EXIM Policy 2002-2007
CHAPTER -1 INTRODUCTION
CHAPTER-2 GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTS
CHAPTER-3 PROMOTIONAL MEASURES
CHAPTER-4 DUTY EXEMPTION/REMISSION SCHEME
CHAPTER 5 EXPORT PROMOTION CAPITAL GOODS SCHEME
CHAPTER- 6 EXPORT ORIENTED UNITS (EOUs), UNITS IN EXPORT PROCESSING ZONES (EPZs), ELECTRONICS HARDWARE TECHNOLOGY PARKS(EHTPs) AND SOFTWARE TECHNOLOGY PARKS (STPs)
CHAPTER 7 SPECIAL ECONOMIC ZONES
CHAPTER-8 DEEMED EXPORTS
CHAPTER-9 DEFINITIONS
APPENDIX - 1:MINIMUM NFEP AND EP REQUIREMENT UNDER THE EOU/EPZ/EHTP/STP SCHEME(PARAGRAPH 6.5 OF THE POLICY)
CHAPTER -1 INTRODUCTION
Duration
1.1 In exercise of the powers conferred under Section 5 of the Foreign Trade(Development and Regulation Act), 1992 (No. x22 of 1992), the Central Governmenthereby notifies the Export and Import Policy for the period 2002-2007. ThisPolicy shall come into force with effect from 1st April, 2002 and shall remainin force upto 31st March, 2007 and will be co-terminus with the TenthFive Year Plan (2002-2007). However, the Central Government reserves the rightin public interest to make any amendments to this Policy in exercise of thepowers conferred by Section-5 of the Act. Such amendment shall be made by meansof a Notification published in the Gazette of India.
Transitional Arrangements
1.2 Any Notifications made or Public Notices issued or anything done underthe previous Export/ Import policies, and in force immediately before thecommencement of this Policy shall, in so far as they are not inconsistent withthe provisions of this Policy, continue to be in force and shall be deemed tohave been made, issued or done under this Policy. Licence/certificate/permissionsissued before the commencement of this Policy shall continue to be valid for thepurpose for which such licence/ certificate/permission was issued unlessotherwise stipulated.
1.3 In case an export or import that is permitted freely under this Policy issubsequently subjected to any restriction or regulation, such export or importwill ordinarily be permitted notwithstanding such restriction or regulation,unless otherwise stipulated, provided that the shipment of the export or importis made within the original validity of the irrevocable letter of creditestablished before the date of imposition of such restriction.
Objectives
1.4 The principal objectives of this Policy are:
(i) To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade.
(ii) To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services.
(iii) To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities, and to encourage the attainment of internationally accepted standards of quality.
(iv) To provide consumers with good quality goods and services at internationally competitive prices while at the same time creating a level playing field for the domestic producers.
1.5 The objectives will be met through the coordinated efforts of the StateGovernments and all the departments of the Government of India in general andthe Ministry of Commerce and Industry and the Directorate General of ForeignTrade and its network of Regional Offices in particular, with a shared visionand commitment and in the best spirit of facilitation, in the interest ofpromotion of trade in goods and services.
Exports and Imports free unless regulated
2.1 Exports and Imports shall be free, except in cases where they areregulated by the provisions of this Policy or any other law for the time beingin force. The itemwise export and import policy shall be, as specified in ITC(HS)published and notified by Director General of Foreign Trade, as amended fromtime to time.
Compliance with Laws
2.2 Every exporter or importer shall comply with the provisions of theForeign Trade (Development and Regulation) Act, 1992, the Rules and Orders madethereunder, the provisions of this Policy and the terms and conditions of anylicence/certificate/permission granted to him, as well as provisions of anyother law for the time being in force. All imported goods shall also be subjectto domestic Laws, Rules, Orders, Regulations, technical specifications,environmental and safety norms as applicable to domestically produced goods.
Interpretation of Policy
If any question or doubt arises in respect of the interpretation of anyprovision contained in this Policy, or regarding the classification of any itemin the ITC(HS) or Handbook (Vol.1) or Handbook (Vol.2), the said question ordoubt shall be referred to the Director General of Foreign Trade whose decisionthereon shall be final and binding.
If any question or doubt arises whether a licence/ certificate/permission hasbeen issued in accordance with this Policy or if any question or doubt arisestouching upon the scope and content of such documents, the same shall bereferred to the Director General of Foreign Trade whose decision thereon shallbe final and binding.
Procedure
The Director General of Foreign Trade may, in any case or class of cases,specify the procedure to be followed by an exporter or importer or by anylicensing or any other competent authority for the purpose of implementing theprovisions of the Act, the Rules and the Orders made thereunder and this Policy.Such procedures shall be included in the Handbook (Vol.1), Handbook (Vol.2) andin ITC(HS) and published by means of a Public Notice. Such procedures may, inlike manner, be amended from time to time.
The Handbook (Vol.1) is a supplement to the EXIM Policy and contains relevantprocedures and other details. The benefits available under various schemes ofthe Policy are given in the Handbook (Vol.1).
Exemption from Policy/ Procedure
Any request for relaxation of the provisions of this Policy or of anyprocedure, on the ground that there is genuine hardship to the applicant or thata strict application of the Policy or the procedure is likely to have an adverseimpact on trade, may be made to the Director General of Foreign Trade for suchrelief as may be necessary. The Director General of Foreign Trade may pass suchorders or grant such relaxation or relief, as he may deem fit and proper. TheDirector General of Foreign Trade may, in public interest, exempt any person orclass or category of persons from any provision of this Policy or any procedureand may, while granting such exemption, impose such conditions as he may deemfit. Such request may be considered only after consulting ALC if the request isin respect of a provision of Chapter-4 (excluding any provision relating to Gem& Jewellery sector) of the Policy/ Procedure. However, any such request inrespect of a provision other than Chapter-4 as given above may be consideredonly after consulting Policy Relaxation Committee.
Principles of Restriction
DGFT may, through a notification, adopt and enforce any measure necessaryfor:-
- Protection of public morals.
- Protection of human, animal or plant life or health.
- Protection of patents, trademarks and copyrights and the prevention of deceptive practices.
- Prevention of prison labour.
- Protection of national treasures of artistic, historic or archeological value.
- Conservation of exhaustible natural resources.
- Protection of trade of fissionable material or material from which they are derived; and
- Prevention of traffic in arms, ammunition and implements of war.
Restricted Goods
Any goods, the export or import of which is restricted under ITC(HS) may beexported or imported only in accordance with a licence/ certificate/ permissionor a public notice issued in this behalf.
Terms and Conditions of a Licence/ Certificate/ Permission
Every licence/certificate/permission shall be valid for the period ofvalidity specified in the licence/ certificate/permission and shall contain suchterms and conditions as may be specified by the licensing authority which mayinclude:
(a) The quantity, description and value of the goods;
(b) Actual User condition;
(c ) Export obligation;
(d) The value addition to be achieved; and
(e) The minimum export price.
Licence/ Certificate/ Permission not a Right
No person may claim a licence/certificate/ permission as a right and theDirector General of Foreign Trade or the licensing authority shall have thepower to refuse to grant or renew a licence/certificate/permission in accordancewith the provisions of the Act and the Rules made thereunder.
Penalty
If a licence/certificate/permission holder violates any condition of thelicence/certificate/ permission or fails to fulfill the export obligation, heshall be liable for action in accordance with the Act, the Rules and Orders madethere under, the Policy and any other law for the time being in force.
State Trading
Any goods, the import or export of which is governed through exclusive orspecial privileges granted to State Trading Enterprise(s), may be imported orexported by the State Trading Enterprise(s) as specified in the ITC(HS) Booksubject to the conditions specified therein. The Director General of ForeignTrade may, however, grant a licence/certificate/permission to any other personto import or export any of these goods.
In respect of goods the import or export of which is governed throughexclusive or special privileges granted to State Trading Enterprise(s), theState Trading Enterprise(s) shall make any such purchases or sales involvingimports or exports solely in accordance with commercial considerations,including price, quality, availability, marketability, transportation and otherconditions of purchase or sale. These enterprises shall act in a nondiscriminatory manner and shall afford the enterprises of other countriesadequate opportunity, in accordance with customary business practices, tocompete for participation in such purchases or sales.
Importer-Exporter Code Number
No export or import shall be made by any person without an Importer-ExporterCode (IEC) number unless specifically exempted. An Importer-Exporter Code (IEC)number shall be granted on application by the competent authority in accordancewith the procedure specified in the Handbook (Vol.1).
Trade with Neighbouring Countries
The Director General of Foreign Trade may issue, from time to time, suchinstructions or frame such schemes as may be required to promote trade andstrengthen economic ties with neighbouring countries.
Transit Facility
Transit of goods through India from or to countries adjacent to India shallbe regulated in accordance with the bilateral treaties between India and thosecountries.
Trade with Russia under Debt- Repayment Agreement
In the case of trade with Russia under the Debt Repayment Agreement, theDirector General of Foreign Trade may issue, from time to time, suchinstructions or frame such schemes as may be required, and anything contained inthis Policy, in so far as it is inconsistent with such instructions or schemes,shall not apply.
Actual User Condition
Capital goods, raw materials, intermediates, components, consumables, spares,parts, accessories, instruments and other goods, which are importable withoutany restriction, may be imported by any person. However, if such imports requirea licence/certificate/ permission, the actual user alone may import such goodsunless the actual user condition is specifically dispensed with by the licensingauthority.
Second Hand Goods
All second hand goods shall be restricted for imports and may beimported only in accordance with the provisions of this Policy, ITC(HS),Handbook (Vol.1), Public Notice or a licence/certificate/permission issued inthis behalf.
Import of samples
Import of samples shall be governed by the provisions given in Handbook(Vol.1).
Import of Gifts
Import of gifts shall be permitted where such goods are otherwise freelyimportable under this Policy. In other cases, a Customs Clearance Permit (CCP)shall be required from the DGFT.
Passenger Baggage
Bonafide household goods and personal effects may be imported as part ofpassenger baggage. Samples of such items that are otherwise freely importableunder this Policy may also be imported as part of passenger baggage without alicence/certificate/ permission. Exporters coming from abroad are also allowedto import drawings, patterns, labels, price tags, buttons, belts, trimming andembellishments required for export, as part of their passenger baggage without alicence/certificate/ permission.
Import on Export basis
New or second hand capital goods, equipments, components, parts andaccessories, containers meant for packing of goods for exports may be importedfor export without a licence/certificate/permission on execution of LegalUndertaking/ Bank Guarantee with the Customs Authorities.
Re-import of goods repaired abroad
Capital goods, equipments, components, parts and accessories, whetherimported or indigenous, may be sent abroad for repairs, testing, qualityimprovement or upgradation or standardisation of technology and re-importedwithout a licence/certificate/permission.
Import of goods used in projects abroad
After completion of the projects abroad, project contractors may import,without a licence/certificate/permission, used goods including capital goodsprovided they have been used for at least one year.
Sale on High Seas
Sale of goods on high seas for import into India may be made subject to thisPolicy or any other law for the time being in force.
Import under Lease Financing
Permission of licensing authority is not required for import of new capitalgoods under lease financing.
Clearance of Goods from Customs
The goods already imported/shipped/arrived, in advance, but not cleared fromCustoms may also be cleared against the licence/ certificate/ permission issuedsubsequently.
Execution of BG/LUT
Wherever any duty free import is allowed or where otherwise specificallystated, the importer shall execute a Legal Undertaking (LUT)/Bank Guarantee (BG)with the Customs Authority before clearance of goods through the Customs, in themanner as may be prescribed. In case of indigenous sourcing, the licence/certificate/permission holder shall furnish BG/LUT to the licensing authority beforesourcing the material from the indigenous supplier/nominated agency.
Private/ Public Bonded Warehouses for Imports
Private/Public bonded warehouses may be set up in the Domestic Tariff Area asper the terms and conditions of notification issued by Department of Revenue.Any person may import goods except prohibited items, arms and ammunition,hazardous waste and chemicals and warehouse them in such private/public bondedwarehouses. Such goods may be cleared for home consumption in accordance withthe provisions of this Policy and against Licence/certificate/ permission,wherever required. Customs duty as applicable shall be paid at the time ofclearance of such goods. If such goods are not cleared for home consumptionwithin a period of one year or such extended period as the custom authoritiesmay permit, the importer of such goods shall re-export the goods.
Free Exports
All goods may be exported without any restriction except to the extent suchexports are regulated by ITC(HS) or any other provision of this Policy or anyother law for the time being in force. The Director General of Foreign Trademay, however, specify through a public notice such terms and conditionsaccording to which any goods, not included in the ITC(HS), may be exportedwithout a licence/ certificate/ permission.
Export of samples
Export of samples shall be governed by the provisions given in Handbook(Vol.1)
Export of Passenger Baggage
Bonafide personal baggage may be exported either along with the passenger or,if unaccompanied, within one year before or after the passenger's departure fromIndia. However, items mentioned as Restricted in ITC(HS) shall require a licence/certificate/permission,except in the case of edible items.
Export of Gifts
Goods, including edible items, of value not exceeding Rs.1,00,000/- in alicensing year, may be exported as a gift. However, items mentioned asrestricted for exports in ITC(HS) shall not be exported as a gift, without alicence/ certificate/ permission, except in the case of edible items.
Export of Spares
Warranty spares, whether indigenous or imported, of plant, equipment,machinery, automobiles or any other goods may be exported upto 7.5% of the FOBvalue of the exports of such goods alongwith the main equipment or subsequentlybut within the contracted warranty period of such goods.
Third Party Exports
Third party exports, as defined in paragraph 9.56 shall be allowed under thePolicy.
