Topic 1.

WAREHOUSING IN CONNECTION WITH IMPORTS

https://howtoexportimport.com/Warehousing-of-Imported-Goods-4628.aspx
The facility of warehousing of imported goods in Customs Bonded Warehouses,
without payment of Customs duty, is permitted under the Customs Act, 1962. In addition to
that, the provision of the Warehoused Goods (Removal) Regulations, 1963 and Manufacture
and Other Operations in Warehoused Regulations, 1966 are also applicable. Basically, goods
after landing are permitted to be removed to a warehouse without payment of duty and duty
is collected at the time of clearance from the warehouse. The law lays down the time period
up to which the goods may remain in a warehouse, without incurring any interest liability and
with interest liability.
Warehousing Stations:
 The warehouses are to be appointed/licensed at particular places only which have
been so declared by Central Board of Excise and Customs.
 The Board has delegated its power for declaring places to be Warehousing Stations to
the Chief Commissioners of Customs.
 In respect of 100% EOUs, the powers to declare places to be Warehousing Stations
have been delegated to the Commissioners of Customs.
Storage Period of Warehoused Goods:
 Any goods deposited in a warehouse may be stored up to a period of one year in the
Bonded Warehouse.
 In the case of capital goods intended for use in any 100% EOU, such goods can,
however, be stored up to a period of 5 years.
 The warehousing period can be extended by the Commissioner of Customs for a 6
months and by the Chief Commissioner of Customs for such further period as is
deemed fit by him.
 The importers should file their applications for extension well before the expiry of the
initial/extended period of warehousing.
Before granting extensions, officers have to examine the condition of the goods to see that
they are not likely to deteriorate during the extended period. A somewhat liberal approach
in extending warehousing period in the following categories of cases is considered, if the
interests of revenue are not likely to be risked:
(a) Goods supplied as ship stores/aircraft stores.
(b) Goods supplied to diplomats.
(c) Goods used in the units operating under manufacture-in-bond scheme.
(d) Goods imported by 100% EOUs.
(e) Goods warehoused and sold through duty free shops.
(f) Machinery, equipment and raw material imported for building and fitment to ships.
Extensions in warehousing period are not meant to be granted routinely but only in
such cases where the goods have to be kept in the warehouse under circumstances beyond
the control of the importer. Lack of finance to pay the duty is not considered as valid and good
ground of seeking extensions which are otherwise given for short period.
In case the warehoused goods are likely to deteriorate, the Commissioner of Customs may
reduce the one year's period of warehousing to such shorter period as he may deem fit.
Rate of Interest on Customs Duty in case of Bonded Goods:
In Cases where the capital goods for 100% EOUs remain in a warehouse beyond a period of 5
years, interest at the rate of 24% per annum shall be charged on the Customs duty payable at
the time of clearance of the goods, for the period from the expiry of the said warehousing
period till the date of payment of duty.
In the case of all other goods interest at the rate of 24% per annum is payable after the expiry
of thirty days in the warehouse.
Recovery of Duty on Bonded Goods:
Customs Officers may demand from the owner of bonded goods the full amount of
duty chargeable on such goods, along with all penalties, rent, interest and other charges
payable in the following cases:
(a) Where any warehoused goods are removed in contravention of the Customs Act, 1962;
(b) Where such goods have not been removed from a warehouse at the expiry of the period
permitted under section 61;
(c) Where any warehoused goods have been taken under section 64 as samples without
payment of duty; and
(d) Where any bonded goods have not been cleared for home consumption or exportation or
are not duly accounted for to the satisfaction of the Customs.
 In case the owner fails to pay the amount as demanded above, Customs may detain
and sell, after notice to the owner, such sufficient portion of the bonded goods as may be
selected.
Topic 2. BONDED WAREHOUSING
https://en.wikipedia.org/wiki/Bonded_warehouse
A bonded warehouse, or bond, is a building or other secured area in which dutiable
goods may be stored, manipulated, or undergo manufacturing operations without payment
