Exemption to specified goods imported for production of goods for export or for use in 100% Export-Oriented Undertakings.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

Notification No. 53/97-Customs

Dated: 3-6-1997

G.S.R. 302(E).- 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 the Table below (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 purposes of manufacture of articles for export out of India or for being used in connection with the production or packaging or job work for export of goods or services out of India or for goods for export out of India as referred to in paragraph 9.21 of the Export & Import Policy, 1997 -2002 notification by the Government of India under the Ministry of Commerce notification No. 1/97, dated the 31st March, 1997, as amended from time to time (hereafter referred to as the said Export Oriented units approved by the Board of Approvals for hundred per cent Export Oriented Units, appointed by the notification of Government of India in the Ministry of Industry, Department of Industrial Policy and Promotion or the Development Commissioner concerned as the case may be, for this purpose, (hereinafter referred to as the said Board), from the whole of 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 said Customs Tariff Act subject to the following conditions, namely :-

(1) The imports, clearance, export, transfer and usage of the goods and goods manufactured there from and the net foreign exchange earning as a percentage of export shall be subject to the conditions of the “Export and Import Policy”

(2) The importer has been granted necessary license for the import of the goods for the said purpose.

(3) The importer carries out the manufacture, production, packaging or job work or service in Customs bond and subject to such other conditions as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs in this behalf.

(4) Importer exports out of India 100% or such other percentage, as may be fixed by the said Board, of articles manufactured wholly or partly from the goods during the period stipulated by the said Board or such extended period as may be specified by the said Board.

(5) 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 the Board where it is exclusively required under the said Export-Import Policy, allow any of the said unit to clear any of the said goods for being taken to any other place in India in accordance with the Export and Import Policy.

(a) such clearance of capital goods, material handling equipment, office equipment and captive power plants may be allowed on payment of an amount equal to the customs duty leviable on such goods on depreciated value thereof and the rate in force on the date of payment of such duty;

(b) such clearance of goods (including container, 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, polyethylene 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 No. 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), or the exemption available to imported goods under the Export Promotion Scheme other than the Export Promotion Capital Goods Scheme permitting import of capital goods at the rate of duty of 5% ad valorem in terms of notification in force at the time of depending.

 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, up to the date of payment of duty.

(6) The importer executes a bond in such form and for such sum and with such security or surety as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs, binding himself to fulfill the export obligations and conditions stipulated in this notification and in or under 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 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 Custom or Deputy Commissioner of Customs to have been found installed or otherwise used within the bonded premises or exceeding within a period of one year from the date of importation or procurement there of or within such extended period not exceeding five years as the Assistant Commissioner of Customs 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 cleared for home consumption 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 within the said period, allow

(iii) in the case of,-

(a) goods produced or packaged, such goods have not being ex-ported out of India and

(b) unused goods (including empty cones, bobbins or containers, if any, suitable for repeated use) as have not been exported or cleared for home consumption, 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) 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 procurement.

(7) Notwithstanding anything contained in this notification the exemption herewith shall also apply to goods which on importation into India are used for the purpose of manufacture of articles within hundred per cent Export Oriented Unit and such articles (including rejects, waste and scrap material arising in the course of manufacture of such articles) even if not exported out of India, are allowed to be sold in India, in accordance with the Export and Import Policy, on payment of duty of excise leviable thereon under section 3 of the Central Excise 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 the inputs obtained under this notification and used for the purpose of manufacture 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, or where such articles are cleared to the warehouses appointed or registered under the notification of the Government of India in the Ministry of Finance, Department of Revenue number 26/98-Central Excise (NT), dated the 15th July, 1998 or cleared to warehouse authorized to carry on manufacturing process or other operations under section 65 of the Customs Act, 1962 (52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulations, 1966 or cleared to the licene holders referred to in clause (e) of paragraph 6.9 of the Export and Import Policy, without payment of duty.

