Registration for 100% EOUs - Liberalisation or tightening up?
NOTIFICATION dated 26.6.2001 exempted certain specified categories of assessees from obtaining registration under Rule 9 of the Central Excise Rules, 2001. Paragraph No. 2 of the Notification declares that 100% EOUs are deemed to be registered under the Rule 9 of the CE Rules, 2001. The relevant para is extracted below.
2. hereby declares that where a hundred percent export oriented undertaking or a unit in Export Processing Zone or a unit in Special Economic Zone, is licensed or appointed, as the case may be, under the provisions of the Customs Act, 1962 (52 of 1962), such undertaking or unit shall be deemed to be registered for the purposes of rule 9 of the Central Excise (No.2) Rules, 2001.
However, the above para has an exclusion, which is given at the bottom of the Notification. It reads:
Provided that such hundred percent export oriented undertaking or a unit in Export Processing Zone shall not be deemed to be registered for the said purpose if such undertaking or unit procures excisable goods from the domestic tariff area or removes excisable goods to the domestic tariff area.
It means, the exemption / deemed registration is not applicable if the EOU is either procuring excisable goods from the domestic tariff area or clears the excisable goods in DTA. In such instances it requires a registration under Rule 9.
The above position had been made clear in Circular No , Dated: September 17, 2002. Paragraph 4 of this circular is reproduced below:
4. Furthermore, Export Oriented Units (EOUs) and units in Export Processing Zones (EPZ units) were deemed to be registered under Central Excise vide Notification No., dated 26.6.2001. At the same time such units which clear goods to domestic tariff area on payment of central excise duty are required to file a return with the Superintendent of Central Excise in terms of Rule 17 of Central Excise Rules, 2002. It is observed that the EOUs and EPZ units are increasingly getting linked to the domestic economy through procurement of excisable goods therefrom and sale of finished goods, scrap etc. in the domestic market. These transactions or inter-linkages have revenue implications for Central Excise administration. Hence, it is considered necessary by the Board to require such of the EOUs and EPZ units which have inter-linkage with domestic economy through procurement and/or sale of goods to get registered with the Department with 15 digit PAN-based Registration Numbers being allotted to them. Other EOUs and EPZ units would continue to be treated as deemed registered with the Central Excise authorities.
From the Notification and the Circular supra, while no registration is required if there are no DTA sales or no DTA procurements under CT 3, a registration is required either if there are any DTA sales or procurement of goods from DTA under CT 3.
But, have you ever seen an EOU which does not procure goods from DTA under CT 3 or clears finished goods in DTA? What is the rationale behind requiring the EOUs procuring the goods under CT3 to get registered with Central Excise if there are no DTA sales? The units anyway obtain an approval for manufacturing and other operations in the warehouse from the jurisdictional Assistant/Deputy Commissioner of Customs/Central Excise, execute a B-17 Bond for warehousing/procurement/clearance of duty free goods (capital goods/raw materials and finished goods).
In these days of liberalisation, may be the Board can waive the requirement of registration for all those EOUs which procure duty free goods from DTA and do not clear goods into DTA and do away with this bureaucratic hassle. (If the goods are cleared in DTA, duty is required to be paid and the registration is required for making payment of duty etc)