Export of Imported Goods
Goods imported, in accordance with this Policy, may be exported in the sameor substantially the same form without a licence/certificate/ permissionprovided that the item to be imported or exported is not mentioned as restrictedfor import or export in the ITC(HS). Exports of such goods imported againstpayment in freely convertible currency would be permitted against payment infreely convertible currency.
Goods, including those mentioned as restricted item for import or export(except prohibited items) in ITC(HS), may be imported under Customs Bond forexport in freely convertible currency without a licence/certificate/ permission.
Goods or parts thereof on being exported and found defective/damaged orotherwise unfit for use may be replaced free of charge by the exporter and suchgoods shall be allowed clearance by the customs authorities provided that thereplacement goods are not mentioned as restricted items for exports in ITC(HS).
Goods or parts thereof on being exported and found defective, damaged orotherwise unfit for use may be imported for repair and subsequent re-export.Such goods shall be allowed clearance without a licence/certificate/ permissionand in accordance with customs notification issued in this behalf.
Private bonded warehouse exclusively for exports may be set up in DTA asper the terms and conditions of the notifications issued by Department ofRevenue. Such warehouse shall be entitled to procure the goods from domesticmanufacturers without payment of duty. The supplies made by the domesticsupplier to the notified warehouses shall be treated as physical exportsprovided the payments for the same are made in free foreign exchange.
Denomination of Export Contracts
All export contracts and invoices shall be denominated in freely convertiblecurrency and export proceeds shall be realised in freely convertible currency.Contracts for which payments are received through the Asian Clearing Union (ACU)shall be denominated in ACU Dollar. The Central Government may relax theprovisions of this paragraph in appropriate cases. Export contracts and Invoicescan be denominated in Indian rupees against EXIM Bank/Government of India lineof credit.
If an exporter fails to realise the export proceeds within the timespecified by the Reserve Bank of India, he shall, without prejudice to anyliability or penalty under any law for the time being in force, be liable toaction in accordance with the provisions of the Act, the Rules and Orders madethereunder and the provisions of this Policy.
Free movement of export goodsNo seizure of Stock
2.42.1 No seizure of stock shall be made by any agency so as to disrupt themanufacturing activity and delivery schedule of export goods. In exceptionalcases, the concerned agency may seize the stock on the basis of prima facieevidence. However, such seizure should be lifted within 7 days.
Export Promotion Council
2.43 The basic objective of export promotion councils is to promote anddevelop the exports of the country. Each Council is responsible for thepromotion of a particular group of products, projects and services. The list ofthe councils, and their main functions are given in Handbook (Vol.1).
Registration -cum-Membership Certificate
2.44 Any person, applying for (i) a licence/ certificate/ permission toimport/ export, [except items listed as restricted items in ITC(HS)] or (ii) anyother benefit or concession under this policy shall be required to furnishRegistration-cum-Membership Certificate (RCMC) granted by the competentauthority in accordance with the procedure specified in the Handbook (Vol.1)unless specifically exempted under the Policy.
Central Assistance to States
3.1 In furtherance to the methodology outlined in Paragraph 1.5 the StateGovernments shall be encouraged to fully participate in encouraging exports fromtheir respective states. For this purpose, suitable provisions shall be made inthe Annual Plan of the Department of Commerce for allocation of funds to thestates on the twin criteria of gross exports and the rate of growth of exportsfrom different states. The States shall utilise this amount for developingcomplementary and critical infrastructure such as roads connecting productioncentres with the ports, setting up of Inland Container Depots and ContainerFreight Stations, creation of new State level export promotion industrialparks/zones, augmenting common facilities in the existing zones, equityparticipation in infrastructure projects and any other activities as may benotified by DGFT from time to time.
Market Access Initiative
3.2 Financial assistance shall be available under the scheme to theexport promotion councils, industry and trade associations and other eligibleentities, as may be notified from time to time, on the basis of the competitivemerits of proposals received in this regard for the following purposes whichinter-alia includes:-
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Marketing studies on country product focus approach basis.
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Setting up of common showrooms under one roof and warehousing facility in the identified centres on the basis of marketing studies in important cities abroad.
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Participation in sales promotion campaigns through international departmental stores.
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Publicity campaign for launching identified products in selected markets.
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Participation in international trade fairs, seminars, buyers sellers meet.
- Promotion of select brands.
- Transport subsidies for select agriculture products.
- Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro chemicals and testing charges for engineering products.
- Inland freight subsidies for units located in North East, Sikkim and Jammu &Kashmir.
- Setting up of "business centre" in Indian missions abroad for visiting Indian exporters/businessmen.
Towns of Export Excellence
3.3 A number of towns in specific geographical locations have emerged asdynamic industrial locations handsomely contributing to India’s exports. These"Industrial Clusters " rooted in history symbolise the bursting forthof the free market spirit and are essentially collective response to commonproblems of competitiveness. Some have become globally renowned manufacturingbases. It is necessary to grant recognition to these industrial cluster itemswith a view to maximize their export profiles and help in upgrading them to moveup in the higher value markets.
A number of such industrial cluster towns are exporting a substantial portionof their products which are world class. For example, Tirupur is exporting 80%of its production of hosiery. A beginning is being made to consider industrialcluster towns such as Tirupur for hosiery, woollen blanket in Panipat, woollenknitwear in Ludhiana to be eligible for the following benefits:-
Common service providers in these areas shall be entitled for facility ofEPCG scheme. The recognised associations of units will be able to access thefunds under the Market Access Initiative scheme in Paragraph 3.2 for creatingfocused technological services. Further such areas will receive priority forassistance for identified critical infrastructure gaps from the scheme onCentral Assistance to States mentioned in paragraph 3.1. The units in thesenotified areas would be eligible for availing all the EXIM policy schemes as pertheir choice and the provisions of those schemes shall stand relaxed to theextent provided in this paragraph in respect of such units.
Special Focus on Cottage and Handicraft Sector
3.4 The small scale sector alongwith the cottage and handicraft sector hasbeen contributing to more than half of the total exports of the country. Thecottage and handicrafts sector which mostly employs artisan and rural peoplecontributes significantly to this effort. In recognition of the exportperformance of this sector and to further increase its competitiveness, thefollowing facilities shall be extended to this sector.
i) The unit in this sector shall be eligible for funds from Market AccessInitiative (MAI) scheme as given in paragraph 3.2 of this Policy. Funds shall beearmarked for this sector in the MAI scheme. The funds shall be utilised fordeveloping their website for virtual exhibition, among other activities,
ii) Under the EPCG scheme, these units will not be required to maintainaverage level of exports as given in paragraph 5.5(ii) of this Policy;
iii) These units shall be entitled to the benefit of export house statuson achieving lower average export performance of Rs.5 crore during the precedingthree licensing years as given in paragraph 3.7.2 of this Policy; and
iv) The units in handicraft sector shall be entitled to duty free imports ofspecified items upto 3% of FOB value of their exports.
Agri Export Zones (AEZ)
3.5.1 With a view to promoting agricultural export from the country andremunerative returns to the farming community in a sustained manner, AEZ asannounced earlier would be set up for end to end development for export ofspecific products from a geographically contiguous area.
3.5.2 AEZ would be identified by the State Government, who may evolve acomprehensive package of services provided by all State Government agencies,State agriculture universities and all institutions and agencies of the UnionGovernment for intensive delivery in these zones.
3.5.3 Such services which would be managed and co-ordinated by StateGovernment would include provision of pre/post harvest treatment and operations,plant protection, processing, packaging, storage and related research &development etc. APEDA will supplement, within its schemes and provisions,efforts of State Governments for facilitating such exports.
3.5.4 Units in AEZ would be entitled for all the facilities available forexports of goods in terms of provisions of the respective schemes.
Brand Promotion and Quality
3.6.1 The Central Government aims to encourage manufacturers and exporters toattain internationally accepted standards of quality for their products. TheCentral Government will extend support and assistance to trade and industry tolaunch a nationwide programme on quality awareness and to promote the concept oftotal quality management.
State Programmes
3.6.2 The Central Government will encourage and assist State Governments inlaunching similar programmes in their respective States, particularly for thesmall scale and handicraft sectors.
Test Houses
3.6.3 The Central Government will assist in the modernisation and upgradationof test houses and laboratories in order to bring them at par with internationalstandards.
Quality Complaints/ Disputes
3.6.4
The Regional Sub-Committee on Quality Complaints (RSCQC) set up at theRegional Offices of the Directorate General of Foreign Trade shall investigatequality complaints received from foreign buyers. The guidelines for settlementof quality complaints, in particular, and such other complaints, in general, isgiven in Appendix- 37 of Handbook (Vol.1).
3.6.5 If it comes to the notice of the Director General of Foreign Trade orhe has reason to believe that an export or import has been made in a mannergravely prejudicial
(i) to the trade relations of India with any foreign country;
(ii) to the interest of other persons engaged in exports or imports;
(iii) has brought disrepute to the credit or the goods of the country;
The Director General Foreign Trade may take action against the exporter orimporter concerned in accordance with the provisions of the Act, the Rules andOrders made thereunder and this Policy.
Status Certificate
Export Performance Level
3.7.2 The applicant is required to achieve the prescribed average exportperformance level:
| Category | Average FOB / FOR value during the preceding three licensing years, in Rupees |
| Export House | 15 crore |
| Trading House | 100 crore |
| Star Trading House | 500 crore |
| Super star trading house | 2000 crore |
Note :
Units in Small Scale Industry/Tiny Sector/Cottage Sector/Units registeredwith KVICs or KVIBs/ Units located in North Eastern States, Sikkim and J&K/Units exporting handloom, handicrafts, hand knotted carpets, silkcarpets/exporters holding golden status/ exporters exporting to countries inLatin America and CIS/sub Saharan Africa, units having ISO 9000 (series) status,shall be entitled for export house status on achieving average FOB/FOR value ofRs.5 crore during the preceding three licensing years. The same threshold limitshall be applicable to the service exporters and agri exporters (other thangrains) for obtaining Export house status.
Export made on re-export basis shall not be counted for the purpose ofrecognition.
The exports made by a subsidiary of a limited company shall be countedtowards export performance of the limited company for the purpose ofrecognition. For this purpose, the company shall have the majority share holdingin the subsidiary company.
Special Strategic Package for Status Holders
3.7.2.1 The status holders shall be eligible for the following new/ specialfacilities:
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Licence/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis.
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Fixation of Input-Output norms on priority;
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Priority Finance for medium and long term capital requirement as per conditions notified by RBI;
- Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;
- 100% retention of foreign exchange in EEFC account;
- Enhancement in normal repatriation period from 180 days to 360 days.
Validity Period
3.7.3 All status certificates issued or renewed on or after 1.4.2002 shall bevalid from 1st April of the licensing year during which the application for thegrant of such recognition is made upto 31st March, 2007, unlessotherwise specified. On the expiry of such certificate, application for renewalof status certificate shall be required to be made within a period as prescribedin the Handbook (Vol.1). During the said period, the status holder shall beeligible to claim the usual facilities and benefits.
Transitional Arrangement
3.7.4 The status certificates expiring on 31st March, 2002 shallbe deemed to have been extended upto 31st March, 2004. However,further renewal shall be granted on achieving the threshold limit prescribed inthe Policy.
Service Exports
3.8 "Services" include all the 161 tradable services covered underthe General Agreement on Trade in Services where payment for such services isreceived in free foreign exchange. A list of services is given in Appendix-36 ofHandbook (Vol.1).
The service providers as defined in paragraph 9.47, rendering services listed inAppendix–36 shall be entitled for all the facilities mentioned in the Policy.All provisions of the Policy shall apply mutatis-mutandis to such export ofservices as they apply to goods.
Electronic Data Interchange
3.9 In an attempt to speed up the transactions, reduce physical interface andto bring about transparency in various activities related to exports, electronicdata interchange would be encouraged. Applications received electronically shallbe cleared within 24 hours.
Duty Exemption/ Remission Scheme
4.1 The Duty Exemption Scheme enables duty free import of inputs required forexport production. An Advance Licence is issued under Duty Exemption Scheme. TheDuty Remission Scheme enables post export replenishment/ remission of duty oninputs used in the export product. Duty Remission scheme consist of (a) DFRC and(b) DEPB. DFRC permits duty free replenishment used in the export product. TheDEPB scheme allows drawback of import charges on inputs used in the exportproduct.
Advance Licence
4.1.1 An Advance Licence is issued to allow duty free import of inputs, whichare physically incorporated in the export product (making normal allowance forwastage). In addition, fuel, oil, energy, catalysts etc. which are consumed inthe course of their use to obtain the export product, may also be allowed underthe scheme. Duty free import of mandatory spares upto 10% of the CIF value ofthe licence which are required to be exported/ supplied with the resultantproduct may also be allowed under Advance Licence. Advance Licence can be issuedfor:-
Physical exports:- Advance Licence may be issued for physical exports to amanufacturer exporter or merchant exporter tied to supporting manufacturer(s)for import of inputs required for the export product.
Intermediate supplies:- Advance Licence may be issued for intermediate supply toa manufacturer-exporter for the import of inputs required in the manufacture ofgoods to be supplied to the ultimate exporter/ deemed exporter holding anotherAdvance Licence.
Deemed exports:- Advance Licence can be issued for deemed export to the maincontractor for import of inputs required in the manufacture of goods to besupplied to the categories mentioned in paragraph 8.2 (b), (c), (d) (e) (f),(g)(i) and (j) of the Policy.
