The Union budget has exempted certain products manufactured by 100 per cent export-oriented zones (EPZs) and free-trade zones like castor oil cakes, cotton waste, waste of fish and aquatic invertebrates from payment of excise duty on clearance in the domestic tariff area.
It has also allowed EOU/EPZ units to sell 25 per cent of their total output in the domestic market by paying only excise duty equivalent to those paid on similar goods by manufacturers in the domestic market.
This has been allowed for units using primarily indigenous inputs.
In a pre-budget memorandum, the Confederation of Export Units (CEU) had suggested that where the inputs are predominantly indigenous (60 per cent or above) the unit should be asked to pay the excise duty and sell in the market. In cases where the inputs are mostly imported, it was in favour of continuing with the present system.
In cases where inputs are 100 per cent indigenous the export-oriented units want to be treated at par with domestic units, there should be no restriction on the quantum of sale.
Where the end product is excise free, the duty on inputs can be charged and Modvat facility may be allowed on the duty paid on inputs.
While the ministry has granted the first of the demands, it has not waived the percentage permitted to be sold that is 25 per cent.
Earlier, these units were allowed to sell up to 25 per cent of their total production at home on payment of 50 per cent of customs or excise, which ever is higher.
This was making the EOU products uncompetitive since domestic units paid only excise and the customs plus countervailing duty was invariably higher than just the excise duty. This discrepancy has been removed for units which use indigenous inputs.
The exemption for software exports is also likely to help EOU/EPZ exporters.
Says R Veeramani, president, Confederation of Export Units: This measure will solve the problems of electronic sector who have been importing software for design development.
These units use upgrades to make their products compatible with latest trends. Such upgrades were earlier being charged full customs duty similar to the duty charged on main software. Now, these will also be duty free.
Also, export-oriented units, electronic hardware technology parks (EHTPs) and export processing zone units in the electronic hardware sector have been allowed to sell 50 per cent of the value of their production in the domestic market in any 12 month period.
This sale can be made on payment of excise duty equivalent to full customs duty including the additional duty of customs.
