Supply of tags, labels, buttons etc. from EOU to DTA - Conditions, procedures Notified
AS per para 6.09(g) of the Foreign Trade Policy, 2015-20, the following supplies effected from EOU / EHTP / STP / BTP units will be counted for fulfilment of positive NFE.
(g) Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA unit for export.
CBEC has notified the conditions, safeguards and procedures for supply of items like tags, labels, printed bags, stickers, belts, buttons and hangers produced or manufactured in an Export Oriented Undertaking ("EOU") and cleared without payment of duty to a Domestic Tariff Area ("DTA") unit in terms of Para 6.09 (g) of Foreign Trade Policy, 2015-20, for the purpose of their exportation out of India.
1. The EOU is required to execute a bond and furnish a guarantee or security of 5% duty.
2. EOU can clear the goods to DTA without payment of duty.
3. DTA unit should export the goods within six months or within such extended period as the Deputy or Assistant Commissioner may allow.
4. Where the specified goods are not received by the DTA Unit or are not exported by the DTA exporter within the specified period or the extended period as permitted by the Assistant or Deputy Commissioner in charge of EOU, the EOU shall be liable to pay the duty leviable on such specified goods alongwith interest and penalty.
5. The specified goods shall be deemed not to have been used for the specified purpose even if any of the quantity of the subject goods is lost or destroyed by natural causes or by unavoidable accidents or for any other reasons during transport from the place of procurement to the DTA exporter and no wastage of the specified goods shall be allowed and duty on such goods lost or destroyed shall be payable by the EOU, alongwith interest and penalty.
The FTP 2015-20 came into force from 1.4.2015 and the Board is issuing this notification on 24.09.2015. Was there no procedure or condition for the last six months?
There is an existing notification No. 31/2007-CENT dated 02 08 2007 for the 2004-09 Policy. What happens to that notification? Perhaps that has lost its fizz long back!
Now, even if a single button is lost, the DTA unit is finished. If the buttons received from the EOU are defective, there seems to be no option for the DTA except suffer duty. Why can't it be sent back?
Incidentally, the notification 31/2007-CE(NT) provides a remedy thus -
Provided that if the specified goods on receipt are found to be defective or damaged or unsuitable or surplus to the needs of the DTA exporter, he may return these goods to the EOU unit from whom he had obtained these goods and all such goods returned shall be added to the non-duty paid stock of the EOU unit and dealt with accordingly. At the time of return of such goods, the procedure prescribed herein for removal of said goods from the EOU unit to the DTA exporter shall mutatis mutandis apply.
Perhaps, the Board wants the EOU to manufacture these goods bereft of any defect!
What is DTA?
What is a DTA? The notification defines it:
"Domestic Tariff Area" means India except Special Economic Zone and hundred per cent. export oriented undertakings.
Please note the ‘Special Economic Zone' is in singular and the export oriented undertakings' is in plural. They should have written it as 'Special Economic Zones' , but these days, nobody is fussy about such language. And what was the need to define Domestic Tariff Area?
Anyway this is not a new invention. It was like this even in the old notification. But Notification No. 23/2003-CE dated 31.03.2003 has it like this:
"Domestic Tariff Area" means India except special economic zones and export oriented undertaking, Software Technology Park units and Electronic Hardware Technology Park units.
Here the zone is plural while the EOU is singular. They must have thought that the singular and plural are interchangeable as per their fancy.
Notification No. , Dated: September 24, 2015