In addition, in respect of supply of goods to specified projects mentioned inparagraph 8.2 (d) (e) (f),(g) and (j) of the Policy, an Advance Licence fordeemed export can also be availed by the sub-contractor of the main contractorto such project provided the name of the sub contractor(s) appears in the maincontract. Such licence for deemed export can also be issued for supplies made toUnited Nations Organisations or under the Aid Programme of the United Nations orother multilateral agencies and paid for in foreign exchange.
4.1.2 Advance Licence is issued for duty free import of inputs, as defined inparagraph 4.1.1 subject to actual user condition. Such licences (other thanAdvance Licence for deemed exports) are exempted from payment of basic customsduty, additional customs duty, anti dumping duty and safeguard duty, if any.However, Advance Licence for deemed export shall be exempted from basic customsduty and additional customs duty only.
4.1.3 Advance Licence and/or materials imported thereunder shall not betransferable even after completion of export obligation.
4.1.4 Advance Licences (including Advance Licence for deemed exports andintermediate supply) shall be issued with a positive value addition. However,for exports for which payments are not received in freely convertible currency,the same shall be subject to value addition as specified in Appendix-32 ofHandbook (Vol.1), 2002-07.
4.1.5 Advance Licence shall be issued in accordance with the Policy andprocedure in force on the date of issue of licence and shall be subject to thefulfillment of a time bound export obligation as may be specified.
4.1.6 The facility of Advance Licence shall also be available where some ofthe inputs are supplied free of cost to the exporter. In such cases, forcalculation of value addition, the notional value of free of cost inputsalongwith value of other duty-free inputs shall be taken into consideration.
Export Obligation
4.1.7 The period for fulfillment of the export obligation under AdvanceLicence shall be as prescribed in the Handbook (Vol.1).
Advance Release Orders
4.1.8 An Advance Licence holder (except Advance Licence for intermediatesupply) and holder of DFRC intending to source the inputs from indigenoussources/state trading enterprises/ EOU/ EPZ/SEZ/ EHTP/STP units in lieu ofdirect import has the option to source them against Advance Release Ordersdenominated in foreign exchange/Indian rupees. The transferee of a DFRC shallalso be eligible for ARO facility.
Back-to-Back Inland Letter of Credit
4.1.9 An Advance Licence holder, (except Advance Licence for intermediatesupply) and holder of DFRC may, instead of applying for an Advance ReleaseOrder, avail of the facility of Back-to-Back Inland Letter of Credit inaccordance with the procedure specified in Handbook (Vol.1).
Prohibited Items
4.1.10 Prohibited items of imports mentioned in ITC(HS) shall not be importedunder the licence issued under the scheme.
Compliance with Export Policy
4.1.11 Goods mentioned as restricted for exports in ITC(HS) may be exportedwithout specific export licence/ certificate/ permission under Advance Licencefor physical exports issued with prior import condition. In such cases, thelicence/certificate/permission holder shall not be allowed to use indigenousinputs and the export product shall be manufactured only out of imported inputsunder Advance Licence for physical exports.
Re-import of Exported Goods under Duty Neutralisation Scheme
4.1.12 Goods exported under Advance Licence/ DFRC/ DEPB may be re-imported inthe same or substantially the same form subject to such conditions as may bespecified by the Department of Revenue from time to time.
Admissibility of Drawback
4.1.13 In the case of an Advance Licence, the drawback shall be available inrespect of any of the duty paid materials, whether imported or indigenous, usedin the goods exported, as per the drawback rate fixed by Ministry of Finance(Directorate of Drawback). The Drawback shall however be restricted to the dutypaid materials as mentioned in the licence.
Value Addition
4.1.14 The value addition for the purposes of this chapter shall be:-
V.A A - B = ------------ x 100, where
B
V.A is Value Addition
A is the FOB value of the export realised /FOR value of supply received.
B is the CIF value of the imported inputs covered by the licence, plus any other imported materials used on which the benefit of duty drawback is being claimed.
Duty Free Replenishment Certificate
4.2 DFRC is issued to a merchant-exporter or manufacturer-exporter for theimport of inputs used in the manufacture of goods without payment of basiccustoms duty, and special additional duty. However, such inputs shall be subjectto the payment of additional customs duty equal to the excise duty at the timeof import.
4.2.1 DFRC shall be issued on minimum value addition of 33%.
4.2.2 DFRC may be issued in respect of exports for which payments arereceived in non-convertible currency. Such exports shall, however, be subject tovalue addition and conditions as specified in Appendix-32 of Handbook (Vol.1).
4.2.3 DFRC shall be issued only in respect of export products covered underthe SIONs as notified by DGFT. However, DFRC shall not be issued in respect ofSIONs which are subject to "actual user" condition or where the inputis allowed with prior import condition or where the norms allow import of AceticAnhydride, Ephedrine and Pseudo Ephedrine in the Handbook (Vol-II).
However DFRC may be issued for SIONs allowing import of Acetic Anhydride,Ephedrine and Pseudo Ephedrine provided these items are specifically deletedfrom the list of import items.
4.2.4 DFRC shall be issued for import of inputs as per SION asindicated in the shipping bills. The validity of such licences shall be 18months. DFRC and or the material(s) imported against it shall be freelytransferable.
4.2.5 The export products, which are eligible for modified VAT, shallbe eligible for CENVAT credit. However, non excisable, non dutiable or noncentrally vatable products, shall be eligible for drawback at the time ofexports in lieu of additional customs duty to be paid at the time of importsunder the scheme.
4.2.6 The exporter shall be entitled for drawback benefits in respect of anyof the duty paid materials, whether imported or indigenous, used in the exportproduct as per the drawback rate fixed by Directorate of Drawback (Ministry ofFinance). The drawback shall however be restricted to the duty paid materialsnot covered under SION.
Jobbing, Repairing etc. for re-export
4.2.7 Import of goods, including those mentioned as restricted in ITC(HS) butexcluding prohibited items, in terms of paragraph 4.1.1 supplied free of cost,may be permitted for the purpose of jobbing without a licence/ certificate/permission as per the terms of notification issued by Department of Revenue fromtime to time.
Duty Entitlement Passbook Scheme
4.3 The objective of DEPB is to neutralise the incidence of Customs duty onthe import content of the export product. The neutralisation shall be providedby way of grant of duty credit against the export product.
4.3.1 Under the DEPB, an exporter may apply for credit, as a specifiedpercentage of FOB value of exports, made in freely convertible currency. Thecredit shall be available against such export products and at such rates as maybe specified by the Director General of Foreign Trade by way of public noticeissued in this behalf, for import of raw materials, intermediates, components,parts, packaging material etc.
4.3.2 The holder of DEPB shall have the option to pay additional customsduty, if any, in cash as well.
Validity
4.3.3 The DEPB shall be valid for a period of 12 months from the date ofissue.
Transferability
4.3.4 The DEPB and/or the items imported against it are freely transferable.The transfer of DEPB shall however be for import at the port specified in theDEPB, which shall be the port from where exports have been made. Imports from aport other than the port of export shall be allowed under TRA facility as perthe terms and conditions of the notification issued by Department of Revenue.
Applicability of Drawback
4.3.5 Normally, the exports made under the DEPB Scheme shall not be entitledfor drawback. However, the additional customs duty/excise duty paid in cash oninputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as perrules framed by the Department of Revenue. In cases, where the additionalcustoms duty is adjusted from DEPB, no benefit of CENVAT/ Drawback shall beadmissible.
Scheme for Gem and Jewellery
4.4 Exporters of gem and jewellery are eligible to import their inputs byobtaining Replenishment (REP) Licences from the licensing authorities inaccordance with the procedure specified in this behalf.
Replenishment Licence
4.4.1 The exporters of gem and jewellery products listed in Appendix-26 ofthe Handbook (Vol.1) shall be eligible for grant of Replenishment Licences atthe rate and for the items mentioned in the said Appendix to import andreplenish their inputs. Replenishment licence may also be issued for import ofconsumables as per the details given in paragraph 4.80 of Handbook (Vol.1).
Export of Cut & Polished Diamonds for Certification/ Grading
4.4.2 Gems and Jewellery exporters with a track record of at least threeyears and having an annual average turnover of Rs.5 crores and above during thepreceding three licensing years or the authorised offices /agencies in India ofGemological Institute of America (GIA), The Robert Mouawad Campus, InternationalGemological Institute (IGI) and European Gemological Laboratory (EGL) in USA,Hoge Road Voor Diamand, Antwerp, (HRD), World Diamond Centre of Diamonds HighCouncil, Antwerp, Belgium may be permitted to export cut & polished diamondseach weighing 0.50 of a carat and above to the said laboratories/agencies, forthe purpose of certification/grading reports by them with a condition that thesame should be re-imported with the certificate/grading reports issued by themwithout any import duty at the time of re-import.
4.4.2.1 At the time of export of cut and polished diamonds forcertification/grading, exporter should give an undertaking to the customs thatthe cut and polished diamonds will be re-imported within three months of exportsfor certification/ grading. The export invoice should clearly indicate theestimated value, height, circumference, weight of each diamond to be exportedfor certification/ grading so that at the time of their import, the abovespecification could be compared with the original ones to establish theiridentity. Subsequently these cut and polished diamonds would be exported as perthe provisions of the Policy.
Schemes for Gold/ Silver/ Platinum Jewellery
4.4.3 Exporters of gold/silver/platinum jewellery and articles thereof mayimport their essential inputs such as gold, silver, platinum, mountings,findings, rough gems, precious and semi-precious stones, synthetic stones andunprocessed pearls etc. in accordance with the procedure specified in thisbehalf.
Nominated Agencies
4.4.4 The exporter availing the schemes of gold/ silver/platinum jewelleryand articles thereof may obtain gold/silver/platinum from the nominatedagencies. The nominated agencies are MMTC Ltd, Handicraft and Handloom ExportCorporation (HHEC), State Trading Corporation (STC), The Project and EquipmentCorporation of India Ltd (PEC) and any agency authorised by Reserve Bank ofIndia (RBI). A bank authorised by RBI is allowed export of gold scrap forrefining and import in the form of standard gold bars.
Items of Export
4.4.5 The following items, if exported, would be eligible for the facilitiesunder these schemes:
(a) Gold jewellery, including partly processed jewellery and any articlesincluding medallions and coins (excluding the coins of the nature of legaltender), whether plain or studded, containing gold of 8 carats and above;
(b) Silver jewellery including partly processed jewellery and any articlesincluding medallions and coins (excluding the coins of the nature of legaltender and any engineering goods) containing more than 50% silver by weight;
(c) Platinum jewellery including partly processed jewellery and any articlesincluding medallions and coins (excluding the coins of the nature of legaltender and any engineering goods) containing more than 50% platinum by weight.
Value Addition
4.4.6 The value addition will be as given in Handbook (Vol.1).
Wastage Norms
4.4.7 Under the schemes for gold/silver/platinum jewellery, the wastage ormanufacturing loss shall be admissible as specified in the Handbook (Vol.1).
Export Against Supply by Foreign Buyer
4.4.8 Where export orders are placed on the nominated agencies/ statusholder/ exporters of three years standing having an annual average turnover ofRs. Five Crore during the preceding three licensing years, the foreign buyer maysupply to the nominated agencies/status holder/ exporter, in advance and free ofcharge, gold/ silver/ platinum, alloys, findings and mountings ofgold/silver/platinum for manufacture and export. The exports may be made by thenominated agencies directly or through their associates or by the statusholder/exporter as the case may be. The import and export of findings shall beon net to net basis. The foreign buyer may also supply to the nominatedagencies/status holder/ exporter in advance and free of charge plain, semifinished gold/silver/platinum jewellery including findings/ mountings/components for repairs/re-make and export subject to minimum value addition of10%. However, if the so imported semi finished gold/silver /platinum jewelleryis exported as studded jewellery, value addition of 15% shall be achieved. Insuch cases of export, wastage of 2% may be permitted.
The procedures in this regard shall be as prescribed in the Handbook (Vol.1)
Export Promotion Tours/Export of Branded Jewellery
Export Against Supply by Nominated Agencies
4.4.10 The exporter may obtain the gold/silver/platinum as an input forexport products from nominated agencies in advance or as replenishment afterexports in accordance with the procedure specified in this behalf.
Export Against Advance Licence
4.4.11 An Advance Licence may be granted for the duty free import of:
(a) Gold of fineness not less than 0.995 and mountings, sockets, frames andfindings of 8 carats and above;
(b) Silver of fineness not less than 0.995 and mountings, sockets, frames andfindings containing more than 50% silver by weight;
(c) Platinum of fineness not less than 0.900, mountings, sockets, frames andfindings containing more than 50% platinum by weight.
4.4.12 Such licences shall carry an export obligation which will be requiredto be fulfilled in accordance with the procedure specified in this behalf.
The Advance Licence holder may obtain gold/silver/platinum from the nominatedagencies in lieu of direct import in accordance with the procedure specified inthis behalf.
Gem Replenishment Licence
4.4.13 Gem Replenishment (Gem REP) Licence may be issued under the schemesfor export of gold/silver/platinum jewellery and articles thereof as given inparagraph 4.4.8, 4.4.9, 4.4.10 and 4.4.11 of the Policy. In the case of plaingold/ silver/platinum jewellery and articles, the value of such licences shallbe determined with reference to the realisation in excess of the prescribedminimum value addition. In the case of studded gold/silver/platinum jewelleryand articles thereof, the value of Gem Replenishment Licence shall be determinedby taking into account the value of studdings used in items exported, afteraccounting for the value addition on gold/silver/platinum including admissiblewastage. Such Gem REP licences shall be freely transferable.
