Cutting red tape for export oriented units

EXIM MATTERS

The Central Board of Excise and Customs (CBEC) has implemented (through a circular dated January 13, 2006) relaxation of procedures for Export-Oriented Units (EOU) nine months after notification of the annual supplement to Foreign Trade Policy.

Henceforth, goods manufactured in EOU may be sold to Advance Licence Holders or DFRC (Duty Free Replenishment Certificate) holders on the basis of Advance License or DFRC itself. It is not necessary to obtain Advance Release Orders (ARO).

The jurisdictional Assistant/Deputy Commissioner (AC/DC) of Central Excise/Customs should debit the Advance License/DFRC and send a copy of the same to the concerned licensing authority.

However, the parameters such as "nexus" as applicable for duty free import of goods against advance licence/DFRC would apply. Supply of manufactured goods by one EOU to another can be made under cover of ARE3 form. The goods should be sealed in presence of the bond officer of the sending unit and the seals must be found intact by the bond officer of the receiving unit. If the seals are not intact, the goods must be examined before issue of re-warehousing certificate.

Apparently, the EOU receiving the goods need not issue a CT3 form but the CBEC should make this point explicit. EOUs belonging to the same owner can now share facilities like diesel generating (DG) sets, captive power plants, central air conditioning equipments, uninterrupted power supply system, net-working equipments, EPABX, fax, photocopier equipments, data transfer protocol equipments and security system, irrespective of their location.

However, the unit that imported/procured such goods should not remove the goods from its premises. EOUs that hold status as export house etc. can now import DG sets of capacity commensurate with the actual requirement of the unit on the basis of intimation to i.e. without the recommendation of the Development Commissioner (DC). The CT3 facility will not be suspended even if any case of wilful evasion of duty by the EOU is found but CT3 will be issued for each consignment. Only the facility of pre-authenticated CT3 will be suspended.

Even this measure may be reviewed by the Commissioner if the EOU represents against the decision. The CBEC circular now prescribes a 15days limit for AC/DC to verify the correctness of the duty paid by the EOU prior to debonding.

For sales in Domestic Tariff Area of goods similar to those exported or to be exported, the definition of 'similar goods' as given in Customs Valuation Rules, 1988, has to be adopted.

The DC concerned can ask for verification of unit by concerned AC/DC to conduct site verification before grant of approval to set up EOU. The CBEC insists that no re-warehousing certificate should be issued without physical verification of the goods. This will cause practical difficulties as staff availability will not permit quick verification of each consignment that every EOU receives.

The CBEC has clarified that re-import of rejected jewellery can be made under notification no.94/96-Cus. dated 16.12.1996. The Circular allows import of semi-finished jewellery for the purpose of jobbing under a 1997 notification.

Information provided by the Gem & Jewellery Export Promotion Council should suffice for benefit of duty free import of samples up to Rs. 60000 or 15 units under a 1995 notification.