of duty. It may be managed by the state or by private enterprise. In the latter case a customs
bond must be posted with the government. This system is widely used in developed countries
throughout the world.
Upon entry of goods into the warehouse, the importer and warehouse proprietor incur
liability under a bond. This liability is generally cancelled when the goods are:
 Exported; or deemed exported;
 Withdrawn for supplies to a vessel or aircraft in international traffic;
 Destroyed under Customs supervision; or
 Withdrawn for consumption domestically after payment of duty.
While the goods are in the bonded warehouse, they may, under supervision by the customs
authority, be manipulated by cleaning, sorting, repacking, or otherwise changing their
condition by processes that do not amount to manufacturing.
After manipulation, and within the warehousing period, the goods may be exported
without the payment of duty, or they may be withdrawn for consumption upon payment of
duty at the rate applicable to the goods in their manipulated condition at the time of
withdrawal.
In the United States, goods may remain in the bonded warehouse up to five years from
the date of importation. Bonded warehouses provide specialized storage services such as
deep freeze or bulk liquid storage, commodity processing, and coordination with
transportation, and are an integral part of the global supply chain.
TYPES
Depending on the country or region, there are various options for the storage of goods in a
bonded warehouse.
Temporary storage premises (RTO)
Temporary storage premises offer the possibility of storing goods that enter the
customs territory of the EU awaiting further customs-approved use or treatment.
Type B customs warehouse
The type B customs warehouse is a public customs warehouse. This means that the
administrator (warehouse keeper) can make the premises available to anyone that wants to
store goods under customs control.
It is also known as Public Customs Bonded Warehouses. Certain examples of Type B
customs warehouse in Asian countries are Central Warehousing Corporation, Concor, State
Warehousing Corporation, DHL Public Bonded Warehouses, Contegrate Entrepot Public
Bonded Warehouses, All cargo Custom Bonded Warehouses and many more.
Type B Warehouses are licensed by the concerned Customs authorities to act as
custodian and escrow to store goods 'til Duty is paid by the importers.
Type C customs warehouse
A type C customs warehouse is a private customs warehouse. This means that only
the administrator of the customs warehouse (warehouse keeper) can store goods in it, either
their own goods or goods stored on behalf of others, the warehouse keeper remaining
responsible to Customs for the goods kept in storage.
The warehouse keeper is also the person who has to provide security to Customs.
Type C warehouses are importer-specific warehouses wherein goods of only the
specific licensed importers may be stored in the warehouse.
Such warehouses are also called as Private Bonded Warehouses.
Type D and E customs warehouses
Type D and E customs warehouses are private customs warehouses, which means that
only the administrator (warehouse keeper) is allowed to store goods in them.
Free warehouse
A Public Bonded Warehouse is a building or premises guarded and locked by Customs.
Within this building or these premises, anyone can store goods.
Special economic zone or Free zone
Unlike a free warehouse, a special economic zone is not a building or premises, but a
location. This location is a geographical area which has been carefully charted and recorded.
Sometimes these areas are known as bonded logistics parks.
Implementation
Depending on different countries, it is difficult to choose what kind of warehouse
should be chosen for different situations, for example, goods may be entered for temporary
warehouse and afterwards for consuming locally or they may be transported out-bound to
another country and are placed in warehouse for a while, or they are entered for warehouse
waiting for retailers to transfer them.
Under such a complex circumstances, many importers and exporters try to use
automation to help manage issues in bonded warehouse which, to some extent, can respond
rapidly to customer orders and dispatch products
Aircraft and Ship stores
Bonded store is place where they place those items which are not declared either
serviceable or un-serviceable.
Topic 3. SPECIAL FACILITIES PROVIDED FOR NRI AND THE NORMS FOR IMPORT OF VARIOUS
ITEMS BY THEM