(8) The Assistant Commissioner of Customs or Deputy Commissioner of Customs may permit –

(i) the goods imported into India or goods partially processed or manufactured or packaged there from to be taken outside the hundred per cent Export Oriented Unit concerned temporarily without payment of duty for the purposes of test, repairs, refining, processing, display, job work or any other operation necessary for manufacture of final product and return to the same unit or to be removed without payment of duty under bond for export from the job worker”s premises subject to such conditions and limitations as may be specified by him in this behalf:

Provided that the scrap, waste remnants generated during such processes at the job worker”s premises is either returned to the unit or is cleared on payment of duty as if the said scrap, waste or remnants have been cleared by the same unit;

(ii) to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns and drawings to the premises of sub-contractors subject to the condition that these goods shall be brought back to the bonded premises of Export Oriented Units on completion of the job work, within a stipulated period.

(iii) after the approval of the Board of Approval, the said goods, or goods partially processed or manufactured, or packaged there from in the unit to be taken out of India for the purpose of processing if such processing is not available in India, without payment of duty and to be returned to the said unit thereafter, subject to such conditions or limitations as may be specified by him in this behalf.

(9) Omitted vide No. 64/2002-cus dated 24-6-2002.

(10) The Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such condition as he may deem fit to impose under the circumstances of the case for the proper safeguard of the revenue interest, permit a unit to re-export the goods.

(11) Where the whole of the process of manufacture by a unit is not possible to be undertaken in bond, the Commissioner of Customs may, subject to such conditions as may be imposed by him, allow such unit to undertake such of the processes, as necessary, in customs bond.

(12) The Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such conditions as he may prescribe, permit destruction of reject, waste and scrap material without the payment of duty, within the hundred per cent Export Oriented Unit or outside the said unit where it is not possible or permissible to destroy the same within the said unit.

(12A) The Assistant Commissioner of Customs or Deputy Commissioner of Customs may, subject to such conditions as he may specify, permit destruction of capital goods without payment of duty inside the unit, or outside the said unit, where it is not possible or said unit, in the presence of custom officer.

(13) Notwithstanding anything contained in this notification, the exemption contained herein shall also apply to spares and consumables, other than those specified in the Table below, to the extent of 1.5% of the ex-factory value of articles manufactured for export out of India by the undertaking during the preceding year or such percentage in excess thereof as the Central Government may in each individual case allow having regard to the recommendation made in this behalf by the said Board of Approvals for hundred per cent Export Oriented Unit for the purpose of supply of such spares and consumables with the export articles for after-sale-service subject to the condition that such supply is specifically stipulated in the relevant export contract and the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that the value of such spares and consumable has been included for arriving at the value addition as required under Export and Import Policy.

(14) The Assistant Commissioner or Deputy Commissioner of Customs, may, allow supply or transfer of capital goods imported or procured by a hundred percent Export Oriented Unit or articles manufactured by such unit to another hundred percent Export Oriented Unit or to a unit in the Free Trade Zone or Export Processing Zone or Special Economic Zone for the purpose of use in the said unit or for further manufacture and export, subject to such conditions and limitations as may be prescribed by him in this behalf.

2. Nothing contained in this notification shall apply to the goods imported by an aquaculture unit or by a service sector export oriented undertaking, which does not export services out of India.

3. Notwithstanding anything contained in paragraph 1, in the case of units engaged in the development of computer software, data entry and conversion, data processing, data analysis and control or data management, the exemption contained therein shall also apply to goods imported by such unit for any or all of the said purposes, for export and for providing consultancy services for development of software “on site” abroad:

Provided that –

(a) the conditions stipulated in this notification are complied with by said unit; and

(b) the procedure specified by the Commissioner of Customs is followed.

Explanation. – Consultancy fees received by a unit in convertible foreign currencies for consultancy services for any or all of the said purposes “on site” abroad shall be deemed to be exports for the purposes of fulfillment of export obligation under this notification.

3A. The Assistant Commissioner of Customs or Deputy Commissioner of Customs may permit to use computer system for training purpose (including commercial training) subject to the condition that no computer terminal shall be installed outside the bonded premises for the purpose.

