Subject : Scheme of exemption for 100% EOU/ EPZ units- Levy of duty on DTA clearance – clarification regarding.
A case has been brought to the notice of the Board wherein a unit in an EPZ had imported more or less full assembled articles and after some minor processing had exported some of the articles but had also cleared a substantial quantity into the DTA in accordance with the EXIM Policy. A question had been raised whether the benefit of 50% duty concession available in terms of Notification No. 2/95-Central Excise dated 4.1.1995 (or its previous versions such as Notification No. 101/93-central excise) would apply to such clearances of the article into the DTA.
2. In this context, I am directed to invite your attention to para-3 of Notification No. 134/94-Cus. dated 22.6.1994 which provides for exemption to the goods imported by a unit in the EPZ / FTZ even if the goods manufactured or produced are not exported by the said unit but are cleared in the DTA in accordance with the EXIM Policy and no payment of applicable duties. It has been provided that where the articles manufactured are excisable, such articles are allowed to be cleared in the DTA on payment of excise duty leviable under section 3 of the Central Excises & Salt Act, 1944. The effective rate of duty on such goods has been prescribed in terms of Notification No. 2/95-Central Excise dated 4.1.1995 where, inter alia, the duty concession of 50% on the customs duty is available. Where, however, the articles produced manufactured, packaged or processed in the unit are not excisable i.e. the nature of activity in the EPZ with relation to such goods does not result in the emergence of any excisable goods in terms if the Central Excises & Salt Act, 1944 or the Chapter Notes, Section notes or Chapter Heading/ Sub-Heading of the Central Excise Tariff Act, 1985, the said para-3 or Notification No. 134/94-Customs provides for clearance of such articles only on payment of customs duty on the goods imported by the unit (whether capital goods, raw-materials, components, etc.) in an amount equal to the customs duty leviable on the articles produced, manufactured, processed, etc. as if such articles has been imported as such. In other words, in respect of articles produced, manufactured, packaged or processed in the unit which are not excisable, normal customs duty would be leviable on the article on a deemed basis as provided in the Notification by way of a condition of exemption. In such cases since the goods are not excisable, there is no question of having recourse to a Central Excise Exemption Notification (Notification No. 2/95-Central Excise or any other Central Excise Notification).
3. The aforesaid interpretation would equally apply to other 100% EOU Schemes such as EHTP Scheme, STP Scheme of Exemption for Aquaculture, Horticulture, Sericulture, Viticulture, etc. whether the operation of such units are carried out in customs bond or not and where the aforesaid clause or condition has been included in the relevant notification.
4. All the Collectors of Customs/Central Excise may take note of the aforesaid position and immediately review the practice of assessment of goods cleared in the DTA from 100% EOUs/ EHTP/ STP/ ETZ units to ensure that the goods have been assessed correctly as per the law.