http://www.eximguru.com/exim/guides/how-to-
import/ch_17_import_of_gold_and_silver_by_nri.aspx
Introduction
Reserve Bank of India has granted general permission to persons of Indian nationality
or origin to bring into India a limited amount of gold and silver. However, import of gold and
silver is govern by certain rules and regulation and are given in detail below.
Import of Gold
A NRI who has been residing in a foreign country for over one year and is returning to
India may be allowed to import jewellery without paying any custom duty in his use up to an
aggregate value of ten thousand rupees in the case of a male passenger.
In case of a female passenger, an individual can import gold of up to rupees twenty
thousands.
If the amount of gold imported exceeds the import duty free range, then the custom duty
charges an amount of Rs. 250 per 10 gms of gold.
Even in such a situation, an individual is only permitted to import a maximum of 10 kg
of Gold as a part of their baggage after paying the required customs duty. It should also be
noted that that these facilities is given only to those passengers who is coming to India after
a stay abroad of about six months.
Gold may be brought into India in any form, including ornaments; however, a
declaration is needed to be filled by the importer for obtaining the permitted quantity of gold
from customs bonded warehouse of State Bank of India or from Metal & Mineral Trading
Corporation subject to other conditions.
In case where a passenger has declared the gold, but could not clear it for want of
sufficient foreign exchange for paying Customs duty, then re-export of the same may be
permitted.
Silver
A Non Resident Indian can import silver in any form up to 100 kilos at a time provided
he is coming to India after 6 months stay abroad. Duty is payable @ Rs. 500/- per Kilo.
Selling of imported Gold and Silver.
Gold and silver so brought by NRIs can be sold to residents against payment in rupees. But
it should be credited in rupees and credited to Ordinary Non-resident Rupee (NRO) account
of the NRI seller.
Custom Bonded Warehouse
This is an option to take delivery of the metals in India from the customs bonded
warehouses to be operated by the State Bank of India and the Minerals and Metals Trading
Corporation (MMTC)
1. Sometimes physical carriage of gold involved security hazards, particularly for
passengers arriving by flights landing at odd hours during nights, it was thought fit to
introduce Customs Bonded Warehouses.

