The notification exempts specified goods exported by 100% EOU operating in EHTP and STP

Government of India
Ministry of Finance
(Department of Revenue)

Date: 22-10-1991

Notification No. 138/91-Customs

Exemption to specified goods imported for purpose of development of software for export.

G.S.R. 639(E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table below (hereinafter referred to as the goods), when imported into India or procured from a Public Warehouse or a Private Warehouse appointed or licensed, as the case may be, under section 57 or section 58 of the said Customs Act, or procured from international exhibitions held in India, for the purpose of development of software, data entry and conversion, data processing, data analysis and control data management or call centre services for export out of India (hereinafter referred to as “the said activities”), by a software development units in the Software Technology Park Complex (hereinafter referred to as the Complex) under the Hundred Per cent Export Oriented Scheme approved by the Inter-Ministerial Standing Committee for Hundred Per cent Export Oriented Units in the Electronics Hardware Technology Parks (EHTP) and Software Technology Parks (STP) (hereinafter referred to as the Standing Committee) appointed by the notification of the Government of India in the Ministry of Industry, Department of Industrial Development No. S.0.117(E), dated the 22nd February, 1993 from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty, if any, leviable thereon under section 3 of the second mentioned Act, subject to the following conditions, namely.

(1) the importer has been granted necessary licence for the import of goods for the said purposes;

(2) the importer carries out the said activities under customs bond and subject to such other conditions as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs in this behalf;

(3) the importer exports out of India hundred per cent or such other percentage, as may be fixed by the Standing Committee, of software developed, data entry and conversion done, data processed, data analysed and controlled data management done or call centre services rendered wholly or partly from the goods for the period stipulated by the Standing Committee or such extended period as may be specified by the Standing Committee;

(4) the importer agrees –

(a) to bring the goods into the Complex and use them within the Complex in connection with the said activities for export, using data communication link or in the form of physical export;

(b) not to move the goods from the Complex without the approval of the Assistant Commissioner of Customs or Deputy Commissioner of Customs;

(c) to export out of India allsoftware developed, data entered, conversion done, data processed, data analysed and controlled, data management done or call services rendered; or transfer such developed software, data entered and converted, data processed, data analysed and controlled, data management done or call services rendered to any unit within the same complex with pior approval of Assistant Commissioner, on the recommendations of the Chief Executive of the Software Technology Park Society (hereinafter referred to as the Society), set up by the Government of India in the Department of Electronics for the said complex;

(5) the importer shall produce a certificate to the Assistant Commissioner of Customs or Deputy Commissioner of Customs from the Chief Executive of the Society to the effect that the goods are to be installed or used in the unit set up in the Complex, and that the import of such goods have been authorized by the Standing Committee;

(6) without prejudice to any other provisions contained in this notification, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such conditions and limitations as he may deem fit to impose under the circumstances of the case for the proper safeguard of the revenue interest and also subject to such permission of the Standing Committee where it is exclusively required under the Export and Import Policy, as hereinafter referred to in this condition, allow the said unit to clear any of the said goods for being taken to any other place in India in accordance with the Export and Import Policy 1^st April, 2002- 31^st March, 2007, published by the Government of India in the Ministry of Commerce and Industry, Notification No. 1/2002-07, dated 31^st March, 2002, as amended from time to time (hereinafter in this notification referred to as the said Export & Import Policy), –

(a) such clearance of capital goods, material handling equipments, office equipments and captive power plants may be allowed on payment of an amount equal to the customs duty leviable on such goods on the depreciated value thereof and at the rate in force on the date of payment of such duty;

Provided that in the case of capital goods, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such conditions as he may specify, permit destruction of such capital goods without payment of duty inside the complex, or outside the said complex, where it is not possible or permissible to destroy the same within the said complex, in the presence of custom officer.

(b) such clearance of goods (including containers, suitable for repeated use) other than those specified in clause (a) may be allowed on payment of customs duty on the value at the time of import and at rates in force on the date of payment of such customs duty;

(c) such clearance of used packing materials such as cardboard boxes, polythelene bags of a kind unsuitable for repeated use may be allowed without payment of any customs duty;

Provided that the importer shall not be eligible to avail of the exemption applicable to goods falling under heading number 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), or the exemption available to the imported goods under any Export Promotion scheme other than the Export Promotion Capital Goods scheme permitting import of capital goods at the rate of duty of 10% ad valorem in terms of notifications in force at the time of debonding.