Gem REP Rate and Item
4.4.14 The scale of replenishment and the item of import will be asprescribed in Appendix 26A of Handbook (Vol.1).
Personal Carriage of Export/ Import Parcels
4.4.15 Personal carriage of gems and jewellery export parcels by foreignbound passengers and personal carriage of gems & jewellery import parcels byan Indian importer/foreign national may be permitted as per the conditions givenin Handbook (Vol.1).
Diamond Imprest Licence
4.4.16 Diamond Imprest Licence for import of cut & polished diamondsincluding semi processed diamonds, half cut diamonds, broken in any form, formixing with cut & polished diamonds or for export as it is, may be issuedfor export of cut & polished diamonds. Such licences shall carry an exportobligation, which has to be discharged in accordance with the procedurespecified in this behalf.
Eligibility
4.4.16.1 An exporter of cut & polished diamonds who is status holder maybe issued a licence for import of cut & polished diamonds upto 5% of theexport performance of the preceding year of cut & polished diamonds.
Export Obligation
4.4.16.2 The export obligation against each consignment shall be fulfilledwithin a period of five months from the date of clearance of such consignmentthrough Customs. However, at no point of time, the importer shall be required tomaintain records of individual import consignments nor will they be required toco-relate export consignments with the corresponding import consignments towardsfulfillment of export obligation.
Private/ Public Bonded Warehouse
4.4.17 Private/Public Bonded Warehouses may be set up in EPZ/DTA for importand re-export of cut & Polished diamonds, cut & polished colouredgemstones, uncut & unset precious & semi-precious stones. Import &re-export of cut & polished diamonds & cut & polished colouredgemstones will be subject to achievement of minimum value addition of 5%.
EPCG Scheme
5.1 The scheme allows import of new capital goods including CKD/SKD thereofas well as computer software systems at 5% Customs duty subject to an exportobligation equivalent to 5 times CIF value of capital goods to be fulfilled overa period of 8 years reckoned from the date of issuance of licence over a periodof 8 years.
However, in respect of EPCG licences for Rs.100 crore or more, the sameexport obligation shall be required to be fulfilled over a period of 12 years.
The capital goods shall include jigs, fixtures, dies and moulds. Spares mayalso be imported under the scheme upto 20% of the CIF value of capital goods.EPCG licence may also be issued for import of components of such capital goodsrequired for assembly or manufacturer of capital goods by the licence holder.
Eligibility
5.2 The scheme covers manufacturer exporters with or without supportingmanufacturer(s)/vendor(s), merchant exporters tied to supporting manufacturer(s)and service providers.
Conditions for Import of Capital Goods
Import of capital goods shall be subject to Actual User condition till theexport obligation is completed.
The following conditions shall apply to the fulfillment of the exportobligation:-
(i) The export obligation shall be fulfilled by the export of goods capableof being manufactured or produced by the use of the capital goods imported underthe scheme. The export obligation may also be fulfilled by the export of samegoods, for which EPCG licence has been obtained, manufactured or produced indifferent manufacturing units of the licence holder/ specified supportingmanufacturer(s)/ vendor(s).
However, if exporter is processing further to add value on the goods somanufactured, the export obligation shall stand enhanced by 50%.
(ii) The export obligation under the scheme shall be, in addition to anyother export obligation undertaken by the importer, except the export obligationfor the same product under Advance Licence, DFRC, DEPB or Drawback scheme. Theexport obligation under the scheme shall be, over and above, the average levelof exports achieved by him in the preceding three licensing years for same andsimilar products except for categories mentioned in Handbook (Vol.1).
5.5.1 Any firm/ company acquiring a unit which is under BIFR shall be allowed12 years for fulfilment of export obligation reckoned from the date of issuanceof licence . This dispensation would be only for EPCG licences taken by the BIFRunit.
Indigenous Sourcing of Capital Goods and benefits to domestic supplier
A person holding an EPCG licence may source the capital goods from a domesticmanufacturer instead of importing them. The domestic manufacturer supplyingcapital goods to EPCG licence holders shall be eligible for deemed exportbenefit under paragraph 8.3 of the Policy.
Benefits to domestic Supplier
5.7 In the event of a firm contract between the EPCG licence holder anddomestic manufacturer for such sourcing, the domestic manufacturer may apply forthe issuance of Advance Licence for deemed exports for the import of inputsincluding components required for the manufacturer of said capital goods.
The domestic manufacturer may also replenish the inputs including componentsafter supply of capital goods to the EPCG licence holders. The export obligationrelating to the EPCG licence shall be reckoned with reference to the CIF valueof the licence actually utilized.
5.8 Service provider in Agri export zone shall have the facility to move orshift the capital goods within the zone provided he maintains accurate record ofsuch movements. However, such equipments shall not be sold or leased by thelicence holder.
Eligibility
6.1 Units undertaking to export their entire production of goods and servicesmay be set up under the Export Oriented Unit (EOU) Scheme, Export ProcessingZone (EPZ) Scheme, Electronic Hardware Technology Park (EHTP) Scheme or SoftwareTechnology Park (STP) Scheme. Such units may be engaged in manufacture,services, repair, remaking, reconditioning, re-engineering including making ofgold/ silver/ platinum jewellery and articles thereof, agriculture, includingagro-processing, aquaculture, animal husbandry, bio-technology, floriculture,horticulture, pisciculture, viticulture, poultry, sericulture and granites andmay export all products except restricted and prohibited items of exports in ITC(HS). Units for generation/distribution of power may also set up in EPZs. Notrading units shall be permitted.
Export and import of goods
6.2 An EOU/EPZ/EHTP/STP unit may export goods and services includingagro-products, partly processed jewellery, sub-assemblies and components. It mayalso export by-products, rejects, waste scrap arising out of the productionprocess.
An EOU/EPZ/EHTP/STP unit may import without payment of duty all types ofgoods, including capital goods, as defined in the Policy, required by it for itsactivities as mentioned in paragraph 6.1 above or in connection therewith,provided they are not prohibited items of imports in the ITC (HS). The unitsshall also be permitted to import goods required for the approved activity,including capital goods, free of cost or on loan from clients.
EOU/EPZ/EHTP/STP units may procure goods required by it for its activities orin connection therewith, without payment of duty, from bonded warehouses in theDTA set up under the Policy and from International Exhibitions held in India.
STP/EHTP/EPZ may import without payment of duty all types of goods forcreating a central facility for use by software development units in STP/EHTP/EPZ.The central facility for software development can also be accessed by units inthe DTA for export of software.
An EOU engaged in agriculture, animal husbandry, floriculture, horticulture,pisciculture, viticulture, poultry or sericulture may import without payment ofduty only such goods as are permitted to be imported duty free under a CustomNotification issued in this behalf.
Further EOUs in agriculture and horticulture engaged in contract farmingshall be permitted to import/procure from DTA specified goods as at Appendix14-B of Handbook (Vol.1) and take out the same to the fields of contract farmersfor production or in connection therewith and bringing back the produce forexports.
EOU/EPZ gem and jewellery units may also source gold/silver/platinum throughthe nominated agencies.
EOU/EPZ/EHTP/STP unit, other than service units, may also export to RussianFederation in Indian Rupees against repayment of State Credit/Escrow RupeeAccount of the buyer subject to RBI clearance, if any.
Second hand Capital Goods
6.3 Second hand capital goods may also be imported without payment of duty.
Leasing of Capital Goods
6.4 An EOU/EPZ/EHTP/STP unit may, on the basis of a firm contract between theparties, source the capital goods from a domestic/foreign leasing company. Insuch a case, the EOU/EPZ/EHTP/STP unit and the domestic/foreign leasing companyshall jointly file the documents to enable import/ procurement of the capitalgoods without payment of duty.
Net Foreign Exchange earning as a Percentage of exports (NFEP) and MinimumExport Performance (EP)
6.5 The minimum Net Foreign Exchange earning as a Percentage of Exports(NFEP) and the minimum Export Performance (EP) shall be as specified in AppendixI of the Policy. Items of manufacture for export specified in the Letter ofPermission (LOP)/ Letter of Intent (LOI) alone shall be taken into account forcalculation of NFEP and EP.
Letter of Permission/ Letter of Intent and Legal Undertaking
6.6 (a) On approval, a Letter of Permission (LOP)/Letter of Intent (LOI)shall be issued by the Development Commissioner to EOU/EPZ/EHTP/STP unit. TheLOP/LOI shall have an initial validity of 3 years. Its validity may be extendedby another 3 years, beyond initial validity, by the competent authority.
(b) LOP/LOI issued to EOU/EPZ/EHTP/STP units by the concerned authority wouldbe construed as a licence for all purposes, including for procurement of rawmaterials and consumables either directly or through designated State TradingEnterprise. Standard format for LOP/LOI for EOU/EPZ units is given in Appendix14-C.
(c) The unit shall execute a legal undertaking with the DevelopmentCommissioner concerned and in the event of failure to fulfil the performance, asstipulated in Appendix I of the Policy, it would be liable to penalty in termsof the legal undertaking or under any other law for the time being in force.
Application and Approvals
6.7 (a) Only project having an investment of not less than Rs.50 lakhs andabove in plant and machinery shall be considered for establishment under EOUscheme. (This shall however not apply to existing units and units in EPZ/EHTP/STP/agriculture/ floriculture/aquaculture/ animal husbandry/ information technology,services and such other sectors as may be decided by the BOA). Applications forsetting up of EOU/EPZ/EHTP/STP units, satisfying the conditions mentioned inparagraph 6.7 of the Handbook (Vol-I) may be approved by the concernedDevelopment Commissioner within 15 days.
(b) In other cases, approval may be granted by the Board of Approval (BOA)set up for this purpose as notified and indicated at Appendix 14-B.
(c) Proposals requiring industrial license may be considered by the Board ofApproval on a case to case basis.
DTA Sale of finished products/ rejects waste/ scrap/ remnants and by-products
6.8 The entire production of EOU/EPZ/EHTP/STP units shall be exported subjectto the following:
(a) Unless specifically prohibited in the LOP/LOI, rejects may be sold in theDomestic Tariff Area (DTA) on payment of duties as applicable to sale underparagraph 6.8(b) of the Policy, on prior intimation to the Customs authorities.Such sales shall be counted against DTA sale entitlement under paragraph 6.8(b)of the Policy. Sale of rejects upto 5% of FOB value of exports shall not besubject to achievement of NFEP.
(b) Units, other than gems and jewellery units, may sell goods/ services upto50 % of FOB value of exports, subject to fulfilment of minimum NFEP asprescribed in Appendix-I of the Policy on payment of applicable duties. Salesmade to a private bonded warehouse set up under paragraph 2.39 of the policyshall also be taken into account for the purpose of arriving at FOB value ofexports by EOU/EPZ units provided payment for such sales are made from EEFCaccount. No DTA sale shall be permissible in respect of motor cars, alcoholicliquors, tea (except instant tea) and books or by a packaging/labelling/segregation/ refrigeration unit and such other items as may be notified fromtime to time.
(c) Gems and jewellery units may sell upto 10% of FOB value of exports of thepreceding year in DTA subject to fulfilment of NFEP as prescribed in Appendix 1of the Policy. In respect of sales of plain jewellery, the recipient shall payconcessional rate of duty to the Customs in Indian rupees as applicable to salefrom nominated agencies. In respect of studded jewellery, duty shall be payablein Indian rupees as notified by Customs.
(d) Scrap/waste/remnants arising out of production process or in connectiontherewith may be exported or sold in the DTA on payment of duties as applicableunder paragraph 6.8 (b) of the Policy within the overall ceiling of 50% of FOBvalue of exports but shall not be subject to achievement of minimum NFEP. Saleof waste/scrap/remnants by units not entitled to DTA sale or sales beyond theDTA sale entitlement, shall be on payment of full duties.
(e) There shall be no duties/taxes on such scrap/waste/ remnants in case thesame are destroyed with the permission of Customs authorities.
(f) EOU/EPZ/EHTP/STP units may be permitted to sell finished products whichare freely importable under the Policy in the DTA over and above the levelspermissible under sub paragraph (b) above against payment of full duties,provided they have achieved the NFEP and EP as per Appendix-I of the Policy.
Such sales may also be permitted in exceptional cases without achievement ofNFEP/EP.
(g) For services, including software units, sale in the DTA in any mode,including on-line data communication, shall be permissible up to 50% of FOBvalue of exports and/or 50% of foreign exchange earned, where payment for suchservices is received in free foreign exchange.
(h) By-products included in the LOP/LOI may also be sold in the DTA subjectto achievement of NFEP and on payment of applicable duties within the overallentitlement of paragraph 6.8 (b) of the Policy. Sale of by-products by units notentitled to DTA sales or beyond the entitlements of paragraph 6.8(b) shall alsobe permissible on payment of full duties.
Note: In the case of units manufacturing electronics hardware andsoftware, the NFEP and DTA sale entitlement shall be reckoned separately forhardware and software.
Other Supplies in DTA
6.9 The following supplies in DTA shall be counted towards fulfillmentof NFEP/EP :
(a)Supplies effected in DTA in terms of paragraph 8.2 of the Policy
(b)Supplies effected in DTA against payment from the Exchange Earners ForeignCurrency (EEFC) Account of the buyer in the DTA or against foreign exchangeremittance received from overseas.
(c)Supplies to other EOU/EPZ/EHTP/STP/SEZ units provided that such goods arepermissible for procurement in terms of paragraph 6.2 of the Policy.
(d) Supplies made to private bonded warehouses set up under paragraph 2.39 ofthe Policy and/or under Section 65 of the Customs Act.
(e) Supply of goods against special entitlement of duty free import of goods.