2. This facility would be operated by SBI and MMTC in Delhi, Mumbai and
Thiruvananthapuram and specified delivery centres.

3. Passengers availing of this facility would have the option to make the payment for the
gold in foreign exchange either abroad or in India.
 4. In cases where passengers had made the payment abroad and were found ineligible
for import on their arrival in India, appropriate provision for refund would be provided
under the scheme.

5. Passengers intending to avail of the facility of delivery of gold through such

warehouses would be required to make a declaration to this effect before the customs
authorities at the time of their arrival in the country at the respective airports – Sahar,
IGI Delhi and Thiruvananthapuram.

6. The eligibility of the passengers would be decided by the customs authorities at the
time of customs clearance of the passengers and such passengers would deposit the
duty at the airport itself.

Eligibility Requirements for Availing Transfer Of Residence

Indian nationals, foreign nationals including those of Indian origin, transferring their residence
to India or coming to India on employment, can import their personal effects and household
goods into India under Transfer of Residence rules subject to the following conditions.
A. Owner of the goods must have lived / stayed abroad for a minimum period of 2 years and
must be transferring his / her residence to India. Indian nationals must not have visited India
for more than six months in the preceding two years.
B. Foreign nationals must have a resident / business / work / entry visa.
C. Goods must be shipped out within 30 days of arrival of the owner into India. If there is a
delay then goods can be cleared only if the delay is condoned by the customs authorities.
Every case is decided on its merits.
D. Owner or his or her family members should not have availed Transfer of Residence
Concessions in the preceding 3 years.
Duty Free Allowance
Under Transfer of Residence Rules following items can be imported free if used and old
A. Personal effects and house-hold goods like clothes, books, kitchenware, furniture, small
appliances like mixer, juicer, iron etc. are allowed to be imported duty free if these goods are
old and are used by the shipper.
B. Video Cassette Recorder or Video Cassette Player or Video Television Receiver or Video
Cassette Disk Player.
C. Washing Machine
D. Electrical or Liquefied Petroleum Gas Cooking Range
E. Personal Computer (Desk Top Computer)
F. Laptop Computer (Notebook Computer)
G. Domestic refrigerators of capacity up to 300 liters or equivalent
Concessional Duty
Under Transfer of residence duty for the following items the import duty has been reduced
to 15%
1. Color Television or Monochrome Television. (LCD, LED & Plasma is charged @ 36.06%)
2. Digital Video Disc Player.
3. Video Home Theatre System.
4. Dish Washer
5. Music System
6. Air-Conditioner
7. Domestic refrigerators of capacity above 300 liters or its equivalent
8. Deep Freezer
9. Microwave Oven
10. Video camera or the combination of any such video camera with one or more of the
following goods, namely:-
 Television Receiver
 Sound recording or reproducing apparatus
 Video reproducing apparatus
11. Word Processing Machine
12. Fax Machine
13. Portable Photocopying Machine
14. Vessel
15. Aircraft
16. Cinematographic films of 35 mm and above.
17. Gold or Silver, in any form, other than ornaments
Concessional customs duty rate of 15% of the value is allowed only on the first unit. If the
owner has two or more similar units, or the combined value of the appliances & personal &
household effects exceeds Rs. 5,00,000/= (USD 10,000) Then customs duty @ 36.06 % will be
charged on the additional units or the additional value
Non Transfer of Residence, New & Other Goods
Import Duty for all other goods will be charged @ 36.06% of assessed value
Other Information
Foodstuff imports:
Foreign nationals can import foodstuff in their main household goods shipment duty free up
to a limit of Rs. 50,000/=
Import of Alcohol, Spirits etc.:
Import duties on alcohol, wines, spirits, etc. are very high in India (approx. 160 % + fine &
penalty). Hence it is not advisable to ship wine & liquor into India. However, if it is a must to
ship then please complete our Alcohol Declaration Form with details of Brand, Type of Liquor,
Quantity, Alcohol Content, Purchase Price etc. It is also advisable to pack them separately and
load them at the beginning of the container to enable easy retrieval for customs inspection.
Import of Motor Cars and Bikes:
Motor cars can be imported by paying customs duty @ 208% of the CIF value for both used
and new cars. Motor Bikes can be imported by paying customs duty @ 85% of the CIF value
for both used and new bikes. However, other rules & regulations apply, so please check with
us prior to shipping.
Import of Pets:
Two pets per passenger. Veterinary certificates and other health documents are required.
Restricted / prohibited goods:
Porno-graphic material, obscene literature, narcotics, wildlife items like ivory, horns etc and
firearms, ammunition and other weapons. Should you need further information please
contact us prior to shipping.
Customs examination:
Generally all import consignments are physically inspected 100% as per Indian customs
regulations.
Owner's Presence:
A. All goods can be custom cleared only after arrival of owner of the goods into India.
B. Owner's personal presence is generally a must and is advisable
C. In case owner cannot be present, a power of attorney can be executed in our favor.
D. Completed customs forms should be duly signed and attested to ensure smooth custom
clearance.
Duration for Clearance of FCL Shipments:
Unloading & Placement of container in Customs bonded warehouse: Day 1 / 2
Customs Inspection and assessment of duty: Day 2 / 3
Payment of duty and release of goods: Day 3 / 4
Delivery in same city as POE & unpacking of goods: Day 4 / 5
Delivery in different city as POE: Add 2 to 5 days
Duration for Clearance of LCL Shipments:
Unloading & Placement of de-stuffed goods in Customs bonded warehouse: Day 4 / 7
Customs Inspection and assessment of duty: Day 4 / 9
Payment of duty and release of goods: Day 5 /10
Delivery in same city as POE & unpacking of goods: Day 9 / 12
Delivery in different city as POE: Add 2 to 5 days
(The above information is based on the average duration taken for clearance & delivery. The
actual time can be less than or more than the above)
Topic 4. IMPORT OF CAPITAL GOODS AND RAW MATERIALS FOR FREE TRADE ZONES AND
100% EOU’S

https://www.dripcapital.com/en-us/resources/blog/free-trade-zones-ftzs

Free Trade Zones (FTZs) are those locations or areas that allow the import, storage,
manufacturing of goods, etc., without subjecting them to customs duties or taxes.

