EXPORT ORIENTED UNITS SCHEME

Presented by: Bhanu Pratap Singh – B 37Dinesh Tiwari – B 39Saket Singh – B 42Naveen Negi – B 46Pankaj Singh Parihar – B 53

Introduced in 1981

Units undertaking to export their entire production of goods and services may be set up under the Export Oriented Units (EOU) Scheme

Duty free import or local procurement for 100% EOU

Reimbursement of CST on purchases from Domestic Tariff Areas (DTA)

INTRODUCTION

Permitted to export all products except prohibited items

Special License required for sectors like defence equipments, alcoholic drinks, cigarettes

Can be set-up anywhere in the country *

Initial Bonding Period of 5 years

Increase Exports

Earn Foreign Exchange

Stimulate FDI

Transfer of latest Technologies

Generate additional Employment

OBJECTIVES

Minimum investment of Rs 1 crore

The EOU must execute a B-17 bond with the Jurisdictional Assistant Commissioner of Customs/Central Excise in charge of the unit.

Achieve Minimum NFEP (Net Foreign Exchange Earning as a Percentage of Exports) & Export Performance (EP)

OBLIGATIONS

EOU Incentives

Incentives given to EOU

Attractive policy provision for EOU’s

Fiscal incentives available to 100% EOU’S

Incentives given to EOU

No imp licenses are required by the EOU unit and import of all industrial

input exempt from custom duty

High quality inputs are available at lower cost

Single window clearance for EOU

Industrial plot and design are available to EOU’s at concessional

rate

Attractive policy provision for EOU’s

• EOU’s can also import second hand capital goods without any age limit

• 50% of the physical export can be sold in the domestic market on payment of concessional duty

• Export through third party is permitted• 100% FDI investment is permitted

through automated route similar to SEZ unit

Fiscal incentives available to 100% EOU’s

Exemption

from custom and central

excise duty on import/local procurement

of capital goods, raw

material etc

Reimbursement of CST on

purchase made from DTA

CENVAT credit on service tax

paid

Goods Imported/Exported and founded defective

EOU’s are under special category in which EOU’s are eligible for fast track clearance through the custom

EOU’s are free to make replacements of Exported/Imported goods which has been found defective, damage or unfit for the overseas/domestic buyers

RED AND GREEN CHANNEL

Two channel system has been adopted for Customs Clearance:(i) Green Channel for non-dutiable goods. (ii) Red Channel for dutiable/prohibited goods.

Transport of dutiable/prohibited goods through the Green Channel is liable for prosecution/penalty and further confiscation of goods.

With regard to clearance of import cargo, the EOUs are eligible for fast track or green channel clearance through the Customs.

GOVERNING BODYDevelopment Commissioner Administrative head of export processing

zones Governed by Ministry of Commerce (GOI)Powers: To adjust for currency fluctuation, in case of

capital goods import Enhancement of production capacity Broad banding/diversification of product

range Change in name or ownership Change of location/expansion Extension of validity of Letter of Permission To adjudicate in all matters

GOVERNING BODY

Customs & Central Excise Officers

Liberal as compared to the Development

Commissioner.

Relaxation in terms of supervision has been given.

Warehouse not locked by customs officials anymore.

Imported goods not controlled by customs anymore.

Control is record based and not physical now.

EXPORT CLEARANCE

DTA – 1% of last year’s exports or Rs. 10 lakhs for new EOUs

Abroad – All under the guidance of customs dept.

Surplus/Unutilised Goods – Duty is payable to be able to sell in DTA except when disposed off in DTA with permission from customs.

B-17 Bonds

B-17 Bond covers different types of activities that includes-

All EOU conducts operations under supervision of CCED

• transhipment of EXIM goods between port of EXIM & unit premises'

• duty-free import/procurement from the original

• sources as per relevant notification & warehousing/storage in the unit

• movement of duty-free goods for job work and return

• temporary clearance for repair and display in exhibitions

• transfer from one warehouse to another.

• B-17 Bond does not cover the differential duty amount

against advance sale

EXPORT ORIENTED UNITS

Minimum investment in plant and machinery and building is Rs 100 L this should be before commencement of commercial production.

General infrastructure available to EOU unit are not as better as available to SEZ units

Central Sales Tax (CST) paid on purchases refundable

Special Economic Zone (SEZ)

There is no such limit for SEZ

General infrastructure available to SEZ unit are much better as available to SEZ units

In case of SEZ unit, supplier does not have to pay CST

Fast Track Clearance Scheme (FTCS) for clearances of imported consignments for EOU.

Supplies made to EOU by Indiansupplier are ‘deemed exports’ and supplier is entitled to benefits of ‘deemed export’

In case of SEZ units, customs clearance for export and import is obtained within the zone itself.

Supplies to SEZ are ‘exports’ and all export benefits are available.

Thank You