(f) Supply of goods to Defence and internal security forces, foreignmissions/ diplomats provided they are entitled for duty free imports of suchitems in terms of general exemption notification issued by Ministry of Finance.
(g) Supply of services (by services units) relating to exports paid for infree foreign exchange or for such services rendered in India Rupees which areotherwise considered as having been paid for in free foreign exchange by RBI.
(h)Supplies of Information Technology Agreement (ITA-I) items, provided thatthe items are manufactured in the unit and attract zero rate of basic customsduty.
Export through status holder
6.10 An EOU/EPZ/EHTP/STP unit may export goods manufactured by it through amerchant exporter/status holder recognized under this Policy or any other EOU/EPZ/ EHTP/STP/SEZ unit.
Samples
6.11 Procedure for export/supply of samples by EOU/EPZ/EHTP/STP units isgiven in paragraph 6.11 of the Handbook Vol-I.
Entitlement for supplies from the DTA
6.12 (a) Supplies from the DTA to EOU/EPZ/EHTP/STP units will be regarded as"deemed exports" and the DTA supplier shall be eligible for therelevant entitlements under paragraph 8.3 of this Policy besides discharge of EPif any, on the supplier. In addition the EOU/EPZ/EHTP/STP units shall beentitled to the following:-
i) Reimbursement of Central Sales Tax.ii) Exemption from payment of Central Excise Duty on all goods as per entitlement under Paragraph 6.2 of the Policy.
iv) Reimbursement of Duty paid on fuels procured from domestic oil companies, by the Development Commissioner of the concerned Zone as per the rate of Drawback notified by the Directorate General of Foreign Trade from time to time.
(b) Supplier of cut and polished diamonds, precious and semi-precious stones,synthetic stones and processed pearls from DTA to EOU/EPZ units shall beeligible for grant of Replenishment Licenses at the rates and for the itemsmentioned in Appendix-13 of the Handbook (Vol.1).
The entitlements under paragraph (a) (i) and (ii) above shall be availableprovided the goods supplied are manufactured in India.
Other Entitlements
6.13 Other entitlements of EOU/EPZ/EHTP/STP units are indicated in theHandbook (Vol-I).
6.14 (a) Transfer of manufactured goods from one EOU/EPZ/ EHTP/STP unitto another EOU/EPZ/ EHTP/ STP/SEZ unit will be allowed.
(b) Goods imported/procured by an EPZ unit may be transferred or given onloan or lease to another EPZ unit in the same Zone which shall be duly accountedfor, but not counted towards discharge of export performance.
Eligibility
7.1 (a) Special Economic Zone (SEZ) is a specifically delineated duty freeenclave and shall be deemed to be foreign territory for the purposes of tradeoperations and duties and tariffs.
(b) Goods going into the SEZ area from DTA shall be treated as deemed exportsand goods coming from the SEZ area into DTA shall be treated as if the goods arebeing imported.
(c) SEZ units may be set up for manufacture of goods and rendering ofservices, production, processing, assembling,trading, repair, remaking,reconditioning, re-engineering including making of gold/ silver/ platinumjewellery and articles thereof or in connection therewith.
Export and Import of Goods.
7.2 (a) SEZ units may export goods and services including agro-products,partly processed jewellery, sub-assemblies and component. It may also exportby-products, rejects, waste scrap arising out of the production process.
SEZ units, other than trading/service unit, may also export to RussianFederation in Indian Rupees against repayment of State Credit/Escrow RupeeAccount of the buyer, subject to RBI clearance, if any.
(b) SEZ unit may import without payment of duty all types of goods, includingcapital goods, as defined in the Policy, whether new or second hand, required byit for its activities or in connection therewith, provided they are notprohibited items of imports in the ITC(HS). Goods shall include raw material formaking capital goods for use within the unit. The units shall also be permittedto import goods required for the approved activity, including capital goods,free of cost or on loan from clients.
(c) SEZ units may procure goods required by it without payment of duty, frombonded warehouses in the DTA set up under the Policy and from InternationalExhibitions held in India.
(d) SEZ may import, without payment of duty, all types of goods for creatinga central facility for use by software development units in SEZ. The Centralfacility for software development can also be accessed by units in the DTA forexport of software.
(e) Gem & Jewellery and Jewellery units may also source gold/ silver/platinum through the nominated agencies.
(f) SEZ units may also import/procure goods from DTA without payment of dutyfor setting up of units in the Zone.
Leasing Of Capital Goods
7.3 SEZ unit may, on the basis of a firm contract between the parties, sourcethe capital goods from a domestic/foreign leasing company. In such a case theSEZ unit and the domestic/ foreign leasing company shall jointly file thedocuments to enable import/procurement of the capital goods without payment ofduty.
Net Foreign exchange Earning (NFE)
7.4 SEZ unit shall be a positive net foreign exchange earner. Net Foreignexchange Earning (NFE) shall be calculated cumulatively for a period of fiveyears from the commencement of commercial production according to the formulagiven in Paragraph 7.4 of the Handbook (Vol-I).
Monitoring of performance
7.5 (a) The performance of SEZ units shall be monitored by a committeecomprising of Development Commissioner and Customs. The Committee shall beheaded by the Development Commissioner. It will also see that thewastage/manufacturing loss on gold/ silver/platinum jewellery and articles arewithin the overall percentage prescribed in Appendix- 14 L of Handbook (Vol-I).In case of higher wastage/ manufacturing loss, the committee shall satisfyitself of the reasonableness of the same.
(b) The performance of SEZ units shall be monitored as per the guidelinesgiven in Appendix-14 E of Handbook (Vol-I).
Legal Undertaking
7.6 The unit shall execute a legal undertaking with the DevelopmentCommissioner concerned and in the event of failure to achieve positive foreignexchange earning it shall be liable to penalty in terms of the legal undertakingor under any other law for the time being in force.
Approvals and Applications
7.7 (a) Applications for setting up of SEZ units, satisfying the conditionsmentioned in paragraph 7.19 of the Handbook (Vol.1) may be given approval by theconcerned Development Commissioner of SEZ. In other cases, approval may begranted by the Board of Approvals (BOA) as notified and indicated at Appendix 14–B of Hanbook (Vol-I).
(b) Proposal requiring industrial License may be considered by the Board ofApproval on case to case basis.
DTA Sales and Supplies
7.8 (a) SEZ unit may sell goods, including by-products, and services in DTAin accordance with the import policy in force, on payment of applicable duty.
(b) DTA sale by service/trading unit shall be subject to achievement ofpositive NFE cumulatively. Similarly for units undertaking manufacturing andservices/ trading activities against a single LOP, DTA sale shall be subject toachievement of NFE cumulatively.
(c) The following supplies effected in DTA by SEZ units will be counted forthe purpose of fulfilment of positive NFE:
(i) Supplies effected in DTA in terms of Paragraph 8.3 of the Policy.
(ii) Supplies made to bonded warehouses set up under the Policy and/or under Section 65 of the Customs Act.
(iii) Supplies to other EOU/EPZ/SEZ/ EHTP/ STP units provided that such goods are permissible for procurement by units in terms of paragraph 7.2 of the Policy.
(iv) Supplies against special entitlement of duty free import of goods
(v) Supplies of goods to defence and internal security forces, foreign missions/diplomats provided they are entitled for duty free import of such items in terms of general exemption notification issued by the Ministry of Finance.
(vi) Supply of services (by services units) relating to exports paid for in free foreign exchange or for such services rendered in Indian Rupees which are otherwise considered as having been paid for in free foreign exchange by RBI.
(vii) Supplies of Information Technology Agreement (ITA-I) items, provided that the items are manufactured in the unit and attract zero rate of basic customs duty.
Entitlement for Supplies from the DTA
7.9 (a) Supplies from the DTA to SEZ units shall be eligible for thefollowing:
(I) DTA supplier shall be entitled for :-
(i) Relevant entitlements under paragraph 8.3 of the Policy.
(ii) Discharge of Export performance, if any, on the supplier.
(II) SEZ units shall be entitled for:-
(i) Reimbursement of Central Sales Tax;
(ii) Exemption from payment of Central Excise Duty on all goods eligible forprocurement as per paragraph 7.2 of the policy.
(iii) Reimbursement of Central Excise Duty, if any, paid on bulk tea procuredby SEZ units so long as levy on bulk tea in this regard is in force.
(iv) Reimbursement of Duty paid on fuels or any other goods procured from DTAas per the rate of drawback notified by the Directorate General of Foreign Tradefrom the date of such notification.
(b) Supplier of cut and polish diamonds, precious and semi-precious stones,synthetic stones and processed pearls from Domestic Tariff Area to the unitssituated in SEZ shall be eligible for grant of Replenishment Licenses at therates and for the items mentioned in Appendix-13 of the Handbook (Vol. I).
(c) The entitlements under paragraphs (I) and (II) (i) and (ii) above shallbe available provided the goods supplied are manufactured in India.
Export Through Status Holder
7.10 SEZ unit may also export goods manufactured by it through a merchantexporter/ status holder recognized under this Policy or any other EOU/EPZ/SEZ/EHTP/STP unit.
Inter-unit Transfer
7.11 (a) Transfer of manufactured goods, including partlyprocessed/semi-finished goods from one SEZ unit to another SEZ/EOU/EPZ/ EHTP/STPunit will be allowed.
(b) Goods imported/procured by an SEZ unit may be transferred or given onloan to another unit within the same SEZ which shall be duly accounted for, butnot counted towards discharge of export performance.
(c) Transfer of goods in terms of sub-paras (a) and (b) above within the sameSEZ shall not require any permission but the units shall maintain properaccounts of the transaction.
(d) Capital goods imported/procured may be transferred or given on loan toanother SEZ/EOU/ EPZ/ EHTP/ STP unit with prior permission of the DevelopmentCommissioner concerned.
Other Entitlements
Other entitlements of SEZ units are indicated in the Handbook (Vol-1).
Sub- Contracting
7.12 SEZ unit, may subcontract a part of their production or productionprocess through units in the DTA or through other SEZ/EOU/EPZ/ EHTP/ STP, withthe permission of Customs authorities. Subcontracting of part of productionprocess may also be permitted abroad with the approval of the Board of Approval.
Subcontracting by SEZ gems and jewellery units shall be subject to followingconditions :-
i) Goods, finished or semi-finished, including studded jewellery, containing quantity and purity equal to the gold/ silver/platinum so taken out, shall be brought back to the Zone within 30 days. Further, no diamond, precious or semi-precious stones shall be allowed to be taken out of the Zone for sub-contracting.
ii) Receive plain gold/silver/platinum jewellery from DTA in exchange of equivalent quantity of gold/silver/ platinum, as the case may be, contained in the said jewellery.
iii) SEZ units shall not be eligible for wastage or manufacturing loss against the jewellery received from DTA after processing as mentioned in (i) and against exchange of gold/silver/platinum as mentioned in (ii) above.
iv) The DTA unit undertaking job work or supplying jewellery against exchange of gold/silver/platinum shall not be entitled to export benefits.
(c) All units, including gem and jewellery, may sub-contract part of theproduction or production process through other units in the same SEZ withoutpermission of Customs authorities subject to records being maintained by boththe supplying and receiving units.
(d) SEZ units other than gems and jewellery units may be allowed to undertakejob-work for export, on behalf of DTA exporter, provided the finished goods areexported directly from SEZ units. For such exports, the DTA units will beentitled for refund of duty paid on the inputs by way of Brand Rate of dutydrawback.
(e) Scrap/waste/remnants generated through job work may either be clearedfrom the job worker’s premises on payment of applicable duty or returned tothe unit.
7.13 (a) SEZ unit may be debonded with the approval of the DevelopmentCommissioner. Such debonding shall be subject to payment of applicable Customsand Excise duties on the imported and indigenous capital goods, raw materialsetc. and finished goods in stock. In case the unit has not achieved positive NFE,the debonding shall be subject to penalty, that may be imposed by theadjudicating authority under Foreign Trade (Development and Regulation) Act,1992.
(b) SEZ unit may also be permitted by the Development Commissioner, as onetime option, to debond on payment of duty on capital goods under the prevailingEPCG Scheme, subject to the unit satisfying the eligibility criteria of thatScheme and standard conditions, as per Para 7.13 of the Handbook (Vol-I).
Export through Exhibitions/ Export Promotion Tours/Export of brandedjewellery/
Export through show rooms abroad /Duty Free Shops
7.14 SEZ gem and jewellery, units shall be entitled for the following:
(i) Export of gold/silver/platinum jewellery and articles thereof, forholding/ participating in exhibitions abroad with the permission of DevelopmentCommissioner.
(ii) Personal carriage of gold/ silver/ platinum jewellery, precious,semi-precious stones, beads and articles.
(iii) Export of jewellery and branded jewellery, is also permitted fordisplay/sale in the permitted shops set up abroad.
(iv) Display/sell in the permitted shops set up abroad or in the show roomsof their distributors/agents.
(v) Set up show rooms/retail outlets at the International Airports for saleof jewellery.
Personal carriage of Export/ Import parcel.
7.15 Personal carriage of gems and jewellery export parcels by foreign boundpassengers and personal carriage gems and jewellery, import parcels by an Indianor foreign national may be permitted as per the conditions given in paragraph7.15 of the Handbook (Vol.1).
Export by post / courier
7.16 Gold/silver/platinum jewellery and articles thereof may be exported byairfreight or through Foreign Post Office or through courier.
Disposal of Rejects/Scrap/ Waste/ Remnants
7.17 Rejects/scrap/waste/remnants arising out of production process or inconnection therewith may be sold in the DTA on payment of applicable duty. Noduty shall be payable in case scrap/waste/ remnants/ rejects are destroyedwithin the Zone after intimation to the Custom authorities or destroyed outsidethe SEZ with the permission of Custom authorities. Destruction as stated aboveshall not apply to gold, silver, platinum, diamond, precious and semi preciousstones.