Explanation. – The depreciation in respect of goods covered by clause (a) shall be allowed for the period from the date of commencement of commercial production of the unit or where such goods have been imported after such commencement from the date such goods have come into use for commercial production, upto the date of payment of duty.

(7) the importer executes a bond, in such form and for such sum and with such authority as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself to fulfil the export obligations and conditions stipulated in this notification, and those under the said Export and Import Policy as amended from time to time, and conditions for establishment of Technology Park for software export as specified by the Department of Electronics, and to pay on demand an amount equal to the duty leviable on the goods and interest at the rate of fifteen percent per annum on the said duty from the date of importation or procurement of the said goods till the date of payment of such duty, if –

(i) in the case of capital goods, such goods are not proved to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs to have been installed or otherwise used within the bonded premises or re-exported within a period of one year from the date of importation or procurement thereof or within such extended period not exceeding five years as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow;

(ii) in the case of goods other than capital goods, such goods are not proved to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs to have been used in connection with the production or packaging of goods for export out of India or re-exported or cleared for home consumption within a period of one year from the date of importation or procurement thereof or within such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, on being satisfied that there is sufficient cause for not using them as above; allow;

(iii) in the case of

(a) goods produced or packaged, such goods have not been exported out of India, and –

(b) unused goods (including containers, if any, suitable for repeated use) as have not been exported or cleared for home consumption, within a period of one year from the date of importation or procurement of such goods or within such extended period as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, on being satisfied that there is sufficient cause for not exporting such goods within the said period, allow;

(iv) in the-case of raw materials, components, spares and consumables (other than capital goods) imported or procured duty free, the unit fails to achieve Net Foreign Exchange Earning as a Percentage of Exports (NFEP) and Export Performance (EP) as specified in Appendix-1 of the said Export and Import Policy, within one year of importation or procurement of such goods or within such, extended period, not exceeding one year, as the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, on being satisfied that there is sufficient cause, allow;

Provided that the Commissioner of Customs may extend the period for achievement of Net Foreign Exchange as a Percent age of Exports (NFEP) or Export Performance (EP) for further period not exceeding five years from the date of importation or procurement;

(8) the procedure, as may be prescribed by the Commissioner of Customs, is followed by such unit;

(9) notwithstanding anything contained in this notification, the exemption contained herein shall also apply to goods which on importation into India are used for the development of software, data entry and conversion, data processing, data analysis and control, data management or rendering of call cetre services within the complex and such software, data entry and conversion, data processing, data analysis and data control data management or call centre services even if not exported out of India, are allowed to be sold in India in physical form under and in accordance with the said Import and Export Policy, as amended from time to time, and in such quantity and subject to such other limitations and conditions as may be specified in this behalf by the Standing Committee on payment of duty of excess leviable on such software, data entry and conversion, data processing, data analysis and control or data management under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944).

Provided that such sale of software, data entry and conversion, data processing, data analysis and control  data management or call centre services shall be allowed through data communication link or telecommunication link subject to such conditions as may be specified by the Commissioner of Customs;

(10) the Commissioner of Customs may, subject to the conditions and limitations stipulated in the said Import and Export Policy as amended from time to time, permit the goods imported into India for the purpose aforesaid or, the software developed, data entered and converted, data processed, data analysed and controlled or data management done to be taken temporarily outside the Complex, without payment of duty, for repairs or display, as the case may be, and the importer shall be bound to comply with such conditions and limitations;

(11) the Assistant Commissioner of Customs or Deputy Commissisoner of Customs may, as per procedure specified by him, allow a unit to re-export the goods imported by it;

(12) the telematic infrastructure equipment, if any, imported by the importer may also be utilised for the export by other units engaged in the said activities.

(13) omitted vide 64/2002 dated 24-6-2002.

