Advance Licence

An Advance Licence is issued under Duty Exemption Scheme to allow import of inputs which
are physically incorporated in the export product (making normal allowance for wastage). In
addition, fuel, oil, energy, catalysts etc. which are consumed in the course of their use to
obtain the export product, may also be allowed under the scheme. Advance Licence can be
issued for:-

a. Physical exports
b. Intermediate supplies
c. Deemed exports.

For physical exports, Advance Licence can also be issued on the basis of annual requirement
in respect of export products for which SIONs have been notified. Duty Remission Scheme
consists of

a. Duty Free Replenishment Certificate and

b. Duty Entitlement Passbook Scheme.

The scheme allows drawback of import charges on inputs used in the export product
(making normal allowance for the wastage). In general units primarily engaged in
production of domestic market can also get required inputs free of duty for executing an
export order under the duty exemption scheme for which they are required to execute a
bond with customs authorities and are required to fulfill the export obligation.

Export Promotion Capital Goods Scheme

Chapter 6 of Exim Policy and Hand Book of Procedure Volume 1 provide the Export
Promotion Capital Goods Scheme enabling the import of new capital goods including
computer software system with concessional customs duty against the commitment of
export obligation. The import under EPCG scheme is required to export the items having
nexus with import items. Present rate of duty is 5% + 0.5% + NIL + NIL. The exporter is
required to undertake the export obligation equivalent to 5 times of CIF value of capital
goods on FOB basis or 4 times of CIF value of capital goods on NFE basis, to be fulfilled over
the period of 8 years from the date of issuance of the licence. The guiding customs
notification is 49/2000 dated 27-04-2000. The importer under EPCG scheme is required to
execute the Bank Guarantee and Legal Undertaking. In some cases the bank Guarantee can
be exempted.

Duty Free Replenishment Certificate

Duty Free Replenishment Certificate is issued to a merchant-exporter or manufacturer-
exporter for the import of inputs used in the manufacture of goods without payment of
Basic Customs Duty, Surcharge and Special Additional Duty. However, such inputs shall be
subject to the payment of Additional Customs Duty equal to the Excise Duty at the time of
import.

i. Duty Free Replenishment Certificate shall be issued only in respect of export

products covered under the SIONs as notified by DGFT.
ii. Duty Free Replenishment Certificate shall be issued for import of inputs, as per
SION, having same quality, technical characteristics and specifications as those used
in the end product and as indicated in the shipping bills. The validity of such licences
 shall be 12 months. DFRC and or the material imported against it shall be freely
transferable.
iii. The Duty Free Replenishment Certificate shall be subject to a minimum value
addition of 33%
iv. The export products, which are eligible for modified VAT, shall be eligible for CENVAT
credit owever, non excisable, non dutiable or non centrally vatable products, shall be
eligible for drawback at the time of exports in lieu of additional customs duty to be
paid at the time of imports under the scheme.
v. The exporter shall be entitled for drawback benefits in respect of any of the duty paid
materials, whether imported or indigenous, used in the export product as per the
drawback rate fixed by Directorate of Drawback (Ministry of Finance). The drawback
shall however be restricted to the duty paid materials not covered under SION.
vi. The export under deffered payment scheme to Russia is also allowed for issuance of
DFRC.

The difference between DFRC & Advance Licence together with DEPB is as under DFRC is
transferable script available on post export basis. In this case basic custom duty surcharge
and special additional duty is exempted but payment of additional customs duty (CBD) is
applicable Advance Licence is issued with actual user condition and non transferable.In this
case all duties of customs and excise are exempted DEPB is transferable script available on
post export basis for the duty incident on the custom duty incident on the import content of
the export product.The importer has the option to pay additional customs duty if any in cash
as well .

Duty Entitlement Passbook Scheme

For exporters not desirous of going through the licensing route, an optional facility is given under
DEPB. The objective of Duty Entitlement Passbook Scheme is to neutralise the incidence of
Customs duty on the import content of the export product. The neutralisation shall be provided
by way of grant of duty credit against the export product. Under the Duty Entitlement Passbook
Scheme (DEPB), an exporter may apply for credit, as a specified percentage of FOB value of
exports, made in freely convertible currency. The credit shall be available against such export
products and at such rates as may be specified by the Director General of Foreign Trade by way
of public notice issued in this behalf, for import of raw materials, intermediates, components,
parts, packaging material etc. The holder of Duty Entitlement Passbook Scheme (DEPB) shall
have the option to pay additional customs duty, if any, in cash as well. Under the scheme
Exporters are granted duty credits on the basis of pre notified entitlement rates which will allow
them to import input duty free The exporter can export any product under this scheme provided
the same is covered by SION. Goods in the negative list of exim policy cannot be exported under
this scheme.

Export Oriented Unit / Export Processing Zone

All required inputs and capital goods whether indeginous or imported, are made available to
these units free of customs and excise duties under bond.These are customs bonded units
With much relaxed control and in accordance with the exim policy for manufacture of
articles for export out of India or for production or packaging or job work for export of
goods or services out of India. The EOU are required to export their entire production with
allowances as applicable for same in the domestic tariff area (DTA) and can be setup at any
place in India where as the Government of India has declared certain specified places as
export processing zones wherein the conditions for operating the unit are almost same as of
EOU. Export Processing Zones can also be set up by State Governments or in private / joint
sector as per guidelines issued vide notification No. 42(RE)/92-97 dated 31st May, 1994
(Appendix-16G).