Replacement/Repair of Goods
7.18 (a) The general provisions of Policy relating to export ofreplacement/ repaired goods shall apply equally to SEZ units, save that, casesnot covered by these provisions shall be considered on merits by the DevelopmentCommissioner.
(b) The goods sold in the DTA and found to be defective may be brought backfor repair/ replacement under intimation to Development Commissioner.
(c) Goods or parts thereof on being imported/ indigenously procured and founddefective or otherwise unfit for use or which have been damaged or becomedefective after import/ procurement may be returned and replacement obtained ordestroyed. In the event of replacement, the goods may be brought back from theforeign suppliers or their authorised agents in India or the indigenoussuppliers.
(d) Goods may be transferred to DTA/abroad for repair/ replacement, testingor calibration, quality testing and R & D purpose under intimation toCustoms authorities.
Management of SEZ
7.19 (a) SEZ will be under the administrative control of the DevelopmentCommissioner.
(b) All activities in the zone of SEZ units, unless otherwise specified,shall be through self certification procedure.
Setting up of SEZ in Private/ joint/State Sector
7.20 A SEZ may be set up in the public, private, joint sector or by stateGovernment as notified by the Ministry of Commerce and Industry. The existingExport Processing Zones (EPZs) may also be converted into SEZ by the Ministry ofCommerce and Industry through issue of a notification.
Samples
7.21 SEZ units may, on the basis of records maintained by them, and on priorintimation to Customs authorities:
(i) supply or sell samples in the DTA for display/market promotion on paymentof applicable duties;
(ii) Remove samples without payment of duty, on furnishing a suitableundertaking to Customs authorities for bringing the goods back within astipulated period;
(iii) Samples, including samples made in wax models, silver models and rubbermoulds may be exported on the basis of records maintained by the unit and underintimation to the Custom authorities. Samples may also be exported throughcourier agencies.
Sale of Un-utilised Material/ Obsolete goods
7.22 (a) In case an SEZ unit is unable, for valid reasons, to utilize thegoods, including capital goods and spares, it may dispose them in the DTA inaccordance with the import policy in force and on payment of applicable dutiesor export them.
(b) Capital goods and spares that have become obsolete/surplus may either beexported or disposed of in the DTA on payment of applicable duties. The benefitof depreciation, as applicable, will be available in case of disposal in DTA.
(c) No duty shall be payable if the goods are destroyed with the permissionof Customs authorities.
(d) SEZ unit may be allowed by Customs authorities concerned to donateimported/ indigenously procured (bought or taken on loan) computer and computerperipherals, including printer, plotter, scanner, monitor, key-board and storageunits without payment of duty, two years after their import/procurement and useby the units, to recognized non-commercial educational institutions, registeredcharitable hospitals, public libraries, public funded research and developmentestablishments, organisations of the Government of India or Government of aState or Union Territory as per Custom/ Central Excise notification issued inthis regard.
Entitlement for SEZ Developer
7.23 (a) Developer of SEZ in the Private/Joint/State sector may import/procure goods from DTA without payment of duty for the development, operationand maintenance of SEZ.
(b) SEZ developer shall be eligible for the entitlements as provided for inthe Income Tax Act for development, operation and maintenance of SEZ.
Transitional Arrangements
7.24 An existing EPZ unit will have the following options:
(a) It can opt for SEZ Scheme under this Chapter. On conversion, its previousobligations as an EPZ unit shall be subsumed by its obligations under the SEZScheme. The raw materials, components, consumable and finished goods lying instock with the unit at the time of conversion shall be taken as its openingbalance under the SEZ Scheme. All unutilized DTA sale entitlements of the unitshall cease to exist from the date of conversion as notified by the Ministry ofCommerce and Industry
(b) In case an existing EPZ unit decides not to opt for (a) above, it caneither convert into an EOU or de-bond. In both the cases, the unit shallphysically move out of the SEZ.
(c) Capital goods may be transferred or given on loan with prior permissionof the concerned Development Commissioner/ Customs authorities.
Sub-Contracting
6.15 (a) The EOU/EPZ/EHTP/STP units other than gem and jewellery units, mayon the basis of annual permission from the Customs authorities, sub-contractproduction process in DTA, which may also involve change of form or nature ofthe goods, through job work by units in the DTA. These units may alsosub-contract up to 50% of the overall production of previous year in value termsfor job work in DTA with the permission of Customs authorities.
Sub-contracting of both production and production process may also beundertaken without any limit through other EOU/EPZ/EHTP/STP/SEZ units on thebasis of records maintained in the unit.
Subcontracting of part of production process may also be permitted abroadwith the approval of the Board of Approval.
(b) EOU/EPZ units may, on the basis of annual permission from the CustomAuthorities, undertake job-work for export, on behalf of DTA exporter, providedthe goods are exported directly from the EOU/EPZ units and export documents arein the name of the DTA exporter. For such exports, the DTA units will beentitled to refund of duty paid on the inputs by way of Brand Rate of dutydrawback.
(c) The scrap/waste/remnants generated at the job worker's premises maybe either cleared from the job worker's premises on payment of duty or returnedto the supplying unit.
(d) Gems and jewellery EOU/EPZ units are allowed to receive plaingold/silver/ platinum jewellery, including findings, components andsemi-finished jewellery from DTA against exchange of equivalent quantity of gold/ silver/ platinum, as the case may be, contained in the said jewellery. The DTAunits supplying such jewellery against exchange of gold/silver/platinum shallnot be entitled for deemed export benefits. The EOU/EPZ units shall not beeligible for wastage or manufacturing loss against jewellery.
Sale of Un-utilised Material
6.16 (a) In case an EOU/EPZ/EHTP/STP unit is unable, for valid reasons, toutilize the goods, imported or procured from DTA, it may dispose them in the DTAon payment of applicable duties and submission of import license by DTA unit,wherever applicable or export. Supply from one EOU/EPZ/EHTP/STP unit to anothersuch unit would be treated as import under this paragraph.
(b) Capital goods and spares that have become obsolete/surplus, may either beexported, transferred to another EOU/EPZ/EHTP/STP or disposed of in the DTA onpayment of applicable duties. The benefit of depreciation, as applicable, willbe available in case of disposal in DTA. No duty shall be payable if the goodsare destroyed with the permission of Customs authorities and under intimation toDevelopment Commissioner.
Reconditioning Repair and Re-engineering
6.17 EOU/EPZ/EHTP/STP units may be set up with the approval of BOA to carryout reconditioning, repair, remaking, testing, calibration, quality improvement,up-gradation of technology and re-engineering activities for export in freelyconvertible foreign currency. Such units may import goods of any origin forexport in freely convertible foreign exchange for the above activities. Theprovisions of paragraphs 6.8,6.9 6.10, 6.11, 6.12, 6.14, and 6.15 of thisChapter shall not, however, apply to such activities.
Replacement/ Repair of imported/ indigenous goods
6.18 (a) The general provisions of the Policy relating to export ofreplacement/repaired goods would also apply equally to EOU/EPZ/EHTP/STP units,save that, cases not covered by these provisions shall be considered on meritsby the Development Commissioner.
(b) The goods sold in the DTA and found to be defective may be brought backfor repair/ replacement under intimation to the concerned jurisdictionalCustoms/Excise authorities.
(c) Goods or parts thereof on being imported/ indigenously procured and founddefective or otherwise unfit for use or which have been damaged or becomedefective after import/ procurement may be returned and replacement obtained ordestroyed. In the event of replacement, the goods may be brought back from theforeign suppliers or their authorized agents in India or indigenous suppliers.
Bonding
6.19 The initial bonding period for units under the EOU/EHTP/STP Schemesshall be 5 years. This period may be extended further by the DevelopmentCommissioner concerned for period of 5 years at a time.
Debonding
6.20 (a) Subject to the approval of the Development Commissioner, EOU/EPZ/EHTP/STPunits may be debonded. Such debonding shall be subject to payment of duties ofCustoms and Excise and the industrial policy in force at the time of debonding.
(b) If the unit has not achieved the obligations under the scheme, thedebonding shall also be subject to penalty as may be imposed by the competentauthority.
(c) In the event of a gem and jewellery unit ceasing its operation, gold andother precious metals, alloys, gem and other materials available for manufactureof jewellery, shall be handed over to an agency nominated by the Ministry ofCommerce and Industry (Department of Commerce) at the price to be determined bythat agency.
(d) An EOU/EPZ/EHTP/STP unit may also be permitted by the DevelopmentCommissioner, as a one time option, to debond on payment of duty on capitalgoods under the prevailing EPCG Scheme, subject to the unit satisfying theeligibility criteria under that Scheme and standard conditions, as per Appendix14-J of the Handbook (Vol-I).
Conversion
6.21 (a) Existing DTA units, may also apply for conversion into an EOU/EHTP/STPunit, but no concession in duties and taxes would be available under the schemefor plant, machinery and equipment already installed.
(b) The existing EHTP/STP units may also apply for conversion/merger to EOUunit and vice-versa. In such cases the units will continue to remain in bond andavail the permissible exemption in duties and taxes as applicable under therelevant scheme.
Monitoring of NFEP/EP and maintenance of records
6.22 Net Foreign exchange Earning as a Percentage of exports (NFEP) shall becalculated cumulatively for a period of five years from the commencement ofcommercial production according to the formula given in the Handbook (Vol.1).
The performance of EOU/EPZ units will be monitored as per the Guidelinesgiven in Appendix 14-E of Handbook (Vol.1).
Export through Exhibitions/ Export Promotion Tours/Export of brandedjewellery/Export through show rooms abroad/Duty Free Shops.
6.23 EOU/EPZ gem and jewellery units shall be entitled for the following:
(i) Export of gold/silver/platinum jewellery and articles thereof, forholding/ participating in exhibitions abroad with the permission of DevelopmentCommissioner.
(ii) Personal carriage of gold/ silver/ platinum jewellery, precious,semi-precious stones, beads and articles.
(iii) Export of jewellery and branded jewellery is also permitted fordisplay/sale in the permitted shops set up abroad.
(iv) Display/sell in the permitted shops set up abroad or in the show roomsof their distributors/agents.
(v) Set up show rooms/retail outlets at the International Airports for saleof jewellery.
Personal carriage of Export/ Import parcel.
6.24 Personal carriage of gems and jewellery export parcels by foreign boundpassengers and personal carriage of gems and jewellery, import parcels by anIndian or foreign national may be permitted as per the conditions given inparagraph 6.24 of the Handbook (Vol.1).
Export by Post /Courier
6.25 Gold/silver/platinum jewellery and articles thereof may be exported byairfreight or through Foreign Post Office or through courier.
Development of infrastructure in EPZs.
6.26 Development of infrastructure, including construction of Standard DesignFactory Buildings in an EPZ may be undertaken through private/joint/State sectoras per the guidelines given in Appendix-14 H of Handbook (Vol.I).
Administration of EOU/EPZ units
6.27 Details of administration of EOU/EPZ units are given in Handbook(Vol.1).
Revival of Sick units
6.28 Subject to a unit being declared sick by the appropriate authority,proposals for revival of the unit or its take over may be considered by theBoard of Approval.
Note:
In the case of units under EHTP/STP Schemes, necessary approval / permissionunder relevant paragraphs of this Chapter shall be granted by the officerdesignated by the Ministry of Communication and Information Technology,Department of Information Technology for the purpose instead of the DevelopmentCommissioner of EPZ and by the Inter-Ministerial Standing Committee (IMSC)instead of BOA.
Eligibility
7.1 (a) Special Economic Zone (SEZ) is a specifically delineated duty freeenclave and shall be deemed to be foreign territory for the purposes of tradeoperations and duties and tariffs.
(b) Goods going into the SEZ area from DTA shall be treated as deemed exportsand goods coming from the SEZ area into DTA shall be treated as if the goods arebeing imported.
(c) SEZ units may be set up for manufacture of goods and rendering ofservices, production, processing, assembling,trading, repair, remaking,reconditioning, re-engineering including making of gold/ silver/ platinumjewellery and articles thereof or in connection therewith.
Export and Import of Goods.
7.2 (a) SEZ units may export goods and services including agro-products,partly processed jewellery, sub-assemblies and component. It may also exportby-products, rejects, waste scrap arising out of the production process.
SEZ units, other than trading/service unit, may also export to RussianFederation in Indian Rupees against repayment of State Credit/Escrow RupeeAccount of the buyer, subject to RBI clearance, if any.
(b) SEZ unit may import without payment of duty all types of goods, includingcapital goods, as defined in the Policy, whether new or second hand, required byit for its activities or in connection therewith, provided they are notprohibited items of imports in the ITC(HS). Goods shall include raw material formaking capital goods for use within the unit. The units shall also be permittedto import goods required for the approved activity, including capital goods,free of cost or on loan from clients.
(c) SEZ units may procure goods required by it without payment of duty, frombonded warehouses in the DTA set up under the Policy and from InternationalExhibitions held in India.
(d) SEZ may import, without payment of duty, all types of goods for creatinga central facility for use by software development units in SEZ. The Centralfacility for software development can also be accessed by units in the DTA forexport of software.
(e) Gem & Jewellery and Jewellery units may also source gold/ silver/platinum through the nominated agencies.
(f) SEZ units may also import/procure goods from DTA without payment of dutyfor setting up of units in the Zone.
