1) Units undertaking to
export their entire production of goods and service, except
permissible sales in the DTA, as per the Export – Import Policy
are referred to as Export Oriented Units (EOU).
The Electronic Hardware Technology Park (EHTP) Scheme and the
Software Technology Park (STP) Schemes are two special variants of
the general EOU scheme. These units can undertake manufacture of goods including
repair, remaking, reconditioning, re-engineering, rendering of
services like development of software data processing &
conversion, data management and call center activities.
The purpose of EOU scheme is to boost exports by creating
additional production capacity.
2) The EOUs basically function under the
administrative control of the concerned Development Commissioner of
Export Processing Zones i.e., under the Commerce Ministry,
Government of India. Powers
of the Development Commissioner are delegated to the Director, STPI
under the Ministry of Communication and Information Technology,
Government of India in respect of EHTP & STP units.
These units can be an individual STP / EHTP units by
themselves or in an area designated so by the Ministry of
3) EOU scheme is governed under the provisions of
Chapter VI of EXIM policy and Appendix 14-I under para 6.1 of Hand
Book of Procedures, Ministry of Finance, Department of Revenue have,
vide their Customs Notification NO.52/2003 – Cus. dated 31.3.2003
as amended and Central Excise Notification No.22/2003 – CE dated
31.3.2003 as amended, prescribe the eligibility, limitations and
guidelines for the EOUs. In addition, the provisions of Chapter IX of the Customs Act,
1962 pertaining to warehousing read with Manufacture and Other
Operations in Warehouse Regulations, 1966 are also applicable to all
EOUs. The salient
features of these notifications / legal provisions are as follows:
All goods specified in the notifications (including capital
goods, raw materials, spares / consumables, office equipment,
material handling equipment, computer furniture, security system,
pollution and quality control equipment, etc.) are
exempt from payment of all the customs / central excise
duties when imported or procured indigenously for manufacture or
development of software or any other activity as mentioned above.
The EOU unit is to be licensed as a bonded warehouse under
Section 58 of the CA’1962. The
entire EOU premises will be a customs bonded and all the duty free
goods brought in the
EOU unit are required to be bonded therein.
EOU unit is obliged to export their entire production, except
as may be permitted by the CSEZ / STPI (Cochin Special Economic Zone
& STPI, Bangalore Zone cover the are under Bangalore Customs)
for DTA sales. Prior to 1.4.2003, an
EOU Unit was obliged (a) to achieve 10% NFEP (net foreign exchange
earning as a percentage
of export) and (b) to discharge export obligation equal to 3 or 5
times the CIF value of imported capital goods or US $ 0.25 million
whichever is higher. However
w.e.f. 1.4.2003, they are required to achieve only a positive Net
Foreign Exchange Earning (NFE).
The period to achieve the above is five years from the
commencement of production.
The export performance is monitored by the CSEZ / STPI. They are also approving authorities for units issuing of LOP,
accepting of legal undertaking, attestation (listing and permission)
for procuring capital goods by import or from indigenous sources and
for enhancement of value limits of capital goods so permitted.
The power to accept the Bond, issue of Block Transfer,
Procurement Certificate for import, CT-3 certificate for indigenous
goods, permissions for re-export, Inter Unit Transfer, common
sharing, DTA sale, de-bonding assessment, destruction etc. are with
The duty free capital goods and raw material should be
installed and put to use within a period of one year and three years
respectively (or as extended) from the date of import / procurement,
failing which, duty foregone along with interest is charged.
DTA sale of the produce is permitted to the extent of 50% of
FOB value of exports on payment of applicable Central Excise duties
under Section 3 of Central Excise Act, 1944 read with Notification
No.23/2003 (CE) dated 31.3.2003 as amended.
Re-export, Third party export, Inter-unit transfer, Temporary
removal for display, Job work etc. are allowed as per the conditions
stipulated in the notification and policy.
De-bonding of duty free goods is allowed on payment of duties
on the depreciated value of the capital goods at the rate of 20% per
annum in case of IT items and 10% per annum on other goods.
Destruction of goods is permitted on satisfaction of
conditions of notification.
The initial warehousing / bonding period of capital goods and
raw material is 5 years and 3 years respectively under the
provisions of Section
61 of the Customs Act. Thereafter
specific permission for extension of the warehousing / bonding
period is required from the Commissioner of Customs.
Bangalore Customs have provided detailed guidelines about the
conditions, limitations and procedures to be followed by the EOUs in
its comprehensive public notices 104/2001 dated 17.10.2001 and
138/2002 dated 19.9.2002. Various
other Public Notices have also been issued from time to time.
These Public Notices and other useful information is
available on Bangalore Customs Commissionerate web site at www.kar.nic.in/blrcustoms.
Bangalore has the
highest concentration of 100% EOUs and STPI units in the country.
The growth in export performance of 100% EOUs including STPI
units in Bangalore was the highest in the country during financial
The Customs Division, Bangalore of the Commissionerate of
Customs, Bangalore has
jurisdiction over the Export Oriented Units (EOUs), Software
Technology Park (STP) units and the Electronic Hardware Technology
Park (EHTP) units in Bangalore Urban, Bangalore Rural, Tumkur and
Kolar districts of Karnataka. This is the only Division of its
kind in the country in as much as it is a Customs / Central Excise
formation administering exclusively the EOU / STP / EHTP scheme.The
Development Commissioner, CSEZ has the administrative control over
the Export Oriented Units of Bangalore, Tumkur and Kolar
districts (Director, STPI, Bangalore
STPs / EHTPs) monitoring their performance while the revenue angle
of the EOU scheme (operated through the duty exemption notifications
issued by Customs & Central Excise) is handled by the
Office of the Deputy Commissioner, Customs