CHAPTER 5

EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME

Zero duty EPCG Scheme

5.1

Zero duty EPCG scheme allows import of capital goods for preproduction, production and post
production (including CKD/SKD thereof as well as computer software systems) at zero Customs
duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods
imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date.

The scheme will be available for exporters of engineering & electronic products, basic chemicals
& pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products, leather
& leather products, paper & paperboard and articles thereof, ceramic products, refractories, glass
& glassware, rubber & articles thereof, plywood and allied products, marine products, sports
goods and toys subject to exclusions as provided in HBP Vol. I.

Validity period for import of capital goods and provision for extension in export obligation
period will be as separately provided in the HBP Vol. I. All other provisions pertaining to
concessional 3% duty EPCG scheme under this Chapter, to the extent they are not inconsistent
with the above provisions of zero duty EPCG scheme, shall be applicable to the zero duty EPCG
scheme also. The zero duty EPCG scheme will be in operation till 31.3.2012.

Concessional 3% Duty EPCG Scheme

5.2

Concessional 3% duty EPCG scheme allows import of capital goods for pre-production,
production and post production (including CKD/SKD thereof as well as computer software
systems) at 3% Customs duty, subject to an export obligation equivalent to 8 times of duty saved
on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from
Authorization issue-date.
In case of agro units, and units in cottage or tiny sector, import of capital goods at 3% Customs
duty shall be allowed subject to fulfillment of export obligation equivalent to 6 times of duty
saved on capital goods imported, in 12 years from Authorization issue-date.

For SSI units, import of capital goods at 3% Customs duty shall be allowed, subject to
fulfillment of export obligation equivalent to 6 times of duty saved on capital goods, in 8 years
from Authorization issuedate, provided the landed cif value of such imported capital goods under
the scheme does not exceed Rs. 50 lakhs and total investment in plant and machinery after such
imports does not exceed SSI limit.

However, in respect of EPCG Authorization with a duty saved amount of Rs. 100 crores or more,
export obligation shall be fulfilled in 12 years.

In case CVD is paid in cash on imports under EPCG, incidence of CVD would not be taken for
computation of net duty saved, provided the same is not CENVATed.

Capital goods shall include spares (including refurbished/reconditioned spares), tools, jigs,
fixtures, dies and moulds.

Second hand capital goods, without any restriction on age, may also be imported under EPCG
scheme.

However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only
to hotels, travel agents, tour operators or tour transport operators and companies
owning/operating golf resorts, subject to the condition that:

(i) total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current
and preceding three licensing years is Rs. 1.5 crores or more.

(ii) ‘duty saved’ amount on all EPCG Authorizations issued in a licensing year for import of
motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 50% of average foreign
exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three
licensing years.

(iii) vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A
copy of the Registration certificate should be submitted to concerned RA as a confirmation of
import of vehicle. However, parts of motor cars, sports utility vehicles/all purpose vehicles such
as chassis etc. cannot be imported under the EPCG Scheme.

Import of Restricted items of imports mentioned under ITC(HS) shall only be allowed under
EPCG Scheme after approval from EFC at Headquarters.

5.2A

Spares (including refurbished/reconditioned spares), moulds, dies, jigs, fixtures, tools, refractory
for initial lining and catalyst for initial charge; for existing plant and machinery (imported
earlier, under EPCG or otherwise), shall be allowed to be imported under the EPCG scheme
subject to an export obligation equivalent to 50% of the normal export obligation prescribed in
para 5.1 and 5.2 above (for import of capital goods), to be fulfilled in 8 years (6 years for zero
duty EPCG scheme), reckoned from Authorization issue date. This would however be subject to
the condition that the c.i.f. value of import of the above spares etc. will be limited to 10% of the
value of plant and machinery imported under the EPCG scheme. In case of plant and machinery
not imported under the EPCG scheme, c.i.f. value of import of the spares etc. will be limited to
10% of the book value of the plant and machinery.

EPCG for Projects

5.2B

An EPCG Authorization can also be issued for import of capital goods under Scheme for Project
Imports notified by the Central Board of Excise and Customs under S. No. 441 of Customs
Exemption Notification No. 21/2002 dated 01.03.2002.

Export obligation for such EPCG Authorizations would be eight times (6 times for zero duty
EPCG scheme) of duty saved. Duty saved would be difference between the effective duty under
aforesaid Customs Notification and concessional duty under the EPCG Scheme.

EPCG for Retail Sector

5.2C

To create modern infrastructure in retail sector, concessional duty benefits under EPCG scheme
shall be extended for import of capital goods required by retailers having minimum area of 1000
sq. meters. Such retailer shall fulfill export obligation i.e. 8 times of duty saved, in 8 years.

EPCG Authorization for Annual Requirement

5.2D

EPCG Authorization can also be issued for annual requirement to Status Certificate Holders and
all other categories of exporters having past export performance (in preceding two years), both
under zero duty and 3% duty Schemes. The annual entitlement in terms of duty saved amount
shall be upto 50% of FOB value of Physical Export and / or FOR value of Deemed Export, in
preceding licensing year.

Eligibility

5.3

EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s)/

vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.

Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is
designated / certified as a Common Service Provider (CSP) by the DGFT, Department of
Commerce or State Industrial Infrastructural Corporation in a Town of Export Excellence subject
to provisions of Foreign Trade Policy/Handbook of Procedures with the following conditions:-

(i) EPCG licence to be given to the CSP should have a clear endorsement giving the details of
the users and the quantum of Export Obligation (EO) which each user would fulfill;

(ii) Such exports will not count towards fulfillment of other specific export obligations ; and

(iii) Each one of the users of the CSP apart from the CSP should furnish 100% Bank Guarantee
(BG) equivalent to their portion of duty foregone apportioned in terms of quantum of EO to be
discharged by them and the B.G. will be enforced in the event of the obligation not being
fulfilled.

Conditions for import of Capital Goods

5.4

Import of capital goods shall be subject to Actual User condition till export obligation is
completed.

Export obligation

5.5

Following conditions shall apply to the fulfillment of the export obligation:-

(i) Export Obligation shall be fulfilled by export of goods manufactured/services rendered by the
applicant.
Export obligation under the scheme shall be, over and above, the average level of exports
achieved by him in the preceding three licensing years for the same and similar products within
the overall export obligation period including extended period, if any; except for categories
mentioned in paragraph 5.7.6 of HBP Vol. I. Such average would be the arithmetic mean of
export performance in the last three years for the same and similar products provided that
Premier Trading House (PTH) shall have option of fixing average level of exports based on
arithmetic mean of export performance in the last five years instead of three years.

Upto 50% Export Obligation may also be fulfilled by exports of other good(s) manufactured or
service(s) provided by the same firm / company, or group company / managed hotel, which has
the EPCG authorization. However, EPCG authorizations issued prior to 1.4.2008 will be
governed by earlier policy provisions.

However, in such cases, additional export obligation imposed shall be over and above average
exports achieved by the unit / company / group company / managed hotel in preceding three
years for both the original and the substitute product(s) / service(s), despite exemptions in Para
5.7.6 of HBP Vol. I.

(ii) Shipments under Advance Authorization, DFRC, DFIA, DEPB or Drawback scheme, or
incentive schemes under Chapter 3 of FTP; would also count for fulfillment of EPCG export
obligation.

(iii) Export obligation can also be fulfilled by the supply of ITA-I items to DTA, provided
realization is in free foreign exchange.

(iv) Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2
(a), (b), (d), (f), (g) & (j) of FTP shall also be counted towards fulfillment of export obligation,
alongwith usual benefits available under paragraph 8.3 of FTP.

Royalty payments received in freely convertible currency and foreign exchange received for
R&D services shall also be counted for discharge under EPCG. Payment received in rupee terms
for port handling services, in terms of Chapter 9 of FTP shall also be counted for export
obligation discharge.

Provision for BIFR units

5.5.1

Any firm/ company registered with BIFR or any firm/ company acquiring a unit, which is under
BIFR, may be allowed EO extension, as per rehabilitation package prepared by operating agency
and approved by BIFR/Rehabilitation Department of State Government, upto 12 years if not
specified.

Above provisions apply also to SSI units as per rehabilitation scheme of concerned State
government.

EPCG for agro units

5.5.2

LUT/Bond or 15% BG ( as applicable) may be given for EPCG Authorization granted to units in
Agri Export Zones provided EPCG Authorization is taken for export of primary agricultural
product(s) notified in Appendix 8 or their value added variants.

Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier

5.6 A

person holding an EPCG Authorization may source capital goods from a domestic manufacturer.
Such domestic manufacturer shall be eligible for deemed export benefit under paragraph 8.3 of
FTP. Such domestic sourcing shall also be permitted from EOUs and these supplies shall be
counted for purpose of fulfillment of positive NFE by said EOU as provided in Para 6.9 (a) of
FTP.

Fixation of Export Obligation

5.7

In case of direct imports, export obligation shall be reckoned with reference to actual duty saved
amount. In case of domestic sourcing, export obligation shall be reckoned with reference to
notional Customs duties saved on FOR value.

Technological Upgradation of existing EPCG machinery

5.8

EPCG Authorization holders can opt for Technological Upgradation of existing capital good
imported under EPCG Authorization.

Conditions governing Technological Up-gradation of existing capital goods are as under:

(i) Minimum time period for applying for Technological Upgradation of existing capital goods
imported under EPCG is 5 years from Authorization issue-date.

(ii) Minimum exports made under old capital goods must be 40% of total export obligation
imposed on first EPCG Authorization.

(iii) Export obligation would be re-fixed such that total export obligation mandated for both
capital goods would be sum total of 6 times of duty saved on both the capital goods, to be
fulfilled in 8 years from new authorization issue-date.

(iv) Facility for technological up-gradation shall be available only once and the minimum
imports to be made shall be at least 10% of the existing investment in plant and machinery by
applicant.

(v) Capital Goods to be imported must be new and technologically superior to earlier CG.

Incentives for Fast Track Companies

5.9

To incentivize fast track companies with a view to accelerate exports, in cases where
Authorization holder has fulfilled 75% or more of specific export obligation and 100% of
Average Export Obligation till date, if any, in half or less than half the original export obligation
period specified, remaining export obligation shall be condoned and the Authorization redeemed
by RA concerned. However no benefits under Para 5.12 of HBP Vol. I shall be available in such
cases.

CHAPTER 4

DUTY EXEMPTION & REMISSION SCHEMES

Duty Exemption and Remission Schemes

4.1

Duty exemption schemes enable duty free import of inputs required for export production. Duty
Exemption Schemes consist of (a) Advance Authorisation scheme and (b) Duty Free Import
Authorisation (DFIA) scheme. A Duty Remission Scheme enables post export replenishment /
remission of duty on inputs used in export product. Duty remission schemes consist of (a) Duty
Entitlement Passbook (DEPB) Scheme and (b) Duty Drawback (DBK) Scheme.