Although FTZs have been around for quite some time, their responsibilities are now
diversifying to illustrate the nation-state’s and the private sector's roles in boosting local,
national, and global economic development.

For instance, in an FTZ, the interaction between the private sector and government policies
shapes the local and regional development.

Companies setting up in an FTZ can take advantage of its various regulatory and fiscal
incentives. These include the right to duty-free imports, retain and reinvest foreign exchange
earnings, and tax rebates, to name a few.

Moreover, organizations can avail of additional benefits if they adhere to the customs control
and filing requirements.
In short, an FTZ intends to attract investment, increase employment and, thus, reduce poverty
and unemployment in the local area.
Free Trade Zones in International Trade
As mentioned earlier, an FTZ is an area of land designated as a Special Economic Zone (SEZ)
wherein, through specified customs regulations, the storage, shipment, manufacturing, and
handling of goods can occur.

The Organization for Economic Cooperation and Development (OECD) defines an FTZ as a
grouping of countries within which tariffs and non-tariff trade barriers between the members
are generally abolished but with no common trade policy toward non-members.

Usually, one can find an FTZ near international airports, seaports, and national borders.
Compared to the rest of the country, an FTZ has a liberalized system for foreign trade. With
the rise in mercantile activities and international investments, developing countries tend to
possess more FTZs.

The Purpose of Free Trade Zones

The key purpose of creating free trade zones is to facilitate cross-border trade. This is
achieved by ensuring there are no obstacles in the form of any customs regulations in the
area. Free trade zones also faster turnaround of planes and ships as they have to deal with
generous and less stringent customs-related formalities.

These zones help both importers and exporters as they are designed to help reduce labor
costs and tax-specific expenditures. Free trade zones can be used by traders to leverage all
the available business opportunities and maximize their benefits.

These zones also support export-oriented industries and ensure increased foreign exchange
earnings. Free trade zones also help in generating employment opportunities and helps the
lesser developed countries tackle the problem of unemployment to a significant extent.

The Benefits of Free Trade Zones

The benefits offered by a free trade zone vary from one region to another. However, these
are some of the common benefits associated with all free trade zones:-
• Free trade zones offer duty reduction. It is also known as inverted tariff. It means users do
not have to pay any duty on labor costs, overheads, and profits on goods produced within a
free trade zone.

• Traders can defer on payment of duty till such time the goods are moved outside the free
trade zone. The goods exchanged within the free trade zone are duty free till the time they
leave the zone.

• Traders enjoy exemption of duty as they don’t have to pay duty on exports, re-exports, or
imports.

• Free trade zone offers a reduced Merchandize Processing Fee (MPF). Traders are charged a
single payment per shipment instead of and that too at a reduced rate. They are spared the
cost of having to pay MPF on all goods moving out of the free trade zone.

• Free trade zone offers the benefit of a streamlined logistics system. Those using the facility
can deliver goods directly within the FTZ. They just have to make a single entry for multiple
days of import and export.

• Quota Avoidance is another benefit of using free trade zones. Imported goods with an entry
quota placed on them can be kept in an FTZ. These goods can be converted or manufactured
into items that do not fall under the imposed quota within the zone.

• Some free trade zones also offer other vital benefits such as reduced harbor fees or reduced
insurance costs.

Free Trade Zones Work

Immediately on their import, the FTZ allows the entry of goods without the payment of
customs duties and taxes. Then, once admitted to the zone, the goods can be stored, altered,
manufactured, repaired, renewed, and assembled. However, they cannot be sold in the FTZ.

