100% EOU SCHEME
 

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 Information Technology. 

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: 

(i)         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.  

(ii)        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. 

(iii)       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.  

(iv)       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. 

(v)        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 Customs. 

(vi)       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. 

(vii)      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.

 (viii)      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. 

(ix)       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. 

(x)            Destruction of goods is permitted on satisfaction of conditions of notification. 

(xi)       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. 

4)            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 year 2003-04. 

            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 Division.

   
  YEAR WISE GROWTH OF 100% EOUs IN BANGALORE
 
Year Number of Units Registered
1982-83 2
1983-84 3
1984-85 4
1985-86 6
1986-87 3
1987-88 2
1988-89 4
1989-90 10
1990-91 8
1991-92 15
1992-93 35
1993-94 40
1994-95 60
1995-96 55
1996-97 61
1997-98 48
1998-99 63
1999-00 77
2000-01 584
2001-02 128
2002-03 111
2003-04 181
2004-05 224
2005-06 247
2006-07 195
2007-08 161
2008-09 (Upto 30/06/2008) 16
   
   
  NUMBER OF EOUs UNDER CUSTOMS DIVISION (SCHEME-WISE as on 31.12.2007)
 
Name of the Scheme Number of Units
EOU Scheme incl. Floriculture units Gems. and Jewellery etc 329
EHTP Scheme 37
STP Scheme 1297
Total 1663
   
   
  COMMODITY WISE BREAK UP OF EOUs MANUFACTURING GOODS (as on 30/06/2008)
 
Sl.No. Commodity Number
1 Ready made Garments 27
2 Granites 32
3 Engineering Goods (including EHTP Units) 25
4 Silk/Silk yarn/Cotton 16
5 Gem and Jewellary 03
6 Agro Products 13
7 R & D 17
8 Bio Technology Units 05
9 Electronic goods 64
10 Pickles 16
11 General Sector Units 78
12 Chemicals 09
13 Medical Equipments 07
14 Herbal Sector 08
15 Iron Ore 1
16 Pharmaceuticals  08
  Total 329
   
   
  COMPARATIVE FIGURES OF IMPORT DUTY FOREGONE  OF EOUs (excluding STP units)
                                                                                     
Total duty foregone during
April 06 to March 07 in crores
Total duty foregone during
April 07 to Mar 08 in crores
Difference Percentage increase
1 2 3 4
2408 2062 346 17
   
   
  COMPARATIVE FIGURES OF EXPORT PERFORMANCE OF EOUs (EXCLUDING STP UNITS)
 
Total value of Exports during
April 06 to March.07. in crores
Total value of Exports during
April 04 - Dec.04 in crores
Percentage
14750 12600 17
   
   
  EXPORT PERFORMANCE OF STP UNITS **
 
April 06– Mar 07 in crores April 05–Mar 06  in crores % Increase
48,700 37,600 20
  ** Figures are Provisional
   
  Trade facilitation measures offered to EOUs / STPs / EHTPs by Bangalore Customs:
 

Acknowledging the valuable contribution of the 100% EOUs / STPs / EHTPs to the foreign exchange earnings of the country, Bangalore Customs  has, at the behest of CBEC, brought about a series of facilitation measures including the following:

1. Having to deal with only one division office is a unique facility available to the EOUs situated in Bangalore only.  As a result more than 1396 EOUs / STPs / EHTPs are under the administrative control of one excusive field formation of Department of Revenue, Government of India. 

2. Many procedural simplifications have been undertaken over the last few years to reduce the transaction time for the licencees of the division.  Periodic blanket permissions for job work, inter-unit transfer, third party exports and post facto appovals for temporary removals etc. are a few facilities extended in this direction . 

3.The facility of self-sealing export containers has been extended to all Export Oriented Units irrespective of their turnover.

4.Export Oriented Units are placed in a special category for “fast track clearance” at all ports of import including the Air Cargo Complex (ACC) and Inland Container Depot (ICD), Bangalore.

5.The Quarterly Meeting of Representatives of Export Oriented Units in the Customs Head Quarters provides these units a forum to air their problems / suggestions on a regular basis.

  For details on the working of 100% EOU scheme please look up the following Public Notices
 
Public Notice No Issue Date Subject
99/2001 28/09/2001 Simplification of Procedural formalities in respect of 100% EOU's/STPI/EHTP's units - Reg.
104/2001 17/10/2001 100% EOU's/STPI/EHTP's units – Scheme & Procedures – Reg.
138/2002 19/09/2002 100% EOU Scheme
81/2003 18/06/2003 Procedure for import / export through personal carriage
107/2003 26/08/2003 Self sealing to all EOUs
117/2003 08/09/2003 Simplification of Job work procedures
30/2004 23/3/2004 DTA sale procedures for STP units prescribed
52/2004 17/06/2004 Blanket permission
53/2004 17/06/2004 Simplification of DTA procedure
54/2004 17/06/2004 Procedure prescribed for EOU / STP imports by post.
94/2004 11.10.2004  Scheme &Procedure
40/2007 09.05.2007 Re-warehousing of goods imported/procured indigenously by EOUs/EHTPs/STPs/BTPs
   
  Taking forward  the spirit of promptness envisaged in Citizens’ Charter, the following time frame is fixed for various items of work pertaining to the licencees of the Division.  These limits are fixed subject to the assumption that applications made are correct and complete in all respects and are filed on a working day.  The limit fixed is the maximum time and can be completed even early.  In case of ineligibility, the same also would be communicated within these limits.  Cases of delay beyond the limits said below may be brought to the notice of theDeputy Commissioner of Customs,Customs Division.
 
Sl.No Item of work Time frame

Sl.No.

Item of work

Time frame

1

Issue of licence (scrutiny of documents, verification of premises etc.)

4 days

2

Issue of procurement certificate / CT3 / Block Transfer

1 day

3

Bonding of goods

2 days

4

Issue of re-warehousing certificate

2 days

5

Grant of blanket / quarterly permission for job work

3 days

6

Grant of IUT (blanket permission)

2 days

7

Grant of IUT permission (regular)

½ day

8

Grant of temporary removals

½ day

9

Grant of permission for third party export

2 days

10

Permission for re-export

1 day

11

Assessment of export shipping bills

¼ day

12

Export examination

1 day

13

Permission for DTA clearance (quarterly)

2 days

14

DTA clearance assessment

1 day

15

Permission for clearance of waste & scrap

2 days

16

Permission for clearance of unutilised materials

2 days

17

Debonding of materials

2 days

18

Approval of additional premises

2 days

19

Debonding of unit

7 days

   

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