Re-import of exported goods under Duty Exemption / Remission Scheme

4.1.1

Goods exported under Advance Authorisation / DFIA / DEPB may be re-imported in same or
substantially same form subject to DoR specified conditions.

Value Addition

4.1.2

Value addition (VA) for the purpose of this Chapter (Except for Gems and Jewellery Sector)
shall be:-

VA = A-B x 100, where

---------
B

A = FOB value of export realised / FOR value of supply received.

B = CIF value of inputs covered by authorisation, plus any other imported materials used on
which benefit of DBK is claimed.

ADVANCE AUTHORISATION SCHEME

Advance Authorisation

4.1.3

An Advance Authorisation is issued to allow duty free import of inputs, which are physically
incorporated in export product (making normal allowance for wastage). In addition, fuel, oil,
energy, catalysts which are consumed / utilised to obtain export product, may also be allowed.
DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance
Authorisation.

Duty free import of mandatory spares upto 10% of CIF value of Authorisation which are
required to be exported / supplied with resultant product are allowed under Advance
Authorisation. Advance Authorisations are issued for inputs and export items given under SION.
These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of
HBP v1.

Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied
to supporting manufacturer(s) for:

i) Physical exports (including exports to SEZ); and/ or

ii) Intermediate supplies; and /or

iii) Supply of goods to the categories mentioned in paragraph 8.2 (b), (c), (d), (e), (f), (g), (i) and
(j) of FTP ;

iv) Supply of ‘stores’ on board of foreign going vessel / aircraft subject to condition that there is
specific SION in respect of item(s) supplied.

In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d),
(e), (f), (g) and (j) of FTP, an Advance Authorisation can also be availed by sub-contractor to
such project provided name of sub contractor(s) appears in main contract.

Such Authorisation can also be issued for supplies made to United Nations Organisations or
under Aid Programme of the United Nations or other multilateral agencies and which are paid
for in free foreign exchange.

However, Advance Authorization for import of raw sugar, can be issued either to a manufacturer
exporter or merchant exporter tied to supporting manufacturer(s). Exports can also be made by
procurement of white sugar from any other factory(ies). This provision shall be applicable for
exports from 17.2.2009.

4.1.4

Advance Authorisations are exempted from payment of basic customs duty, additional customs
duty, education cess, antidumping duty and safeguard duty, if any. However, imports for supplies
covered under paragraph 8.2 (h) & (i) will not be exempted from payment of applicable anti-
dumping and safeguard duty, if any.

4.1.5

Advance Authorisation and / or materials imported thereunder will be with actual user condition.
It will not be transferable even after completion of export obligation. However, Authorisation
holder will have option to dispose off product manufactured out of duty free inputs once export
obligation is completed. In case where CENVAT credit facility on inputs have been availed for
the exported goods, even after completion of export obligation, the goods imported against
Advance Authorisation shall be utilized only in the manufacture of dutiable goods whether
within the same factory or outside (by a supporting manufacturer),for which the authorisation
holder shall produce a certificate from either the jurisdictional Central Excise Supdt. or
Chartered Accountant, at the option of the exporter, at the time of filing application for EODC to
RA concerned. However, the actual user condition shall not be applicable in case of raw sugar to
be imported from 17.2.2009, till 30.09.2009 under Advance Authorization Scheme.

Further the manufacturing wastes / scrap, as allowed, can be disposed off with the payment of
applicable duty even before fulfilment of export obligation.

4.1.6
Advance Authorisation necessitates exports with a minimum value addition of 15%, except for
items specified in Appendix 11B of HBP v1 and for items in Gems & Jewellery sector, for which
value addition would be as per paragraph 4A.2.1 of HBP v.1. Exports to SEZ Units / supplies to
Developers / Codevelopers, irrespective of currency of realization, would also be covered.

For physical exports for which payments are not received in freely convertible currency, same
shall be subject to value addition as specified in Appendix-11 of HBP v1.

In case of Authorisation for import of Tea, minimum value addition under Advance
Authorisation shall be 50%.

Similarly, in case of spices {covered by Chapter 9 of ITC(HS)}, duty free import of spices shall
be permitted only for value addition purposes like crushing / grinding / sterilization or for
manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc.

4.1.7

Advance Authorisation shall be issued in accordance with Policy and procedure in force on
Authorisation issue date.

Validity period of Advance Authorisation for import shall be as prescribed in HBP v1.

Free of Cost Supply by Foreign Buyer

4.1.8

Facility of Advance Authorisation shall also be available where some or all inputs are supplied
free of cost to exporter by foreign buyer.

In such cases, for calculation of value addition, notional value of free of cost inputs along with
value of other duty-free inputs shall be taken into consideration. However, if all inputs are
supplied free of cost, exporter shall also have option to follow provision prescribed by DoR.

Export Obligation

4.1.9

Period for fulfillment of export obligation under Advance Authorisation shall be as prescribed in
HBP v1.

Provision for BIFR units

4.1.9 A

Any firm / company registered with BIFR or any firm / company acquiring a unit, which is under
BIFR shall be allowed Export Obligation Period (EOP) extension as per rehabilitation package
prepared subject to approval of BIFR or 5 years if not specified, without payment of composition
fee.

Above provisions apply also to SSI units as per rehabilitation scheme of concerned State
government.

