Welcome

Members of FAPCCI and other dignitaries

05.02.2005

EOUs & INDIRECT TAXES

By

S. Jaikumar & M. Karthikeyanswamy associates

chennai – coimbatore – bangalore - hyderabad

SETTING UP AN EOU

100 % Export, except permitted DTA.

Manufacture, Service and repair – sans trading.

Any goods – except prohibited items.

Minimum investment of Rs.1 Crore in P & M, except in certain cases.

Approval by appropriate authority.

Issue of LOP/LOI.

NFEP.

CUSTOMS,

CENTRAL EXCISE & SERVICE TAX

License for PRIVATE BONDED WAREHOUSE under Sec 58 of Customs Act.

Sanction for In bond manufacture under Sec 65

B 17 Bond.

Central Excise Registration.

Import / Procurement of Raw materials / Capital Goods

All items, except prohibited items can be imported / procured without payment of duties. (CT3/PC)

Goods specified in para 6.6.1 of FTP are allowed.

Unspecified goods – with the approval of BOA

Self Certification for import of capital goods.

CG to be installed within one year from the date of import or such extended period (Max 5 years)

Period of warehousing for CG is 5 years and extendable at the pleasure of Commissioner if the goods are not likely to be deteriorated.

Other goods to be used for manufacture within three Years from the date of import and extendable at the pleasure of Commissioner if the goods are not likely to be deteriorated.

DTA

Upto 50 % of FOB value of exports (to include physical exports, deemed exports with forex receipt. Deemed export with receipt in INR – under dispute). 10 % for Gem/Jewellery units.

Concessional rate of duties.

No DTA for motor vehicles, alcoholic liquor, tea etc. Disposal of rejects – 5% without NFE

Waste and Scrap – As per SION and without NFE

Advance DTA for new units. (to be reconciled with the ACTUAL EXPORTS for the financial year for concession)

NFE

Formula.

Cumulative Positive NFE for every 5 years.

Capital goods (including technical know-how fee) Amortisation at 10% per year. Sale of goods to SEZ received in EEFC account.

Certain supplies in DTA.

Supplies to other EOUs, etc.

Certain other entitlements

IT Exemption.

Exemption from industrial licensing.

Retention of export earnings. No bank guarantee if the unit is three years old without any blacklisting and has a turnover of 5 Crores. .

Service Tax exemption (?).

Reimbursement of CST.

Inter unit movements

transfer of manufactured goods permitted from one EOU to another EOU.

Receiving unit would treat the same as imports and the supplying unit would account such transfers for NFE.

Sub contracting

     

EOU shall sub contract up to 50% in value terms of the last years overall production with the permission of Customs authorities.

Similarly EOU can undertake job work from DTA subject to the condition that the goods would be exported directly from the EOU. Import of materials free of cost for jobbing by EOU permitted, however no DTA clearance shall be allowed. Subcontracting both production and production process through other EOUs permitted without any limit.

   Subcontracting abroad permitted with the approval of DC.

Scrap arising during job work either to return to the EOU or to be cleared on payment of duty.

Sale of unutilised material

EOU is permitted to export, transfer to another EOU or sell in DTA on payment of duty foregone, all materials including capital goods imported/procured in excess or which have become obsolete, etc.

       If such materials or either destroyed within the factory or outside the factory with the permission of the Customs authorities, no duty is required to be paid.

       Used packing materials are allowed to be disposed on payment of duty on transaction value.

       In case of textile sector, upto 2% of the CIF value of the imported could be disposed of as leftovers on payment of duty on transaction value.

Fast Track Scheme

EOUs who are status holders can avail this facility

NO bank gaurantee

Clearance on self certification and self sealing

Examination of cargo – procedures applicable to SEZ shall apply

Clearance of rejects and wastes without permission And with prior intimation to DC and AC

Self issued CT3/Procurement Certificates

Export of samples and return of rejects without Permission but with advance intimation

Procurement of DG without permission

Factory Stuffing without any permission

Clearance of samples and removal of CG for repairs Self certification

Permission not required and mere prior intimation for

Sub contracting

Import of capital goods

installation one fax and two computers at HO

DTA Sale

Inter Unit Transfer

Participation in exhibition

Supply of un utilised material

Supply of samples

Replacement/Repair of imported/indigenous goods

Amendments made vide PN 50/2004 –09 dated 24.1.2005

The benefits are available to status holders

Exemption of import cargo at the port but would be examined At the unit

Import based on pre authenticated procurement certificate Issued by Customs for units having physical export of 15 crores

One fax and two computers shall be installed outside the EOU

DG Set shall be procured under intimation to AC/DC

Removal of CG for repairs under prior intimation to AC

Permission on priority basis for clearance of rejects in DTA

Personal carriage of samples and gems/jewels, DTA Sale of finished product, participation in exhibition without prior Permission but on prior intimation.

DRAFT CIRCULAR ISSUED ON FAST TRACK CLEARANCES

Self sealing of containers

Factory stuffing without permission and on prior intimation

Examination of import cargo at the port on exceptional case And in the unit on random/percentage basis as per norms Fixed by the Jurisdictional Commissioner

Permission on priority for clearance of rejects

Removal of CG for repair, etc on prior intimation

One fax and two PCs installed outside the unit

DTA sale on prior intimation

Personal carriage of gems and jewellery for export promotion On prior intimation and permission not necessary

Cenvat Credit and EOUs

Procurement of Petroleum products

Service Tax

THANKS

Swamy associates21/8 Rams FlatsAshoka AvenueDirectors ColonyKodambakkamChennai 600 024.Ph: 044-24811147Fax : 044-24733344

Swamy associates4 E Radhekrishna Apartments33 Sarojini StreetRam NagarCoimbatore 641 009Ph: 0422-5377669Fax : 0422-5378622

Swamy associates493 – 17th G Main6th BlockKoramangalaBangalore 560 095. Ph: 080-51303434

Swamy associatesH.No.3-6-659, Flat No.3CAnushka EnclaveStreet No. 9Himayat NagarHyderabad - 500 029.Ph: 040 - 55526879