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Circular No. 85/95-Cus.
dated 26/7/95
F.No. 305/22/95 – FTT
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject:  Duty leviable on DTA Clearances of goods manufactured by EOU / EPZ / STP / EHTP etc. units.

I am directed to refer to Notification No. 100/95-CE dated 2.6.95 which amended Notification No. 2/95-CE dt. 4.1.95. prescribing the effective rates of duties applicable to goods manufactured by 100% EOUs / EPZ / EHTP / STP / units when cleared into the Domestic Tariff Area.

2. The first effect of the present amendment is to delete the proviso in Notification No. 2/95-CE which had been introduced in terms of Notification No. 76/95-CE. dt. 1.4.95. Accordingly, with effect from 2.6.95 such goods cleared into the DTA will be eligible for the concessional rates of duty, whether or not the goods appear in the Negative List of imports in the EXIM Policy.

3. The amended notification further provides that the concessional duty would be available only to such goods which are identical with the goods exported or expected to be exported from a unit during a specified period. For the removal of doubts, it is clarified that the intention behind this provision is to see that only goods which are similar or which belong to the same class as the goods of export are extended this concessional rate. For example, if the export product is B & W TV or B & W picture tube, then DTA clearance at concessional rate is to be allowed for all types of B & W TVs or picture tubes, as the case may be, without going into matching of details like screen sizes and exact specifications. Against the exports of Two -in- ones or Music Systems, respectively, of similar features will be allowed, irrespective of differences in details like number of bands, wattage of speakers etc. But against the export of Two-in-ones, clearances of Music Systems cannot be allowed and vice versa. similarly if 386 computer is exported, 286 or 486 computer can be allowed clearance. These are only a few illustrations which may be kept in mind in deciding cases of doubt, if any. The idea is to maintain broadly a 1:1 correlation between the export item and the DTA-clearance item, without going into minute details. It has also been provided in the amendment that this condition of 1:1 correlation does not apply to goods in the nature of software, rejects, scrap, waste or remnants.

4. The amended notification now also prescribes the percentage limits of the value of production eligible for the concessional rate. For example, software can be cleared at concessional rate only upto 25% of the total value of production and any clearance in excess of this limit will attract full duty chargeable.

5. Another facet of the notification is that the eligibility of the goods on fulfilling the conditions specified in clauses (i), (ii) or (iii) as the case may be, of the third proviso in the notification, as now amended is to be certified by the Development Commissioner or the Designated officer in charge of the Unit. Such certificates, which also certify that the clearances are in accordance with the EXIM Policy provision, shall be produced at the time of clearance of the goods into the DTA where concessional duty is sought in terms of this notification.

6. It is desired by the Board that the Commissioners of Customs/Central Excise concerned may issue suitable Standing Order and Public/ Trade notices explaining the implications of the new provisions contained in the present amendment and the procedural requirements, for the benefit of the Departmental officers and the Trade. Development Commissioners and Designated officers in charge of the Units may also be suitable address, explaining the requirement of certification.

7. These instructions are issued in supercession of instruction issued vide Circular No. 39/95 dt. 18.4.95.

(A.K. Raghunathan)
Senior Technical Officer (FTT)

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April 2024