GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
3-6-1994
Notification No. 126/94-Customs
100% E.O.Us – goods used in manufacture of export goods imported
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 Annexure-I to this notification (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 production or manufacture of articles specified in Annexure-II for export out of India or for being used in connection with the production, manufacture or packaging of the said articles specified in Annexure-II for export out of India (hereinafter referred to as the specified purpose) by hundred per cent Export Oriented Undertakings approved by the Board of Approval for hundred per cent Export Oriented Undertakings, appointed by the notification of Government of India in the former Ministry of Industry and Civil Supplies, (Department of Industrial Development) No. S.0.163(E)/RLIU/10(2)76, dated the 3rd March, 1976 or the Development Commissioner concerned as the case may be, from the whole of the 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 the necessary licence for the import of the said goods;
(2) the importer, at the time of import of the said goods, produces to the Assistant Commissioner of Customs or Deputy Commissioner of Customs a certificate from the Development Commissioner to the effect that the importer has executed a bond in such form and for such sum as may be prescribed binding himself-
(a) to bring the said goods into his unit and to use them for the specified purpose; and
(b) to dispose of the said goods or the articles produced, manufactured or packaged in the unit or the waste, scrap or remanents arising out of such production, manufacture or packaging in the manner as may, if any, be prescribed in the Export-Import Policy and in this notification;
(3) The importer at the time of import or procurement of said goods executes a bond in such form and for such sum as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself :-
(a) to produce a certificate from the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, having jurisdiction over his unit, certifying receipt of the said goods in the unit as having been entered in the records prescribed for this purpose.
(b) to fulfil the Export obligation and comply with the conditions stipulated in this notification and Export and Import Policy, 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 duty free 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 unit 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 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 within the said period allow;
(iii) in the case of –
(a) goods as produced or packaged such goods have not been exported out of India, and
(b) unused goods (including containers suitable for repeated use) as have not been exported, 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 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 Percentage of Exports (NFEP) or Export Performance (EP) for further period not exceeding five years from the date of importation or procurement;
(4) the importer uses the goods for the production, manufacture or packaging of articles and exports out of India hundred per cent or such other percentage, as may be fixed by the said Board of Approvals for a period of 5 years or such extended period as may be specified by the said Board;
(5) the importer shall maintain a proper account of import, consumption and utilization of the said goods and of exports made by him, and shall submit such account periodically to the Development Commissioner in such form and in such manner as may be laid down by the said Development Commissioner;
(6) the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such conditions and limitations as maybe imposed by him and subject to the provisions of the Export-Import Policy-
(a) allow a unit to re-export the said goods;
(b) permit the said goods or goods produced, manufactured or packaged in the unit to be taken out temporarily without payment of duty for repairs, processing, testing or display and to be returned to the unit thereafter; and
(c) permit the capital goods or goods produced, manufactured or packaged to be supplied/ transferred without payment of duty from the unit to another hundred per cent Export Oriented Undertaking or to a unit in an Export Processing Zone or Special Economic Zone for use in the unit.
(d) permit destruction of the capital goods without payment of duty within the unit, or outside the said unit, where it is not possible or permissible to destroy the same within the said unit, in the presence of custom officer.
(e) permit destruction of rejects and waste without payment of duty within the unit, or outside the said unit, where it is not possible or permissible to destroy the same within the said unit, in the presence of Customs or Central Excise Officer.
2. 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 Development Commissioner or Board of Approvals where it is exclusively required under the Export and Import Policy, allow the said units to clear any of the said goods for being taken to any other place in India in accordance with the Export-Import Policy-
(a) such clearance of capital goods and office equipments 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;
(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 15% 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.
3. Notwithstanding anything contained in this notification, the exemption contained herein shall also apply to –
(a) the said goods which on importation into India are used for the purposes of production, manufacture or packaging of articles and such articles (including rejects, waste and scrap material arising in the course of production, manufacture or packaging of such articles) even if not exported out of India are allowed to be sold in India under and in accordance with the Export-Import Policy and in such quantity and subject to such other limitations and conditions as may be specified in this behalf by the Development Commissioner, on payment of duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or where such articles (including rejects, waste and scrap material) are not excisable, customs duty equal in amount to that leviable on inputs obtained under this notification and used for the purpose of production, manufacture or packaging of such articles, which would have been paid, but for the exemption under this notification, shall be payable at the time of clearance of such articles.
(b) the indigenously procured fruits and vegetables cleared into Domestic Tariff Area without payment of duty by the importer under intimation to the Assistant Commissioner of Customs or Deputy Commissioner of Customs.
