) replacement of the references to old FTP, 2004-2009 with the new
FTP, 2015-2020 and its Appendix.
Notification no. 23/2003-Central Excise, dated 31.03.2003 amended by
Notification No. 23/2018--Central Excise, dated 05.12.2018
4. The Notification No. 23/2003-Central Excise, dated 31.03.2003
prescribes effective duties leviable on the DTA clearance of excisable goods by
EOUs. The main amendments are as follows:-
(a) removal of reference to non existing entries at Sr. Nos. 5, 5A, 6 and 7A of
the Table which have been omitted by Notification No. 16/2017-Central Excise,
dated 30.06.2017.
(b) removal of the reference to Duty Free Replenishment Certificate (DFRC),
which has been replaced by Duty Free Import Authorization (DFIA).
(c) removal of the condition that the goods cleared to the DTA must be
"similar" to those exported and also removal of the cap of 50% on DTA sale in
line with the present FTP, 2015-2020.
(d) replacing the references to the old FTP, 2004-2009 with the new FTP,
2015-2020.
Notification No. 24/2003-Central Excise, dated 31.03.2003 amended by
Notification No. 23/2018--Central Excise, dated 05.12.2018
5. The Notification No. 24/2003-Central Excise dated 31.03.2003 provides for
exemption from duties of Excise on the goods manufactured by a EOU provided
these are not brought to any place in India. Post GST, the Additional Duties of
Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and the Additional
Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978) are no more
in existence. Therefore, suitable amendment has been made to remove reference
to these Acts.
Revised B-17 bond by Notification No. 1/2018--Central Excise (N.T.),
dated 05.12.2018
6. The EOUs have been furnishing a "Mother Bond" in form B-17 (General
Surety/Security) for Customs duty free import, Excise duty free domestic
procurement, provisional assessment, export without payment of duty,
movement of goods for job work and return, temporary clearances, proper
accountal of goods, etc. This bond was notified vide Notification No. 6/98
Central Excise (N.T.), dated 02.03.1998 under the erstwhile Central Excise
Rules, 1944. A revised B-17 (General Surety/Security) bond updated with
references to GSTIN, present FTP provisions and Notification No. 52/2003-
Customs dated 31.03.2003 etc., has been notified under the present Rules 7, 9,
21 and 22 of the Central Excise Rules, 2017. This new bond will be applicable
to the new EOUs. The existing EOUs shall continue with the earlier B-17 bond
already executed by them so that there is no disruption in their working. Also,
all relevant instructions applicable for the old B-17 bond will be mutatis
mutandis applicable to the new B-17 bond.
7. While the above paras briefly explain the changes varied out in the
aforementioned notifications, all officers concerned are requested to carefully
peruse the amending notifications to better understand the new legal
stipulations that apply to the EOUs.
8. Difficulties, if any, may be brought to the notice of the Board.
9. Hindi version will follow.
Yours faithfully,
Sd/-
(Saroj Kumar Behera)
Joint Director
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