Initially, they were subject to physical control by Customs/excise officers. These dispensations were later extended to STP, EHTP and BTP units, with suitable modifications. Even agriculture, horticulture, aquaculture and quarrying could be done under the EOU scheme but without the requirement of Customs bonding. All such units are collectively referred to as EOUs.
Imported goods could be brought into EOUs without duty payment, in line with the warehousing provisions under Customs laws. And, exemption notifications were issued from time to time, providing greater flexibility for EOUs to import their requirements and deal with these. Over the years, numerous notifications were issued for different purposes and the number had proliferated to about 50. So, based on the Kelkar Task Force's report on indirect taxes, a single notification, 52/2003-Cus, was issued on March 31, 2003, dealing with duty-free imports by EOUs. This had many references to operations 'in bond'. So, the EOUs had to comply with the conditions of the exemption notifications and warehousing provisions under the Customs laws.
The finance ministry has since realised that bonded warehouse provisions essentially facilitate deferment of duty. In the case of EOUs, the need for duty deferment is obviated, as the goods they procure are exempt from Customs duties, under the 52/2003 notification. Subject to some conditions, such as the manner of usage of the procured inputs and capital goods, their end-use, including their removal, and the requirement to maintain proper accounts of receipt, storage and utilisation of the imported goods.
So, 52/2003 has now been amended, removing all references to bonded warehouses. Consequently, the EOUs stand de-licensed as warehouses under the Customs Act, with effect from August 13 this year. They have to, however, maintain records in digital form, based on data elements as prescribed by the Central Board of Excise and Customs Circular of July 29.
The EOUs must continue to get and furnish procurement certificates to the Customs at the port of import. However, upon receipt of goods in the unit, they need not obtain re-warehousing certificates and send these to the Customs at the port of import. They have to only send a copy of the relevant bill of entry to the jurisdictional customs/excise office. For inter-EOU movement of goods, the bond-to-bond procedure has been replaced with one to despatch under commercial documents against procurement certificates, and intimation to the jurisdictional authorities by way of copies of documents.
This de-licensing is a significant step towards 'ease of doing business'.