Leasing Of Capital Goods
7.3 SEZ unit may, on the basis of a firm contract between the parties, sourcethe capital goods from a domestic/foreign leasing company. In such a case theSEZ unit and the domestic/ foreign leasing company shall jointly file thedocuments to enable import/procurement of the capital goods without payment ofduty.
Net Foreign exchange Earning (NFE)
7.4 SEZ unit shall be a positive net foreign exchange earner. Net Foreignexchange Earning (NFE) shall be calculated cumulatively for a period of fiveyears from the commencement of commercial production according to the formulagiven in Paragraph 7.4 of the Handbook (Vol-I).
Monitoring of performance
7.5 (a) The performance of SEZ units shall be monitored by a committeecomprising of Development Commissioner and Customs. The Committee shall beheaded by the Development Commissioner. It will also see that thewastage/manufacturing loss on gold/ silver/platinum jewellery and articles arewithin the overall percentage prescribed in Appendix- 14 L of Handbook (Vol-I).In case of higher wastage/ manufacturing loss, the committee shall satisfyitself of the reasonableness of the same.
(b) The performance of SEZ units shall be monitored as per the guidelinesgiven in Appendix-14 E of Handbook (Vol-I).
Legal Undertaking
7.6 The unit shall execute a legal undertaking with the DevelopmentCommissioner concerned and in the event of failure to achieve positive foreignexchange earning it shall be liable to penalty in terms of the legal undertakingor under any other law for the time being in force.
Approvals and Applications
7.7 (a) Applications for setting up of SEZ units, satisfying the conditionsmentioned in paragraph 7.19 of the Handbook (Vol.1) may be given approval by theconcerned Development Commissioner of SEZ. In other cases, approval may begranted by the Board of Approvals (BOA) as notified and indicated at Appendix 14–B of Hanbook (Vol-I).
(b) Proposal requiring industrial License may be considered by the Board ofApproval on case to case basis.
DTA Sales and Supplies
7.8 (a) SEZ unit may sell goods, including by-products, and services in DTAin accordance with the import policy in force, on payment of applicable duty.
(b) DTA sale by service/trading unit shall be subject to achievement ofpositive NFE cumulatively. Similarly for units undertaking manufacturing andservices/ trading activities against a single LOP, DTA sale shall be subject toachievement of NFE cumulatively.
(c) The following supplies effected in DTA by SEZ units will be counted forthe purpose of fulfilment of positive NFE:
(i) Supplies effected in DTA in terms of Paragraph 8.3 of the Policy.
(ii) Supplies made to bonded warehouses set up under the Policy and/or underSection 65 of the Customs Act.
(iii) Supplies to other EOU/EPZ/SEZ/ EHTP/ STP units provided that such goodsare permissible for procurement by units in terms of paragraph 7.2 of thePolicy.
(iv) Supplies against special entitlement of duty free import of goods
(v) Supplies of goods to defence and internal security forces, foreignmissions/diplomats provided they are entitled for duty free import of such itemsin terms of general exemption notification issued by the Ministry of Finance.
(vi) Supply of services (by services units) relating to exports paid for infree foreign exchange or for such services rendered in Indian Rupees which areotherwise considered as having been paid for in free foreign exchange by RBI.
(vii) Supplies of Information Technology Agreement (ITA-I) items, providedthat the items are manufactured in the unit and attract zero rate of basiccustoms duty.
Entitlement for Supplies from the DTA
7.9 (a) Supplies from the DTA to SEZ units shall be eligible for thefollowing:
(I) DTA supplier shall be entitled for :-
(i) Relevant entitlements under paragraph 8.3 of the Policy.
(ii) Discharge of Export performance, if any, on the supplier.
(II) SEZ units shall be entitled for:-
(i) Reimbursement of Central Sales Tax;
(ii) Exemption from payment of Central Excise Duty on all goods eligible forprocurement as per paragraph 7.2 of the policy.
(iii) Reimbursement of Central Excise Duty, if any, paid on bulk tea procuredby SEZ units so long as levy on bulk tea in this regard is in force.
(iv) Reimbursement of Duty paid on fuels or any other goods procured from DTAas per the rate of drawback notified by the Directorate General of Foreign Tradefrom the date of such notification.
(b) Supplier of cut and polish diamonds, precious and semi-precious stones,synthetic stones and processed pearls from Domestic Tariff Area to the unitssituated in SEZ shall be eligible for grant of Replenishment Licenses at therates and for the items mentioned in Appendix-13 of the Handbook (Vol. I).
(c) The entitlements under paragraphs (I) and (II) (i) and (ii) above shallbe available provided the goods supplied are manufactured in India.
Export Through Status Holder
7.10 SEZ unit may also export goods manufactured by it through a merchantexporter/ status holder recognized under this Policy or any other EOU/EPZ/SEZ/EHTP/STP unit.
Inter-unit Transfer
7.11 (a) Transfer of manufactured goods, including partlyprocessed/semi-finished goods from one SEZ unit to another SEZ/EOU/EPZ/ EHTP/STPunit will be allowed.
(b) Goods imported/procured by an SEZ unit may be transferred or given onloan to another unit within the same SEZ which shall be duly accounted for, butnot counted towards discharge of export performance.
(c) Transfer of goods in terms of sub-paras (a) and (b) above within the sameSEZ shall not require any permission but the units shall maintain properaccounts of the transaction.
(d) Capital goods imported/procured may be transferred or given on loan toanother SEZ/EOU/ EPZ/ EHTP/ STP unit with prior permission of the DevelopmentCommissioner concerned.
Other Entitlements
Other entitlements of SEZ units are indicated in the Handbook (Vol-1).
Sub- Contracting
7.12 SEZ unit, may subcontract a part of their production or productionprocess through units in the DTA or through other SEZ/EOU/EPZ/ EHTP/ STP, withthe permission of Customs authorities. Subcontracting of part of productionprocess may also be permitted abroad with the approval of the Board of Approval.
Subcontracting by SEZ gems and jewellery units shall be subject to followingconditions :-
i) Goods, finished or semi-finished, including studded jewellery, containingquantity and purity equal to the gold/ silver/platinum so taken out, shall bebrought back to the Zone within 30 days. Further, no diamond, precious orsemi-precious stones shall be allowed to be taken out of the Zone forsub-contracting.
ii) Receive plain gold/silver/platinum jewellery from DTA in exchange ofequivalent quantity of gold/silver/ platinum, as the case may be, contained inthe said jewellery.
iii) SEZ units shall not be eligible for wastage or manufacturing lossagainst the jewellery received from DTA after processing as mentioned in (i) andagainst exchange of gold/silver/platinum as mentioned in (ii) above.
iv) The DTA unit undertaking job work or supplying jewellery against exchangeof gold/silver/platinum shall not be entitled to export benefits.
(c) All units, including gem and jewellery, may sub-contract part of theproduction or production process through other units in the same SEZ withoutpermission of Customs authorities subject to records being maintained by boththe supplying and receiving units.
(d) SEZ units other than gems and jewellery units may be allowed to undertakejob-work for export, on behalf of DTA exporter, provided the finished goods areexported directly from SEZ units. For such exports, the DTA units will beentitled for refund of duty paid on the inputs by way of Brand Rate of dutydrawback.
(e) Scrap/waste/remnants generated through job work may either be clearedfrom the job worker’s premises on payment of applicable duty or returned tothe unit.
De-bonding
7.13 (a) SEZ unit may be debonded with the approval of the DevelopmentCommissioner. Such debonding shall be subject to payment of applicable Customsand Excise duties on the imported and indigenous capital goods, raw materialsetc. and finished goods in stock. In case the unit has not achieved positive NFE,the debonding shall be subject to penalty, that may be imposed by theadjudicating authority under Foreign Trade (Development and Regulation) Act,1992.
(b) SEZ unit may also be permitted by the Development Commissioner, as onetime option, to debond on payment of duty on capital goods under the prevailingEPCG Scheme, subject to the unit satisfying the eligibility criteria of thatScheme and standard conditions, as per Para 7.13 of the Handbook (Vol-I).
Export through Exhibitions/ Export Promotion Tours/Export of brandedjewellery/Export through show rooms abroad /Duty Free Shops
7.14 SEZ gem and jewellery, units shall be entitled for the following:
(i) Export of gold/silver/platinum jewellery and articles thereof, forholding/ participating in exhibitions abroad with the permission of DevelopmentCommissioner.
(ii) Personal carriage of gold/ silver/ platinum jewellery, precious,semi-precious stones, beads and articles.
(iii) Export of jewellery and branded jewellery, is also permitted fordisplay/sale in the permitted shops set up abroad.
(iv) Display/sell in the permitted shops set up abroad or in the show roomsof their distributors/agents.
(v) Set up show rooms/retail outlets at the International Airports for saleof jewellery.
Personal carriage of Export/ Import parcel.
7.15 Personal carriage of gems and jewellery export parcels by foreign boundpassengers and personal carriage gems and jewellery, import parcels by an Indianor foreign national may be permitted as per the conditions given in paragraph7.15 of the Handbook (Vol.1).
Export by post / courier
7.16 Gold/silver/platinum jewellery and articles thereof may be exported byairfreight or through Foreign Post Office or through courier.
Disposal of Rejects/Scrap/ Waste/Remnants
7.17 Rejects/scrap/waste/remnants arising out of production process or inconnection therewith may be sold in the DTA on payment of applicable duty. Noduty shall be payable in case scrap/waste/ remnants/ rejects are destroyedwithin the Zone after intimation to the Custom authorities or destroyed outsidethe SEZ with the permission of Custom authorities. Destruction as stated aboveshall not apply to gold, silver, platinum, diamond, precious and semi preciousstones.
Replacement/Repair of Goods
7.18 (a) The general provisions of Policy relating to export ofreplacement/ repaired goods shall apply equally to SEZ units, save that, casesnot covered by these provisions shall be considered on merits by the DevelopmentCommissioner.
(b) The goods sold in the DTA and found to be defective may be brought backfor repair/ replacement under intimation to Development Commissioner.
(c) Goods or parts thereof on being imported/ indigenously procured and founddefective or otherwise unfit for use or which have been damaged or becomedefective after import/ procurement may be returned and replacement obtained ordestroyed. In the event of replacement, the goods may be brought back from theforeign suppliers or their authorised agents in India or the indigenoussuppliers.
(d) Goods may be transferred to DTA/abroad for repair/ replacement, testingor calibration, quality testing and R & D purpose under intimation toCustoms authorities.
Management of SEZ
7.19 (a) SEZ will be under the administrative control of the DevelopmentCommissioner.
(b) All activities in the zone of SEZ units, unless otherwise specified,shall be through self certification procedure.
Setting up of SEZ in Private/ joint/State Sector
7.20 A SEZ may be set up in the public, private, joint sector or by stateGovernment as notified by the Ministry of Commerce and Industry. The existingExport Processing Zones (EPZs) may also be converted into SEZ by the Ministry ofCommerce and Industry through issue of a notification.
Samples
7.21 SEZ units may, on the basis of records maintained by them, and on priorintimation to Customs authorities:
(i) supply or sell samples in the DTA for display/market promotion on paymentof applicable duties;
(ii) Remove samples without payment of duty, on furnishing a suitableundertaking to Customs authorities for bringing the goods back within astipulated period;
(iii) Samples, including samples made in wax models, silver models and rubbermoulds may be exported on the basis of records maintained by the unit and underintimation to the Custom authorities. Samples may also be exported throughcourier agencies.
Sale of Un-utilised Material/ Obsolete goods
7.22 (a) In case an SEZ unit is unable, for valid reasons, to utilize thegoods, including capital goods and spares, it may dispose them in the DTA inaccordance with the import policy in force and on payment of applicable dutiesor export them.
(b) Capital goods and spares that have become obsolete/surplus may either beexported or disposed of in the DTA on payment of applicable duties. The benefitof depreciation, as applicable, will be available in case of disposal in DTA.
(c) No duty shall be payable if the goods are destroyed with the permissionof Customs authorities.
(d) SEZ unit may be allowed by Customs authorities concerned to donateimported/ indigenously procured (bought or taken on loan) computer and computerperipherals, including printer, plotter, scanner, monitor, key-board and storageunits without payment of duty, two years after their import/procurement and useby the units, to recognized non-commercial educational institutions, registeredcharitable hospitals, public libraries, public funded research and developmentestablishments, organisations of the Government of India or Government of aState or Union Territory as per Custom/ Central Excise notification issued inthis regard.
7.23 (a) Developer of SEZ in the Private/Joint/State sector may import/procure goods from DTA without payment of duty for the development, operationand maintenance of SEZ.
(b) SEZ developer shall be eligible for the entitlements as provided for inthe Income Tax Act for development, operation and maintenance of SEZ.
Transitional Arrangements
7.24 An existing EPZ unit will have the following options:
(a) It can opt for SEZ Scheme under this Chapter. On conversion, its previousobligations as an EPZ unit shall be subsumed by its obligations under the SEZScheme. The raw materials, components, consumable and finished goods lying instock with the unit at the time of conversion shall be taken as its openingbalance under the SEZ Scheme. All unutilized DTA sale entitlements of the unitshall cease to exist from the date of conversion as notified by the Ministry ofCommerce and Industry
(b) In case an existing EPZ unit decides not to opt for (a) above, it caneither convert into an EOU or de-bond. In both the cases, the unit shallphysically move out of the SEZ.
Deemed Exports
8.1 "Deemed Exports" refers to those transactions in which thegoods supplied do not leave the country.
