Circular No. 6/2004-Cus
27th January, 2004

F.No.305/134/2002-FTT
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise and Customs)

Sub:-  Duty Free Import/ procurement by Trading Units – Amendments in the Notifications relating to EOU/ETHP/STP schemes –  Reg.

            I am directed to invite your attention to the  Export and Import Policy and Handbook of Procedures, 2002-07 announced by the Ministry of Commerce and Industry on 31-3-2002. The new five-year Export and Import Policy and the Handbook of Procedures (HOP) replaced the old Export and Import Policy and Handbook of Procedures, 1997-2002 and came into force w.e.f 1-4-2002. Under the old EXIM Policy(1997-2002), there was a provision for setting up of  trading units under EOU/EPZ schemes. The provision for setting up of trading units under EOU/EPZ schemes has been deleted in the new EXIM Policy, 2002-07.  Para 6.1 of the new Policy specifically provides that no trading unit shall be permitted to be set up under the EOU/EPZ scheme. Accordingly ,  notifications governing duty  free import/ procurement by EOU were amended on 24-6-2002 so as to withdraw the facility of duty free import/ procurement by trading units under  EOU Scheme

2.   However, requests  were received  to allow the trading units which were in existence prior to 31-3-2002 to continue  trading under the EOU Scheme till expiry of their LOP( Letter of Permission).

3.   The matter  has been  examined in the Board and it has been decided to allow the trading units which were in existence prior to 31-3-2002 and have valid LOP as on date to continue under EOU Scheme till the expiry of their LOP. Accordingly ,   notification Nos 52/2003-Cus and 22/2003-CE both dated 31-3-2003 governing duty free import and procurement by EOU/EHTP/STP respectively, have been amended vide notification Nos 1/2004-Cus and 1/2004-CE both dated 2-1-2004.

4.   Since , under the Present Policy, trading units are not allowed to be set up under EOU Scheme, it is needless to mention here that the trading units which were in existence prior to 31-3-2002 should not be given any further extension of LOP and would not be allowed to operate under EOU Scheme once  validity of the LOP has  expired. Therefore, before allowing CT-3/ procurement certificate to the trading units for procurement or import of goods under the amended notifications , it may  be verified  if the unit was in existence prior to 31-3-2002 and  has a valid LOP even now to operate under EOU Scheme as on 2-1-2004 i,e the date of issuance of the notification 1/2004-Cus and 1/2004-CE. The benefit of exemption to the trading units has been allowed for a limited period only and  would not be available in any case where extension of LOP has been granted anytime  after 31-3-2002. The extent of concession would be limited to the concessions available  as per Exim Policy at the time of issue of LOP

5.   It may please be noted that the amending notifications do not have any retrospective effect. In other words these notifications  will not regularise  duty free import/ domestic procurement of goods effected by trading units  between 24-6-2002 and 1-1-2004

6.   No such amendment is necessary for  units in EPZ since all existing EPZs have been converted into SEZ and EPZ Scheme has been discontinued w.e.f 1-4-2003. Trading activity is already allowed under the SEZ Scheme.

7. Wide publicity may be given to the above  by issue of a Public Notice in this regard.

8. Kindly acknowledge receipt of this Circular.

9. Hindi version will follow

A.K.Sinha
Technical Officer (FTT)
Telephone No:- 23093859

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