Advance Authorisation for Annual Requirement

4.1.10

Advance authorisation can also be issued for annual requirement. Imports are exempted from
payment of basic customs duty, additional customs duty, education cess, antidumping duty and
safeguard duty, if any.

Status Certificate holder and all other categories of exporters having past export performance (in
preceding two years) shall be entitled for Advance Authorisation for Annual Requirement.

Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical
export and / or FOR value of deemed export in preceding licensing year or Rs 1 crore, whichever
is higher.

Advance Release Order (ARO) and Invalidation Letter

4.1.11

Holder of Advance Authorisation, Advance Authorisation for Annual Requirement and Duty
Free Import Authorisation intending to source inputs from indigenous sources / State Trading
Enterprises in lieu of direct import, has option to source them either against Advance Release
Order (ARO) or Invalidation letter denominated in free foreign exchange / Indian rupees.
However, supplies may be obtained against Authorisation from EOU / EHTP / BTP / STP / SEZ
units, without conversion into ARO or Invalidation letter.

Transferee of DFIA shall also be eligible for ARO / Invalidation letter facility.

Validity period of ARO shall be as prescribed in HBP v1.

Back-to-Back Inland Letter of Credit

4.1.12

Holder of Advance Authorisation, Advance Authorisation for Annual Requirement and DFIA
may, instead of applying for an ARO or Invalidation letter, avail of the facility of Back-to-Back
Inland Letter of Credit in accordance with procedure specified in HBP v1.

Prohibited Items
4.1.13

Prohibited items of imports mentioned in ITC(HS) shall not be imported under Advance
Authorisation / DFIA. Further items reserved for imports by STEs cannot be imported against
Advance Authorisation / DFIA. However those items can be procured from STEs against ARO
or Invalidation letter.

STEs are also allowed to sell goods on High Sea Sale basis to holders of Advance
Authorisation / DFIA holder.

In addition, STEs are permitted to issue “No Objection Certificate (NOC)” for import by
advance Authorisation / DFIA holder. Authorisation Holder would be required to file Quarterly
Returns of imports effected against such NOC to concerned STE and STE would submit half-
yearly import figures of such imports to concerned administrative Department for monitoring
with a copy endorsed to DGFT.

Similarly prohibited items of exports mentioned in ITC(HS) shall not be exported under
Advance Authorisation / DFIA scheme. Export of restricted items shall be subject to all
conditionalities or requirements of Export Authorisation or permission, as may be required,
under Schedule II of ITC (HS).

Admissibility of Drawback

4.1.14

In case of an Advance Authorisation, drawback shall be available for any duty paid material,
whether imported or indigenous, used in goods exported, as per drawback rate fixed by DoR,
Ministry of Finance (Directorate of Drawback). Drawback allowed shall be mentioned in
Authorisation.

DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEME

Scheme

4.2.1

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are
required for production of export product. DGFT, by means of Public Notice, may exclude any
product(s) from purview of DFIA. This scheme is in force from 1st May, 2006.

Entitlement

4.2.2

Provisions of paragraph 4.1.3 shall be applicable in case of DFIA. However, these

Authorisations shall be issued only for products for which Standard Input and Output Norms
(SION) have been notified.

In case of post export DFIA, a merchant exporter shall be required to mention only name (s) and
address(s) of manufacturer(s) of the export product(s). Applicant is required to file application to
concerned RA before effecting exports under DFIA.

Pre-export Authorisation shall be issued with actual user condition and shall be exempted from
payment of basic customs duty, additional customs duty / Excise duty, education cess,
antidumping duty and safeguard duty, if any.

In case of actual user DFIA and where CENVAT credit facility on inputs have been availed for
the exported goods, even after completion of export obligation, the goods imported against such
DFIA shall be utilized in the manufacture of dutiable goods whether within the same factory or
outside (by a supporting manufacturer)

Import items

4.2.3

Provisions of paragraphs 4.1.11, 4.1.12, 4.1.13 and 4.1.14 of FTP shall be applicable for DFIA
holder.

Value Addition

4.2.4

A minimum 20% value addition shall be required for issuance of such authorisation except for
items in gems and jewellery sector for which value addition would be as per paragraph 4A.2.1 of
HBP v1. Items for which higher value addition is prescribed under Advance Authorisation
Scheme shall be applicable.

Export Obligation

4.2.5

Procedure and time period related to fulfillment of Export Obligation have been laid down in
Chapter 4 of HBP v1.

Transferability

4.2.6

Once export obligation has been fulfilled, request for transferability of Authorisation or inputs
imported against it may be made before concerned RA. Once, transferability is endorsed,
Authorisation holder may transfer DFIA or duty free inputs, except fuel and any other item(s)
notified by DGFT. However, for fuel, import entitlement may be transferred only to companies
which have been granted authorisation to market fuel by Ministry of Petroleum and Natural Gas.

Once transferability is endorsed, imports / domestic procurement against authorisation or transfer

of imported inputs / domestically procured inputs shall be subject to payment of applicable
additional customs duty / excise duty. While endorsing transferability, authorisation would bear a
note as to liability of such additional customs duty / excise duty. However, in case where
CENVAT facility has not been availed, exemption from additional customs duty / excise duty
would be available even after endorsement of transferability on DFIA.

Wherever SIONs prescribe actual user condition and in case of Acetic Anhydride, Ephedrine and
Pseudo Ephedrine, DFIA shall be issued with actual user condition for these inputs and no
transferability shall be allowed for these inputs even after fulfillment of export obligation.