(14) the Commissioner of Customs may allow the infrastructural equipments, if any imported by the importer to be linked to a research or educational institute (other than an institute engaged in commercial activities) as maybe approved by the said Committee for research, education or any such non-commercial purposes as per procedure specified by him in this regard and necessary permission granted by the Standing Committee;

(15) the Assistant Commissioner of Customs or Deputy Commissioner of Customs may permit use of computer system for training purpose (including commercial training) subject to the condition that the unit had achieved prescribed Net foreign exchange earnings as percentage of exports and that no computer terminal shall be installed outside the bonded premises for the purpose.

“(17) The Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow the supply or transfer of capital goods imported by a unit to another hundred per cent export oriented undertaking or to a unit in Export Processing Zone or Special Economic Zone or Electronic Hardware Technology Parks or Software Technology Park for use within the unit as per the procedure specified by him in this behalf and subject to the permission of the Chief Executive of the Software Technology Park.

2. Notwithstanding anything contained in paragraph 1 of this notification, the exemption contained therein shall also apply to goods imported by the Society for creating the Central facility and software development, data entry and conversion, data processing, data analysis and control data management or call centre services rendering units in the complex, subject to satisfaction of conditions under paragraph 1 of this notification.

3. Notwithstanding anything contained in paragraph 1, in the case of unit engaged in the said activities, the exemption contained therein shall also apply to goods imported by such unit for any or all of the said purposes for export and for providing consultancy services for any or all the such activities “on site” abroad.

Provided that –

(a) the conditions stipulated in this notification are complied with by the said unit; and

(b) the procedure specified by the Commissioner of Customs is followed.

4. Without prejudice to other provisions of this notification, where the Assistant Commissioner or Deputy Commissioner of Customs is satisfied that the unit, which has been permitted by the concerned State Electricity Board in this behalf, has been permitted by Development Commissioner to sell into Domestic Tariff Area (DTA) or transfer to other hundred per cent. export oriented undertaking or units in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone, the surplus power generated in its diesel generating sets or captive power plant subject to fulfilment of such conditions as may be specified by the Assistant Commissioner or Deputy Commissioner of Customs on this behalf, the Assistant Commissioner or Deputy Commissioner of Customs may allow the unit-

(i) to sell such surplus power in Domestic Tariff Area on payment of an amount equal to the duty leviable on consumables and raw materials but for the exemption of duty thereon, used for generation of each unit of power so sold in the Domestic Tariff Area on the basis of norms approved by the Board of Approvals appointed by the notification of the Government of India in the Ministry of Commerce and Industry, Department of Commerce, number 14/1/2001-EPZ dated 7^th August, 2001;

(ii) to transfer such surplus power to other hundred per cent. export oriented undertaking or unit in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone without payment of duty:

Provided that both supplying and receiving unit shall maintain account for the quantity of consumables and raw materials used in generation of each unit of power so transferred as quantified on the basis of norms approved by the said Board of Approval, for the purpose of calculation of Net Foreign Exchange earning as a Percentage of Export.

Explanation. – With effect from 13th August, 1993, the consultancy fees received by software development units in convertible foreign currencies for consultancy services for development of software “on site” abroad shall be deemed to be exports for the purposes of fulfilment of export obligation under this notification.

Explanation. – For the purposes of this notification “society” means Software Technology Park Society established by the Government of India, Department of Electronics, and registered under the Societies Registration Act, 1860 (21 of 1860).

The Table

Notification No. 138/91-Cus., dated 22-10-1991 as amended by Notifications No. 154/93-Cus., dated 13-8-1993; No. 161/93-Cus., dated 16-8-1993; No. 110/94-Cus., dated 15-4-1994; No. 192/94-Cus., dated 6-12-1994; No. 83/95-Cus., dated 31-3-1995; No. 101/95-Cus., dated 26-5-1995; No. 117/95-Cus., dated 12-6-1995; No. 171/95-Cus., dated 26-12-1995; No.  9/96-Cus., dated 19-11-1996;No. 33/97-Cus., dated 1-4-1997; No. 12/98-Cus., dated 27-4-1998; No. 65/99-Cus., dated 19-5-1999 No. 9/2000-Cus., dated 28-1-2000 ,No. 71/2000-Cus., dated 22-5-2000., No.64/2002-Cus dated 24-6-2002.and No.65/2002-cus dated25-6-2002.