Since the goods are in the FTZ, they are considered outside the region’s customs territory.
Consequently, they are not subject to duties, tariffs, or quotes in the FTZ. The goods can either
be re-exported or moved to the domestic market for consumption. However, all applicable
duties, taxes, and fees are due once the imported goods are withdrawn from the FTZ and
formally entered into the domestic territory for consumption.

Free Trade Zones Located

Typically, FTZs are based near significant seaports, international airports, and national
boundaries.

Geographically, FTZs exist worldwide, but most are concentrated in two continents. 48% of
FTZs are in Latin America and the Caribbean, while 42% are in Asia. However, back then, a
majority of the FTZs were established in Europe and the US.

This was because of the high trading activities occurring in those regions. But, over the years,
India, Singapore, Dubai, and other countries have also emerged as key FTZ destinations.

For instance, Singapore presently has nine FTZs facilitating intermodal trade and
transshipment activities. In Dubai, around 30 FTZs are vital to the economy and account for
41% of Dubai's total trade.

100% EOU’S
https://www.dripcapital.com/en-in/resources/blog/export-oriented-units

The full form of EOU is Export Oriented Units. Introduced in 1981, the scheme aims to
increase exports from India, to thereby increase foreign exchange earnings and create
employment. This scheme also complements other schemes such as Free Trade Zone (FTZ)
and Export Processing Zone EPZ in India. The provisions of Chapter 6 of the Foreign Trade
Policy and its procedures are applicable to EOU, as well as to Electronics Hardware Technology
Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs). In common
parlance, EOU/STP/EHTP/BTP are together called the EOU scheme. Units registered under the
EOU scheme are required to export 100% of their products unless they sell a portion of it to
Domestic Tariff Area (DTA).
1. Objectives of the EOU scheme

 The EOU scheme provides units with an ecosystem that is conducive for them. They
are given various waivers and preferences in compliance and taxation matters, making
it easier for them to conduct business.
 Exports lead to an inflow of foreign exchange, which helps the nation to improve its
economic position.
 By encouraging export-oriented businesses, the scheme also aims to generate
additional employment through the export sector.
 EOUs were also expected to improve the supply chain starting with the procurement
of raw materials to the supply of finished products to the DTA.
 Export also means an eventual upgrade in the quality and service, so the EOU scheme
was also expected to inspire technological advancements and skill development in the
nation.

2. Benefits of Export Oriented Units

 They can procure raw materials and capital goods through domestic sources or import
without paying any duty on the purchase
 They can claim reimbursement on GST amounts they pay
 In case they have paid duty on the purchase of fuel from domestic oil companies, they
can claim a refund on the same
 EOUs are allowed to claim an input tax credit on goods and services
 EOUs enjoy priority-basis clearance facilities
 EOUs are not required to obtain the industrial licensing which is required for
manufacturing items that are reserved for the SSI sector

3. Important facts to remember while setting up an EOU

 Setting up an EOU

The application for setting up of an EOU is made to the Board of Approval, on whose
approval, a Letter of Permission for setting up the EOU is given. This letter gives you two years
for construction of plant and installation of machinery, which can be further extended by
another year. Once operations begin, the EOU will have to achieve positive foreign exchange
within five years.

 Minimum Investment

To assume the status of an EOU, an investment of at least one crore (minimum) must be
put into plant and machinery. This criterion is not applicable in case of software technology
parks, electronics hardware technology parks and biotechnology parks. Besides, a minimum
investment is also not compulsory in case of EOUs that deal in agriculture, animal husbandry,
handicrafts, information technology, brass hardware, services and handmade jewellery.

 Location

The location of an EOU should be at least 25 kilometres from standard urban area limits
unless it is set up in an industrial area or deals in a non-polluting product or service.

 Industries where EOUs are formed

Initially EOUs mostly centered on industries like textiles, food processing, electronics,
chemicals, plastics and minerals. But over the years EOUs have been set up for manufacturing,
engineering, precious metals, agriculture and allied sectors, services, software, trading etc. as
well.