However, for authorizations issued prior to 1.4.2007, exemption from Additional Customs Duty/
Excise Duty shall continue to be available even after endorsement of transferability as provided
in FTP (RE-2006).

CENVAT Facility

4.2.7

CENVAT credit facility shall be available for inputs either imported or procured indigenously.

DUTY ENTITLEMENT PASSBOOK (DEPB) SCHEME

Duty Entitlement Passbook Scheme (DEPB)

4.3

Objective of DEPB is to neutralise incidence of customs duty on import content of export

product. Component of customs duty on fuel (appearing as consumable in the SION) shall also
be factored in the DEPB rate. Component of Special Additional Duty shall also be allowed under
DEPB(as brand rate) in case of non-availment of CENVAT credit. Neutralisation shall be
provided by way of grant of duty credit against export product.

4.3.1

An exporter may apply for credit, at specified percentage of FOB value of exports, made in
freely convertible currency. In case of supply by a DTA unit to a SEZ unit / SEZ Developer/Co-
Developer, an exporter may apply for credit for exports made in freely convertible currency or
payment made from foreign currency account of SEZ Unit/SEZ Developer/Co- Developer. In
addition, the exporter shall also be entitled for DEPB benefit in case payment is made in Indian
Rupees by SEZ Developer/Co-Developer for supplies received w.e.f 10.2.2006.

Credit shall be available against such export products and at such rates as may be specified by
DGFT by way of public notice. Credit may be utilized for payment of Customs Duty on freely
importable items and/or restricted items. DEPB Scrips can also be utilized for payment of duty
against imports under EPCG Scheme. Further, DEPB Scrips can also be used / debited towards
payment of customs Duty in case of E.O. defaults for authorizations issued under chapters 4 And
5 of this policy. However, penalty / interest shall be required to be paid in cash.

Prohibited items of exports mentioned in ITC(HS) Book (as amended from time to time) shall
not be entitled for DEPB credit except for the exports effected under transitional facility,
wherever allowed, in terms of paragraph 1.5 of FTP.

4.3.2

DEPB holder shall have option to pay additional customs duty in cash as well.

Validity

4.3.3

Validity period of DEPB for import shall be as prescribed in HBP v1.

Transferability

4.3.4

DEPB and / or items imported against it are freely transferable. Transfer of DEPB shall however
be for import at specified port, which shall be the port from where exports have been made.

Imports from a port other than the port of export shall be allowed under TRA facility as per
terms and conditions of DOR notification.

Applicability of Drawback

4.3.5

Additional customs duty / Excise Duty and Special Additional Duty paid in cash or through debit
under DEPB may also be adjusted as CENVAT Credit or Duty Drawback as per DoR rules.

GEMS AND JEWELLERY

Scheme for Gems and Jewellery

4A

Exporters of Gems and Jewellery can import / procure duty free inputs for manufacturing.

Replenishment Authorisation
4A.1

Exporters may obtain Replenishment (REP) Authorisations from RA in accordance with

procedure specified in HBP v1.

4A.1.1

Replenishment authorisation may also be issued for consumables as per paragraph 4A.28 of HBP
v1.

Import of Diamonds for Certification / Grading & reexport

4A.2

The authorized offices/agencies in India of Gemological Institute of America (GIA) or any other
agency approved in this regard shall be permitted to import diamonds to their laboratories for the
purpose of certification/grading reports by them with a condition that the same should be re-
exported with the certification/grading reports issued by them without any import duty as per the
procedure laid down in HBP v.1

Schemes for Gold/ Silver/ Platinum Jewellery

4A.3

Exporters of gold / silver / platinum jewellery and articles thereof may import their essential
inputs such as gold, silver, platinum, mountings, findings, rough gems, precious and
semiprecious stones, synthetic stones and unprocessed pearls etc. in accordance with the
procedure specified in this behalf.

Nominated Agencies

4A.4

Nominated agencies are MMTC Ltd, Handicraft and Handloom Export Corporation (HHEC),
State Trading Corporation (STC), the Project and Equipment Corporation of India Ltd (PEC),
STCL Ltd, MSTC Ltd, Diamond India Limited (DIL), Gems & Jewellery Export Promotion
Council (G&J EPC)), Star Trading House (only for Gems & Jewellery sector) and Premier
Trading House under Paragraph 3.10.2 of FTP and any other agency authorised by RBI.
Exporters (except EOUs and units in SEZ) may obtain gold / silver / platinum from nominated
agency(s).

Procedure for import of precious metal by these agencies (other than those authorized by RBI
and the Gems & Jewellery units operating under EOU and SEZ schemes) and the monitoring
mechanism thereof shall be as per the provisions laid down in HBP v1 in this regard.

A bank authorised by RBI is allowed export of gold scrap for refining and import standard gold
bars as per RBI guidelines.

Items of Export

4A.5

Following items, if exported, would be eligible for facilities:

(a) Gold jewellery, including partly processed jewellery and articles including medallions and
coins (excluding legal tender coins), whether plain or studded, containing gold of 8 carats and
above;

(b) Silver jewellery including partly processed jewellery, silverware, silver strips and articles
including medallions and coins (excluding legal tender coins and any engineering goods)
containing more than 50% silver by weight;

(c) Platinum jewellery including partly processed jewellery and articles including medallions and
coins (excluding legal tender coins and any engineering goods) containing more than 50%
platinum by weight.