3B. Without prejudice to other provisions of this notification, where the Assistant Commissioner or Deputy Commissioner of Customs is satisfied that the unit, which has been permitted by the concerned State Electricity Board in this behalf, has been permitted by Development Commissioner to sell into Domestic Tariff Area (DTA) or transfer to other hundred per cent. export oriented undertaking or units in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone, the surplus power generated in its diesel generating sets or captive power plant subject to fulfilment of such conditions as may be specified by the Assistant Commissioner or Deputy Commissioner of Customs on this behalf, the Assistant Commissioner or Deputy Commissioner of Customs may allow the unit-

(i) to sell such surplus power in Domestic Tariff Area on payment of an amount equal to the duty leviable on consumables and raw materials but for the exemption of duty thereon, used for generation of each unit of power so sold in the Domestic Tariff Area on the basis of norms approved by the said Board;

(ii) to transfer such surplus power to other hundred per cent. export oriented undertaking or unit in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone without payment of duty:

Provided that both supplying and receiving unit shall maintain account for the quantity of consumables and raw materials used in generation of each unit of power so transferred as quantified on the basis of norms approved by the said Board, for the purpose of calculation of Net Foreign Exchange earning as a Percentage of Export.”

4. (i) The Notification No. 13/81-Cus., dated the 9th February, 1981 of the Government of India in the Ministry of Finance is hereby rescinded. (ii) Notwithstanding such rescission, anything done or action taken under notification so rescinded shall be deemed to have been done or taken under the corresponding, provisions of this notification.

Explanation.- For the purpose of this notification,

(a) “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;

(b) “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/ 2002-2007 dated the 31st March, 2002.

Table

Serial No

Description of goods

(1)

(2)

1.

Capital goods.

2.

Raw materials.

3.

Components.

4.

Material handling equipments, namely, forklifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers.

4A

4A. Uninterrupted power supply system (UPS), pollution control equipment, quality assurance equipment, storage systems, special racks for storage, modular furniture, computer furniture, anti-static carpet, tale-conference equipment, servo control system, security systems, air conditioning system and panels for electricals.

4B

4B. Spares and consumables for the items specified at serial number 4A above.

5.

Spares and accessories for capital goods be substituted; (iii) in Serial No. 10, for the words “Office equipment”, the words and letters and material handling equipments namely; forklifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers.

6.

Consumables required for manufacture of goods and rendering services.

7.

A prototype or a technical sample for each of the existing products for the purpose of product diversification, development or evaluation

8.

Drawing, blue prints, technical maps and charts, relating to the manufacturing activity.

9.

Packaging materials.

10.

Office equipment, including PABX, fax machines, video projection systems, as recommended by the Development Commissioner computers, laptop, server, spares and consumables thereof

11.

Captive power plants including captive generating sets of a capacity exceeding 1000 KVA as recommended by the said Board of Approvals.

11A.

Omitted

11B.

Spares, fuels, lubricants, consumables and accessories for captive power plant and captive generating sets and spares, consumables and accessories for transformers as approved by the Assistant Commissioner of Customs or Deputy Commissioner of Customs.

12.

Furnace oil required for the boilers as approved by Assistant Commissioner or Deputy Commissioner of Customs on the recommendations of the Development Commissioner.

13.

Tools, Jigs/ Gauges, Fixtures, Moulds, Dies, Instruments and Accessories.

14.

Goods, re-imported within three years of the date of exportation for repair or re-conditioning.

15.

Goods re-imported within one year from the date of exportation from the unit due to failure of the foreign buyer to take delivery.

16.

Raw materials for making capital goods for use within the unit for the purpose of production or manufacture of export goods.

17.

Any other item required in relation to production of export goods with the prior approval of the Board of approval.

Notification No. 53/97-Cus., dated 3-6-1997 as amended by Notifications No. 12/98-Cus., dated 27-4-1998; No. 38/98-Cus., dated 26-6-1998; No. 59/98-Cus., dated 3-8-1998; No. 65/99-Cus., dated 19-5-1999 and No. 71/2000-Cus., dated 22-5-2000; No. 9/2000-Cus., dated 28-1-2000 , No.56/2001- Cus. dated 18.05.2001., No. 64/2002-cus dated 24-6-2002.and No.65/2002-cus dated 25-6-2002

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