4. Notwithstanding anything contained in this notification, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, may permit the seeds specified in Item number 2 and the goods specified against Item number 6 and Item numbers 16 to 22 of Annexure-I, to be taken out to the fields /farms of contract farmers of the unit for production or in connection therewith; and to bring back the produce to the unit for exports, in accordance with provisions of Export and Import Policy and Handbook of Procedures, Volume-I and subject to the following conditions, namely:-
(a) the unit shall produce an agreement between the unit and contract farmer(s) to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be;
(b) the fields/ farms of the contract farmers shall be located within the jurisdiction of the same Commissioner of Customs or Commissioner of Central Excise, as the case may be, as that of the unit;
(c) in case of units, which has been in existence for at least two years and engaged in export of agriculture or horticulture products, supply of inputs and other equipment to the fields/ farms of the contract farmers shall be allowed to the unit on furnishing a bank guarantee equal to the 50 per cent. of the duty forgone on the goods so transferred to the fields/farms of the contract farmers;
(d) in case of units other than those specified in clause (c), the unit shall be required to furnish a bank guarantee equal to the total duty forgone on the goods so transferred to the fields/ farms of contract farmers;
(e) prior to import of the goods, the unit shall apply to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, giving the details, such as, number of contact farmers and location of their farms, measurement of the farms or fields under contact farming, input-output norms of production as fixed by Directorate General of Foreign Trade and their projected requirements and after examination of the such projected requirement, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, would give permission for the import or procurement of the same on annual basis;
(f) the unit shall be required to have a premise(s) duly bonded under section 58 of the said Customs Act for storage, of imported or domestically procured inputs and capital goods and, of final products manufactured or produced therefrom;
(g) in case of failure of the unit to bring back the agriculture or horticulture produce so produced in the fields/ farms of contract farmers to the unit, as per the norms notified by the Directorate General of Foreign Trade, within the same season or such extended period as may be permitted by the Commissioner of Customs or Central Excise, as the case may be, due to any reason including natural calamity or loss of crop, the unit shall be required to pay the duty equal to the duty forgone on the inputs so taken out to the fields/ farms of the contract farmers;
(h) in respect of goods specified at Item numbers 16 to 22 of Annexure-I and transferred to the fields/ farms of the contract farmers, at any point of time as may be decided by the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, the unit shall be required to account for the goods so transferred to the farms/ fields of the contact farmers;
(i) in case of non-accountal of goods so transferred or use of the goods in farms or fields other than those declared to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, the unit shall pay duty forgone on such un-accounted goods along with the interest at the rate of twenty per cent. per annum within 10 days of receipt of demand notice, and in case of failure to pay the same, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, may en-cash the bank guarantee and disallow the duty free imports/ procurement under the notification.
Explanation.- For the purposes of this notification,
(i) “Export-Import Policy” means the Export and Import Policy 1st April, 2002-31st March, 2007 published by the Government of India in the Ministry of Commerce and Industry vide Notification No. 1/2002-07, dated 31st March, 2002, as amended from time to time.
(ii) “Handbook of Procedures Volume I” means the Handbook of Procedures Volume I, 2002-2007 published by the Government of India in the Ministry of Commerce and Industry vide Public Notice No. 1/2002-07, dated the 31st March, 2002
ANNEXURE-I
1. Green house equipment, accessories, heated rooting tables, propagation trays, seeding machines.
2. Plants or parts thereof, seeds, saplings, tubers, bulbs. Rhizomes, roots, cuttings, all types of grafts, tissue culture material, and other vegetatively propagated material utilised for sowing or planting.
3. Live animals such as pure live stocks (other than grand parent stock and parent stock), used for breeding or rearing purposes, other than horses.
4. Growing media such as Peat Moss (including peat litres) (whether or not agglomerated), Pearlite/ Vermiculate, Rockwool, Cocoa peat, Hydrocom, Foam based medium and other cultivation medium.
5. Office equipments, spares and consumables thereof.
6. Fertilizers and chemicals for pre and post harvest treatments such as micro nutrients, plant and growth regulators and other organic and inorganic substances used for plant nutrition, insecticides, fungicides, weedicides, herbicides, and the like.
7. Animal feed such as cattle feed and poultry feed.
8. Veterinary medicines including vaccines.
9. Packaging materials including machinery and equipment for packaging.
10. Cooling equipment for cold room, storage room, pre-cooling chambers and its accessories.
11. Sorting equipment. Grading equipment. Packing equipment and tem perature control or humidity control equipment.
12. Power generating sets.
13. Refrigeration and airconditioning equipment for fitment on transport vehicles.
14. Spare parts for the maintenance of goods mentioned at Item No. 10 to 13 above.
15. High Speed Diesel for power generating sets as recommended by the Board of Approvals.
16. Filters
17. Dripliers, Driplines and Drip-fittings
18. Micro Sprinklers and Misters
19. Agriculture Sprinklers
20. Fertilizer Tanks
21. Valves
22. Fertilizer Pumps and Chemical Injections
ANNEXURE-II
1. Live animals falling under Chapter 1.
2. Bird”s eggs (fresh) in shells of Heading 04.07.
3. Live trees and other plants; bulbs, roots and the like, cut flowers and ornamental foliage of Chapter 6.
4. Fresh vegetables of Headings 7.01 to 7.09; whole uncut sun dried vegetables of Headings 7.12 and 7.13; Fresh and uncut/sun dried roots and tubers of Heading 7.14.
5. Fresh and uncut/sun dried edible fruits and nuts of headings 8.01 to 8.10.
6. Fresh or sun dried plants and parts of plants of heading 12.11.
7. Silk worm cocoons of heading 50.01 and raw silk of heading 50.02.
Note – The Chapters and Headings referred to in the Annexure are those of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
Notification No. 126/94-Cus., dated 3-6-1994 as amended by Notifications 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. 67/96-Cus., dated 3-9-1996; No. 33/97-Cus., dated 1-4-1997; No. 12/98-Cus., dated 27-4-1998; No. 38/98-Cus., dated 26-6-1998; 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.56/2001-cus. dt. 18-05-01 and No.64/2002-cus dated 24-6-2002.