Value Addition

4A.6

Value Addition (VA) for gems and jewellery sector shall be as per paragraph 4A.2.1 of HBP v1.
It would be calculated as under:

VA = A–B x 100, where

-----------
B

A = FOB value of the export realised / FOR value of supply received.

B = Value of inputs ( including domestically procured ) such as gold / silver / platinum content in
export product plus admissible wastage along with value of other items such as gemstone etc.
Wherever gold has been obtained on loan basis, value shall also include interest paid in free
foreign exchange to foreign supplier.

Wastage Norms

4A.7

Wastage or manufacturing loss for gold / silver / platinum jewellery shall be admissible as per
paragraph 4A.2 of HBP v1.
Export against Supply by Foreign Buyer

4A.8

Where export orders are placed on nominated agencies / status holder / exporters of three years
standing having an annual average turnover of Rs. Five Crores during preceding three licensing
years, foreign buyer may supply in advance and free of charge, gold / silver / platinum, alloys,
findings and mountings of gold / silver / platinum for manufacture and export.

Such supplies can also be in advance and may involve semifinished jewellery including
findings / mountings / components for repairs / re-make and export subject to minimum value
addition of 10%. However, if so imported semi finished gold / silver /platinum jewellery is
exported as studded jewellery, value addition of 15% shall be achieved. In such cases of export,
wastage of 2% may be permitted.

Exports may be made by nominated agencies directly or through their associates or by status
holder / exporter. Import and Export of findings shall be on net to net basis.

Export Against Supply by Nominated Agencies

4A.9

Exporter may obtain gold / silver / platinum as an input for export products from nominated
agencies in advance or as replenishment after exports in accordance with specified procedure.

Export Against Advance Authorisation

4A.10

An Advance Authorisation may be granted for duty free import of :

(a) Gold of fineness not less than 0.995 and mountings, sockets, frames and findings of 8 carats
and above;

(b) Silver of fineness not less than 0.995 and mountings, sockets, frames and findings containing
more than 50% silver by weight;

(c) Platinum of fineness not less than 0.900 and mountings, sockets, frames and findings
containing more than 50% platinum by weight.
4A.11

Such authorisations shall carry an export obligation to be fulfilled as per procedure specified in
paragraph 4A of HBP v1. Value addition shall be as per paragraph 4A.2.1 of HBP v.1.

Advance Authorisation holder may obtain gold / silver / platinum from nominated agencies in
lieu of direct import.

Gem Replenishment Authorisation

4A.12

Gem Replenishment (Gem & Jewellery REP) Authorisation may be issued as given in paragraph
4A.8, 4A.9 and 4A.10 above.

In case of plain or studded gold / silver / platinum jewellery and articles, value of such
Authorisations shall be determined with reference to realisation in excess of prescribed minimum
VA.

Such Gem REP Authorisations shall be freely transferable.

Gem REP Rate and Item

4A.13

Replenishment Rate and item of import will be as prescribed in Appendix 12B of HBP v1.

Export Promotion Tours/ Export of Branded Jewellery

4A.14

Nominated agencies and their associates, with approval of Department of Commerce, and others,
with approval of Gem & Jewellery EPC (GJEPC), may export gold / silver / platinum jewellery
and articles thereof for exhibitions abroad.

Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads and
articles and export of branded jewellery is also permitted, subject to conditions as in HBP v1.

Personal Carriage of Export / Import Parcels

4A.15
Personal carriage of gems and jewellery export parcels by foreign bound passengers and import
parcels by an Indian importer/foreign national may be permitted as in HBP v1.

Export by Post

4A.16

In case of exports through Foreign Post Office (including via Speed Post), value of jewellery
parcels shall not exceed US$ 75000 and 20 kg. by weight.

Diamond & Jewellery Dollar Accounts

4A.17

Firms and companies dealing in purchase/ sale of rough or cut and polished diamonds/precious
metal jewellery plain, minakari and / or studded with / without diamond and/or other stones, with
a track record of at least two years in import or export of diamonds / coloured gemstones/
diamond and coloured gemstones studded jewellery / plain gold jewellery, and having an average
annual turnover of Rs. 3 crores or above during preceding three licensing years, may also carry
out their business through designated Diamond Dollar Accounts (DDA).

Dollars in such accounts available from bank finance and / or export proceeds shall be used only
for:

(i) Import / purchase of rough diamonds from overseas / local sources;

(ii) Purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from
local sources;

(iii) Import / purchase of gold from overseas / nominated agencies and repayment of dollar loans
from the bank; and

(iv) Transfer to Rupee Account of exporter. Details of this DDA Scheme are given in HBP v1.

A non DDA holder is also permitted to supply cut and polished diamonds to DDA holder,
receive payment in dollars and convert same into Rupees within 7 days. Cut and polished
diamonds and coloured gemstones so supplied by non-DDA holder will also be counted towards
discharge of his export obligation and / or entitle him to replenishment Authorisation.

Export of cut & Polished precious and semi-precious stones for treatment and re-import
4A.18

Gems and Jewellery exporters shall be allowed to export cut and polished precious and semi-
precious stones for the treatment and re-import as per customs rules and regulations. In case of
reexport, the exporter shall be entitled for duty drawback as per rules.

Re-import of rejected jewellery

4A.19

Gems & Jewellery exporters shall be allowed to re-import rejected precious metal jewellery as
per para 4A.32 of HBP v1.

Export on consignment basis

4A.20

Gems & Jewellery exporters shall be allowed to export diamond, gemstones & jewellery on
consignment basis as per HBP v1 and Customs rules and regulations.