Categories of Supply
8.2 The following categories of supply of goods by the main/ sub-contractorsshall be regarded as "Deemed Exports" under this Policy, provided thegoods are manufactured in India:
(a) Supply of goods against Advance Licence/DFRC under the Duty Exemption/Remission Scheme;
(b) Supply of goods to Export Oriented Units (EOUs) or units located inExport Processing Zones (EPZs) or Special Economic Zone (SEZs) or SoftwareTechnology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs);
(c) Supply of capital goods to holders of licences under the Export PromotionCapital Goods (EPCG) scheme;
(d) Supply of goods to projects financed by multilateral or bilateralagencies/funds as notified by the Department of Economic Affairs, Ministry ofFinance under International Competitive Bidding in accordance with theprocedures of those agencies/funds, where the legal agreements provide fortender evaluation without including the customs duty;
(e) Supply of capital goods, including in unassembled/ disassembled conditionas well as plants, machinery, accessories, tools, dies and such goods which areused for installation purposes till the stage of commercial production andspares to the extent of 10% of the FOR value to fertiliser plants.
(f) supply of goods to any project or purpose in respect of which theMinistry of Finance, by a notification, permits the import of such goods at zerocustoms duty coupled with the extension of benefits under this chapter todomestic supplies;
(g) Supply of goods to the power and refineries not covered in (f)above.
(h) Supply of marine freight containers by 100% EOU (Domestic freightcontainers–manufacturers) provided the said containers are exported out ofIndia within 6 months or such further period as permitted by the Customs; and
(i) Supply to projects funded by UN agencies.
(j) Supply of goods to nuclear power projects through competitive bidding asopposed to international competitive bidding.
Benefits for Deemed Exports
8.3 Deemed exports shall be eligible for any/all of the following benefits inrespect of manufacture and supply of goods qualifying as deemed exports subjectto the terms and conditions as given in Handbook (Vol.1):-
(a) Advance Licence for intermediate supply/ deemed export.
(b) Deemed Exports Drawback.
(c) Refund of Terminal Excise duty.
9.1 For the purpose of this Policy, unless the context otherwise requires,the following words and expressions shall have the following meanings attachedto them.
9.2 "Accessory" or "Attachment" means a part,sub-assembly or assembly that contributes to the efficiency or effectiveness ofa piece of equipment without changing its basic functions.
9.3 "Act" means the Foreign Trade (Development and Regulation) Act,1992 (No.22 of 1992).
9.4 "Actual User" means an actual user who may be either industrialor non-industrial.
9.5 "Actual User (Industrial)" means a person who utilises theimported goods for manufacturing in his own industrial unit or manufacturing forhis own use in another unit including a jobbing unit.
9.6 "Actual User (Non-Industrial)" means a person who utilises theimported goods for his own use in
(i) any commercial establishment carrying on any business, trade or profession; or
(ii) any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital; or
(iii) any service industry.
9.7 "AEZ" means Agricultural Export Zones notified by DGFT.
9.8 "ALC" means the Advance Licensing Committee in the DirectorateGeneral of Foreign Trade for recommending grant of licences under Duty ExemptionScheme and for recommending Input Output norms and value addition norms to benotified by Director General of Foreign Trade.
9.9 "Applicant" means the person on whose behalf the application ismade and shall, wherever the context so requires, include the person signing theapplication.
9.10 "Capital Goods" means any plant, machinery, equipment oraccessories required for manufacture or production, either directly orindirectly, of goods or for rendering services, including those required forreplacement, modernisation, technological upgradation or expansion. Capitalgoods also include packaging machinery and equipment, refractories for initiallining, refrigeration equipment, power generating sets, machine tools, catalystsfor initial charge, equipment and instruments for testing, research anddevelopment, quality and pollution control. Capital goods may be for use inmanufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture,horticulture, pisciculture, poultry, sericulture and viticulture as well as foruse in the services sector.
9.11 "Competent Authority" means an authority competent to exerciseany power or to discharge any duty or function under the Act or the Rules andOrders made thereunder or under this Policy.
9.12 "Component" means one of the parts of a sub-assembly orassembly of which a manufactured product is made up and into which it may beresolved. A component includes an accessory or attachment to the component.
9.13 "Consumables" means any item, which participates in or isrequired for a manufacturing process, but does not necessarily form part of theend-product. Items, which are substantially or totally consumed during amanufacturing process will be deemed to be consumables.
9.14 "Consumer Goods" means any consumption goods, which candirectly satisfy human needs without further processing and includes consumerdurables and accessories thereof.
9.15 "Counter Trade" means any arrangement under whichexports/imports from/ to India are balanced either by direct imports/exportsfrom the importing/ exporting country or through a third country under a TradeAgreement or otherwise. Exports/Imports under Counter Trade may be carried outthrough Escrow Account, Buy Back arrangements, Barter trade or any similararrangement. The balancing of exports and imports could wholly or partly be incash, goods and/or services.
9.16 "DFRC" means Duty Free Replenishment Certificate issued underDuty Remission Scheme.
9.17 "Drawback, " in relation to any goods manufactured in Indiaand exported, means the rebate of duty chargeable on any imported material orexcisable material used in the manufacture of such goods in India. The goodsinclude imported spares, if supplied with capital goods manufactured in India.
9.18 "EHTP " means Electronic Hardware Technology Park.
9.19 "EOU" means Export Oriented Unit.
9.20 "EPZ" means Export Processing Zone.
9.21 "Excisable goods" means any goods produced or manufactured inIndia and subject to a duty of excise under the Central Excise and Salt Act 1944(1 of 1944).
9.22 "Exporter" means a person who exports or intends to export andholds an Importer-Exporter Code number unless otherwise specifically exempted.
9.23 "Export Obligation" means the obligation to export the productor products covered by the licence or permission in terms of quantity, value orboth, as may be prescribed or specified by the licensing or competent authority.
9.24 "Handbook (Vol.1)"means the Handbook of Procedures (Vol.1) and"Handbook (Vol.2)" means Handbook of Procedures (Vol.2) publishedunder the provisions of the paragraph 2.4 of the Policy.
9.25 "Importer" means a person who imports or intends to import andholds an Importer-Exporter Code number unless otherwise specifically exempted.
9.26 "ITC(HS)" means ITC(HS) Classifications of Export and ImportItems Book.
9.27 "Jobbing" means processing or working upon of raw materials orsemi-finished goods supplied to the job worker so as to complete a part or wholeof the process resulting in the manufacture or finishing of an article or anyoperation which is essential for the aforesaid process.
9.28 "Licensing Authority" means the authority competent to grant alicence under the Act/Order.
9.29 "Licensing Year" means the period beginning on the 1stApril of a year and ending on the 31st March of the following year.
9.30 "Manufacture" means to make, produce, fabricate, assemble,process or bring into existence, by hand or by machine, a new product having adistinctive name, character or use and shall include processes such asrefrigeration, repacking, polishing and labeling. Manufacture, for the purposeof this Policy, shall also include agriculture, aquaculture, animal husbandry,floriculture, horticulture, pisciculture, poultry, sericulture, viticulture andmining.
9.31 "Manufacturer Exporter" means a person who export goodsmanufactured by him or intends to export such goods.
9.32 "MAI" means Market Access Initiative
9.33 "Merchant Exporter" means a person engaged in trading activityand exporting or intending to export goods.
9.34 "NFEP" means Net Foreign Exchange Earning as a percentage ofexports.
9.35 "Notification" means a notification published in the OfficialGazette.
9.36 "Order" means an Order made by the Central Government underthe Act.
9.37 "Part" means an element of a sub-assembly or assembly notnormally useful by itself and not amenable to further disassembly formaintenance purposes. A part may be a component or an accessory.
9.38 "Person" includes an individual, firm, society, company,corporation or any other legal person.
9.39 "Policy" means the Export and Import Policy, 2002-07 asamended from time to time.
9.40 "Prescribed" means prescribed under the Foreign Trade(Development and Regulation) Act, 1992 (No. 22 of 1992) or the Rules or Ordersmade thereunder or under this Policy.
9.41 "Public Notice" means a notice published under the provisionsof paragraph 2.4 of the Policy.
9.42 "Raw material" means:
(i) basic materials which are needed for the manufacture of goods, but which are still in a raw, natural, unrefined or unmanufactured state; and
(ii) for a manufacturer, any materials or goods which are required for his manufacturing process, whether they have actually been previously manufactured or are processed or are still in a raw or natural state.
9.44 "Registration-Cum-Membership Certificate" (RCMC) means thecertificate of registration and membership granted by an Export PromotionCouncil or other competent authority as prescribed in the Policy or Handbook(Vol.1).
9.45 "Rules" means Rules made by the Central Government underSection 19 of the Act.
9.46 "Services" include all the tradable services covered underGeneral Agreement on Trade in Services and earning free foreign exchange.
9.47 "Service Provider" means a person providing
(i) Supply of a ‘service’ from India to any other country;
(ii) Supply of a ‘service’ from India to the service consumer of anyother country in India; and
(iii) Supply of a ‘service’ from India through commercial or physicalpresence in the territory of any other country.
(iv) Supply of a ‘service’ in India relating to exports paid in freeforeign exchange or for such services paid in Indian rupees, which are otherwiseconsidered as free foreign exchange by RBI.
9.48 "SEZ" means Special Economic Zone notified by the Ministry ofCommerce & Industry, Department of Commerce.
9.49 "Ships" mean all types of vessels used for sea borne trade orcoastal trade and shall include second hand vessels.
9.50 "SION" means Standard Input Output Norms notified by DGFT inthe Handbook (Vol.2), 2002-07.
9.51 "Spares" means a part or a sub-assembly or assembly forsubstitution, that is ready to replace an identical or similar part orsub-assembly or assembly. Spares include a component or an accessory.
9.52 "Specified" means specified by or under the provisions of thisPolicy.
9.53 "Status holder" means an exporter recognised as "ExportHouse/Trading House/Star trading House/ Super Star Trading House" orservice provider recognised as "Service Export House, International ServiceExport House, International Star Service Export House International Super StarService Export House" by the Director General of Foreign Trade.
9.54 "STP" means Software Technology Park
9.55 "Third-party exports" means exports made by an exporter ormanufacturer on behalf of another exporter(s). In such cases, shipping billsshall indicate the name of both the exporter/ manufacturer and exporter(s).
9.56 "Wild Animal" means any wild animal as defined in Section2(36) of the Wildlife (Protection) Act, 1972.
| Name of the sector | Minimum NFEP | Minimum EP for five years | ||||
| A. MANUFACTURING/ PROCESSING SECTOR = |
|
| ||||
| 1. | Units with actual investment in plant and machinery, both imported and indigenous of Rs.5 crore and above. | Positive | US $ 3.5 Million or 3 times the CIF value of imported capital goods whichever is higher. | |||
| 2. | Electronics Hardware | Positive | US $ 1.00 Million or 3 times the CIF value of imported capital goods whichever is higher. | |||
| 3. | (a) | Agriculture, aquaculture, animal husbandry, horticulture, pisciculture, viticulture, poultry and sericulture | Positive | -do- | ||
|
| (b) | EOU in Agricultural Export Zones. | Positive | US $ 0.25 Million or 3 times the CIF value of imported capital goods, whichever is higher | ||
|
| (c) | Floriculture | -do- | -do- | ||
|
| (d) | Food processing | -do- | -do- | ||
|
| (e) | Biotechnology | -do- | US $ 0.50 Million or 3 times the CIF value of imported capital goods, whichever is higher | ||
| 4. | Toys all kind | -do- | US $ 0.50 Million or 3 times the CIF value of imported capital goods, whichever is higher | |||
| 5. | Computer software and IT enabled Services | 10% | US $ 0.25 Million or 3 times the CIF value of imported capital goods, whichever is higher - | |||
|
|
| ||||
| Gold/Platinum/Silver |
|
| ||||
|
| (a) | Gold/ platinum/ silver unstudded chains and bangles or combination there of manufactured by fully mechanised process. | 3% | US $ 1 Million or 3 times the CIF value of imported capital goods, whichever is higher. | ||
|
| (b) | Gold/Silver/Platinum medallions, coins (excluding the coins of the nature of legal tender) and other articles. | 3% | -do- | ||
|
| (c) | Gold/siliver/Platinum findings, moundings manufactured by mechanised process. | 3% | -do- | ||
|
| (d) | Plain gold/ platinum/ silver jewellery and articles or combination thereof and ornaments like Mangalsutra containing gold and black beads, imitation stones, cubic zirconia etc. only but excluding diamonds, precious & semi-precious stones. | 7% | -do- | ||
|
| (e) | Repair/remake of plain Gold/ platinum/ silver jewellery | 7% | -do- | ||
|
| (f) | Studded gold/platinum/ silver jewellery and articles thereof or combination thereof. | 10% on gold/ silver/platinum content plus 5% over the value of studdings. | -do- | ||
|
| (g) | Repair/remake of gold/ platinum/ silver studded jewellery | 10% | -do- | ||
| DIAMOND |
|
| |
| (h) | Cut and polished diamonds (with per carat realization of more than US$ 575 FOB | 7% | US $ 1 Million or 3 times the CIF value of imported capital goods, whichever is higher. |
| (i) | (i) Cut and polished diamonds (with per carat realization of more than US $ 400 and upto US $ 575 FOB) | 15% | -do- |
| (j) | Cut and polished diamonds (with per carat realization of more than US $ US $ 260 FOB and upto US $ 400 FOB) | 20% | -do- |
| (k) | Cut and polished diamonds (with per carat realization of more than US $ 125 upto US $ 260 FOB). | 25% | -do- |
|
|
| |
|
| (Other than IT enable services ) | 10% | US $ 0.50 Million or 3 times the CIF value of imported capital goods, whichever is higher |
| 8. ALL OTHERS | 10% | US $ 1 million or 3 times the CIF value of imported capital goods, whichever is higher. | |
