Circular No. 07/2005-CUS

Government of India
Ministry of Finance
(Central Board of Excise & Customs)

Subject:  Extension of   Warehousing Period of Capital Goods imported by EOU/EHTP/STP-Regd

I am directed to  draw your attention to  sub-section 1(a) of section 61 of the Customs Act, 1962, wherein it has been provided that capital goods   intended for use in the EOU can be kept in the warehouse for a period of 5 years. Extension of such warehousing period may be given by the Commissioner of Customs under proviso (i) to sub-section 1 (b) of above   section.  It has been brought to the notice of the Board that EOU/ EHTP/STP units have to approach  every now and then for getting extension of warehousing period. This keeps the units always under pressure of keeping  track of warehousing periods. This practice also distract the attention of the units  from export production apart from being a major irritant.

2. The matter has been considered by the Board. The EOUs  import capital goods frequently especially in the software development sector to keep pace with the development of technology. The units are required to be always in its toes  to apply for extension of warehousing period within the time frame provided in the law. There is no denying that this practice does distract the units attention from export production and the units are always  busy in preparation of obtaining timely extension of warehousing to avoid action under law for delay.

3. As you are aware that the EOU/ EHTP/STP units are required to obtain private bonded warehousing licence u/s 58 of the Customs Act.  The said licence is valid for a period of 5 years and the units are required to apply for renewal after every 5 years.  The Board in order to obviate the difficulties of the EOU/EHTP/STP units  has decided to allow extension of warehousing of  all the capital goods installed or put into use, simultaneously at the time of renewal of warehousing licences irrespective of the fact that the capital goods are due for extension or not. The period of extension would be allowed for such a period  so that the capital goods need further extension only on the date of renewal of warehousing license. The period of extension, therefore may be adjusted accordingly for every piece  of capital goods. However the maximum period of extension at a time  would not be allowed for a period for more than five years.

[Illustration: In  case of  an EOU/EHTP/STP unit having obtained  a warehousing license on 1.1.99 would fall due for renewal  after  initial  5 years period  on 1.1.2004. In this case,

(i)  Assume a C.G has been warehoused on 1-1-2002. Hence, its extension of warehousing falls due on 1-1-2007
(ii) The warehousing license under section 58 becomes due for  renewal on 1-1-2004, and the same  would be renewed for further five year period i.e upto 1-1-2009
(iii) Extension of warehousing period for C.G at (i) above . would also  be given on 1-1-2004 along with renewal of warehousing license for a period  upto 1-1-2009.]

4. The notification 52/2003-Cus  and 22/2003-CE both dated 31-3-2003 , governing duty free import and procurement of goods respectively,  by EOU/EHTP/STP provides that in case the capital goods are not utilised or used within a period of one year from the date of import and procurement or within such extended period not exceeding 5 years allowed by the proper officer on being shown satisfactory ground for not utilizing the goods, the unit would be required to pay duty and interest. This provision of the notification would remain unaltered. However, while granting extension of capital goods which has not been utilised, the unit   may be asked to  justify the reason for not utilizing the goods.

5. Nothing  contained in this circular  would apply in case of raw materials imported/ procured by EOU/EHTP/STP units.6. The difficulty , if any faced in implementation of this circular of the Board , the same may be brought to the notice of the Board immediately.

6. Wide publicity of this instruction may please be given by way of public notice

7. Kindly acknowledge receipt of this circular

Hindi version will follow.

Yours faithfully
Ranjit Kumar
Senior Technical Officer( FTT)
Telephone No 011-.23093859

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Category : Custom Duty (7067)
Type : Circulars (7829) Notifications/Circulars (32357)

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