 Special Licence

Special licence, through an application to the Development Commissioner, is required for

setting up an EOU for sectors like weapons and defence equipment, atomic, narcotics,
psychotropic substances, and certain alcoholic and tobacco-related products.

 Bonding Period

EOUs are licensed to manufacture goods and export within a bonded period of five years.
This period can be extended by five more years by the Development Commissioner and yet
another five years if requested by the EOU to the Commissioner/Chief Commissioner of
Customs.
4. Difference between EOU and SEZ

Although both EOUs and SEZs, were initiated to boost exports, there are differences between
the two. An EOU can be set up anywhere in the country, provided it meets the scheme’s
criteria. On the other hand, an SEZ is a specially demarcated enclave that is deemed to be
outside the Customs jurisdiction and therefore, a foreign territory. Thus, any sale made from
within an SEZ to DTA is considered export while any sale made by an EOU to DTA is regarded
as deemed exports. Sale from SEZs to DTAs are more common, compared to sales from EOUs
to DTAs.

Being a clearly demarcated area, there is substantial control over the physical movement of
goods to and from SEZs, but the same cannot be said about EOUs. In terms of taxability, an
SEZ based establishment is not required to pay tax, while an EOU has to pay tax which it can
claim as a refund later.

5. GST in Export Oriented Units

A supplier must charge GST on goods supplied to the EOU. For its part, the EOU can
either apply for an input tax credit on the GST paid while providing supplies to the DTA or
claim a refund of the GST. EOUs are required to pay GST on admissible sales made to DTAs,
except if it is the sale of zero-rated supplies which are exempt from GST. It must be noted that
GST is applicable even in case of sales from one EOU to another, as such a transaction is
considered a regular sale for the purpose of the GST law. Notably, primary customs duty is
exempted for an EOU in case of imports.

