Overdue changes in rules for EOUs

The Union finance ministry has amended the Customs and Central Excise notifications relevant to Export Oriented Units (EOUs) so as to align these with the present Foreign Trade Policy (FTP). Also, to remove redundancies that had crept in due to changes/supersession of certain other notifications and developments, such as introduction of the Goods and Services Tax (GST). And, to exempt the EOUs from application of the provisions of Customs-bonded warehousing.


It is a welcome development but the question is why it took so long to do so. The changes in Customs notification 52/2003-Cus dated March 31, 2003, include temporary clearance of goods in the Domestic Tariff Area (DTA), valuation of goods cleared into the DTA, registration of job-workers in the DTA for export of goods from own premises and specifying goods manufactured and exported by EOUs that may be re-imported within seven years for repair and re-export.

The amendments to Excise notification 22/2003-CE, also dated March 31, 2003, include clearance of capital goods and goods other than packaging material unsuitable for repeated use, which were procured without payment of excise duty prior to GST introduction, on payment of excise duty or availed of as exemption, allowing depreciation on capital goods and charging duty on leftover textile fabric or textile material on the transaction value. The format of the B-17 bond to be furnished by EOUs has also been amended.

These notifications, as also 23/2003-CE and 24/2003-CE, both dated March 31, 2003, continued the references to several notifications that had given way to new ones on upon introduction of the GST on July 1, 2017. Similarly, references to certain laws such as the Additional Duties of Excise (Goods of Special Importance) Act, 1957) and the Additional Duties of Excise (Textile and Textile Articles) Act, 1978, had continued — although these had ceased to exist upon introduction of GST.

The provisions of Customs-bonded warehouses were made inapplicable to EOUs from August 13, 2016 and FTP 2015-20 came into effect from April 1, 2015; yet, the notifications continued with the earlier references to FTP 2004-09 and warehousing. References to the Duty Free Replenishment Certificate Scheme had continued, although this had been replaced in 2006 with a Duty Free Import Authorisation Scheme.

The latest amendments do away with references to these redundant provisions. To that extent, the government deserves appreciation. However, it reflects poorly on the professionalism and alertness of officials at the Central Board of Indirect Taxes and Customs (CBIC) that these redundant provisions were allowed to continue for years.

CBIC should now review all the provisions and remove references to outdated ones. For example, notifications 45/2017-Cus, 46/2017-Cus and 47/2017-Cus, all dated June 30, 2017, still contain references to the DEEC book which was abolished in 2002.

The ministry has also revised the All Industry Rates of duty drawback, increasing some, rationalising others and notifying these for 24 new items. CBIC has launched a website for on-line filing of applications for recognition as Tier-1 Authorised Economic Operators (AEOs), for processing such applications by the Customs and delivery of digitised AEO certificates online to applicants. It has revised the procedure for disposal of unclaimed imported cargo and prescribed a new one for easier movement of containers across land borders by road, under the Customs Convention on International Transport of Goods under cover of TIR Carnets, 1975.

Email: tncrajagopalan@gmail.com

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