6. Impact of EOUs on Exports

The positive effect of the EOU scheme was prominent in the first two decades of its
existence until the floating of the SEZ scheme. Fast forward another decade, and its share in
overall exports dipped, turning negative. This was in 2011-12, around the time the tax benefits
under the Income Tax Act was withdrawn. EOUs gave exporters the freedom of setting up an
export business in places of their choice, unlike Free Trade Zones and Export Processing
Zones, which had specific locational restrictions. It has also given exporters a wide range of
industrial sectors to choose from while setting up their export-oriented units.
 The law relating to 100% EOUs is widely contained in EXIM Policy, Handbook of
Procedures, various Notifications and Circulars brought out from time to time. It is, therefore,
difficult for a busy professional to keep abreast of all the changes and form a holistic view of
the law relating to 100% EOUs.
To facilitate awareness about 100% EOUs, given below are some of the facts which would
be of interest to a professional.
1. 100% EOUs are permitted to duty free import of goods required for the manufacture or
packaging or production of articles or for service activities. - Notfn. 53/97, dated 3-6-97.
2. 100% EOUs are permitted for duty-free import of goods to carry out reconditioning repair
and reengineering and return the same to the foreign supplier. - Notfn. 53/97, dated 3-6-97.
3. The Commissioner can authorise destruction of waste and rejects generated in the EOU,
without payment of duty either inside or outside the 100% EOU wherever necessary. - Notfn.
53/97, dated 3-6-97.
4. 100% EOUs can send goods into DTA for tests, refining, job work or any other operation
necessary for manufacture of final product. - Notfn. 53/97, dated 3-6-97.
5. 100% EOUs are permitted to take partially processed/manufactured goods to DTA for job
work and bring it back to EOU. - Notfn. 53/97, dated 3-6-97.
6. Interunit transfer of goods is permitted, in case the transferee finds the goods are not
usable or surplus to his requirement. - Notfn. 53/97, dated 3-6-97.
7. 100% EOUs can source spares, fuel, lubricant, and other consumables for captive power
plants and captive generating sets, duty-free on the approval of Jurisdictional Commissioner
of customs/Central Excise on recom-mendation of the Development Commissioner.
8. These units can clear used packing materials without payment of duty and clearance of
goods other than capital goods, material, handling equipment, etc., on payment of duty with
the permission of AC. - Notfn. 9/2000 Cus., dated 28-1-2000; 2/2000-CE, dated 27-1-2000.
9. These units can reexport the imported goods with the permission of AC. - Notfn. 9/2000
Cus., dated 28-1-2000.
10. These units can import samples and prototype without any restriction. - Notfn. 9/2000
Cus., dated 28-1-2000.
11. Goods falling under the First Schedule to the Customs Tariff Act, 1975 when imported into
India by a 100% EOU and when such goods are wholly exempted from the duty of customs
are exempt from the whole of the additional duty leviable thereon under section 9A of
Customs Tariff Act. - Notfn. 5/94, dated 18-1-94.
12. 100% EOUs are permitted to reimport Indian goods for repairs, reconditioning,
reprocessing, refining, remaking, etc., and reexport thereafter. - Notfn. 158/95 -Cus. dated
14-11-95.
13. All four duties of customs are exempted when computer and allied equipments are
donated to a non-commercial Institution by 100% EOUs. This exemption is available only to
second hand equipments. - Notfn. 47/98 Cus., dated 16-7-98.
14. 100% EOUs are exempted from Excise duty to all excisable goods manufactured in them,
which are not being sold in India. - Notfn. 125/84-CE, dated 26-5-84.
15. Reimport of export goods is permissible within one year from the date of export if there
is failure of the foreign buyer to take delivery of goods. - Notfn. 95/93 and 96/93 and 133/94.
16. Material imported for use in the goods to be supplied to EOU are also exempt from duty.
- Notfn. 128/94, Cus., dated 10-6-94.
17. 100% EOUs can procure indigeneously available capital goods components raw materials
and other specified goods without payment of Central Excise Duty. - Notfn. 136/94, dated 10-
11-94; Notfn. 1/95-CE, dated 4-1-95; Notfn. 10/95-CE, dated 23-2-95.
18. 100% EOUs can export through Courier Services also. - Circular No. 65/98 Cus., dated 3-9-
98.
19. With the permission of AC/DC, 100% EOUs can reexport defective parts and components.-
Notfn. 53/97-Cus., dated 3-6-97.
20. 100% EOUs can remove moulds, jigs, tools, fixtures, trackles, instruments, hangers,
patterns, drawings along with goods sent for jobwork to DTA units subject to return of the
goods within the stipulated period. The units are permitted to subcontract a part of their
production process, where substantial manufacturing activity does not take place. - Circular
No. 59/98-Cus., dated 12-8-98.
21. 100% EOUs can use Preauthenticated CT-3 Form booklet for obtaining raw materials free
of duty as and when required without seeking permission from the Central Excise Authorities
every time. - Circular No. 24/91 CX-8, dated 1-7-91.
22. 100% EOUs need not indulge in the manufacture of excisable goods only. The EOU scheme
covers even those activities which may not be strictly considered as "Manufacture" as per
Central Excise Act. - Para 6.1/6.2 of EXIM Policy.
23. 100% EOUs can furnish a single all-purpose Bond (B 17) instead of different bonds. The
bond can be executed with either Surety or Security. - Circular No. 14/98 Cus., dated 10-03-
98; Circular No. 42/98 Cus., dated 19-06-98.
24. 100% EOUs can import capital goods including second hand capital goods in accordance
with the list attested by the Development Commissioner.- Para 6.2(d) of Handbook of
Procedures.
25. 100% EOUs need not obtain Industrial Licence, if it is to manufacture SSI reserved items,
even if it has foreign investment of over 24% in its equity capital. - Ministry of Commerce and
Industry Press Note No. 5 of 2000, dated 29-3-2000.