CHAPTER 8

DEEMED EXPORTS

Deemed Exports

8.1

“Deemed Exports” refer to those transactions in which goods supplied do not leave country, and
payment for such supplies is received either in Indian rupees or in free foreign exchange.

Categories of Supply

8.2

Following categories of supply of goods by main / subcontractors shall be regarded as “Deemed

Exports” under FTP, provided goods are manufactured in India:

(a) Supply of goods against Advance Authorisation / Advance Authorisation for annual
requirement / DFIA;
(b) Supply of goods to EOU / STP / EHTP / BTP;

(c) Supply of capital goods to EPCG Authorisation holders;

(d) Supply of goods to projects financed by multilateral or bilateral Agencies / Funds as notified
by Department of Economic Affairs (DEA), MoF under International Competitive Bidding (ICB)
in accordance with procedures of those Agencies / Funds, where legal agreements provide for
tender evaluation without including customs duty;

Supply and installation of goods and equipment (single responsibility of turnkey contracts) to
projects financed by multilateral or bilateral Agencies / Funds as notified by DEA, MoF under
ICB, in accordance with procedures of those Agencies / Funds, which bids may have been
invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for goods manufactured
abroad;

(e) Supply of capital goods, including in unassembled / disassembled condition as well as plants,
machinery, accessories, tools, dies and such goods which are used for installation purposes till
stage of commercial production, and spares to extent of 10% of FOR value to fertilizer plants;

(f) Supply of goods to any project or purpose in respect of which the MoF, by a notification,
permits import of such goods at zero customs duty;

(g) Supply of goods to power projects and refineries not covered in (f) above;

(h) Supply of marine freight containers by 100% EOU (Domestic freight containers-
manufacturers) provided said containers are exported out of India within 6 months or such
further period as permitted by customs;

(i) Supply to projects funded by UN Agencies; and

(j) Supply of goods to nuclear power projects through competitive bidding as opposed to ICB.

Benefits of deemed exports shall be available under paragraphs (d), (e), (f) and (g) only if the
supply is made under procedure of ICB.

However, in regard to mega power projects, the requirement of ICB would not be mandatory, if
the requisite quantum of power has been tied up through tariff based competitive bidding or if
the project has been awarded through tariff based competitive bidding.

Benefits for Deemed Exports

8.3

Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and
supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1:-

(a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA.

(b) Deemed Export Drawback.

(c) Exemption from terminal excise duty where supplies are made against ICB. In other cases,
refund of terminal excise duty will be given. Exemption from TED shall also be available for
supplies made by an Advance Authorisation holder to a manufacturer holding another Advance
Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter.

Benefits to the Supplier

8.4.1

(i) In respect of supplies made against Advance Authorisation / DFIA in terms of paragraph
8.2(a) of FTP, supplier shall be entitled to Advance Authorisation / DFIA for intermediate
supplies.

(ii) If supplies are made against Advance Release Order (ARO) or Back to Back Letter of Credit
issued against Advance Authorisation / DFIA in terms of paragraphs 4.1.11 and 4.1.12 of FTP,
suppliers shall be entitled to benefits listed in paragraphs 8.3(b) and (c) of FTP, whichever is
applicable.

8.4.2

In respect of supply of goods to EOU / EHTP / STP / BTP in terms of paragraph 8.2(b) of FTP,
supplier shall be entitled to benefits listed in paragraphs 8.3(a), (b) and (c) of FTP, whichever is
applicable.

8.4.3

In respect of supplies made under paragraph 8.2(c) of FTP, supplier shall be entitled to the
benefits listed in paragraphs 8.3(a), (b) and (c) of the Policy, whichever is applicable.

8.4.4

(i) In respect of supplies made under paragraphs 8.2(d), (f) and (g) of FTP, supplier shall be
entitled to benefits listed in paragraphs 8.3(a), (b) and (c), whichever is applicable.

(ii) In respect of supplies mentioned in paragraph 8.2(d), supplies to projects funded by such
Agencies alone, as may be notified by DEA, MoF, shall be eligible for deemed export benefits.
A list of such Agencies / Funds is given in Appendix 13 of HBP v1 .

(iii) Benefits of deemed exports under para 8.2(f) of FTP shall be applicable in respect of items,
import of which is allowed by DoR at zero customs duty, subject to fulfillment of conditions
specified under Notification No. 21/2002-Customs dated 1.3.2002, as amended from time to
time.

(iv) Supply of Capital goods and spares upto 10% of FOR value of capital goods to power
projects in terms of paragraph 8.2(g), shall be entitled for deemed export benefits provided the
ICB procedures have been followed at Independent Power Producer (IPP) / Engineering and
Procurement Contract (EPC) stage. However, in regard to mega power projects, the requirement
of ICB would not be mandatory, if the requisite quantum of power has been tied up through tariff
based competitive bidding or if the project has been awarded through tariff based competitive
bidding. Benefit of deemed exports shall also be available for renovation / modernization of
power plants. Supplier shall be eligible for benefits listed in paragraph 8.3(a) and (b) of FTP,
whichever is applicable. However, supply of goods required for setting up of any mega power
project as specified in S.No. 400 of DoR Notification No. 21/2002- Customs dated 1.3.2002, as
amended, shall be eligible for deemed export benefits as mentioned in paragraph 8.3(a), (b) and
(c) of FTP, whichever is applicable, if such mega power project complies with the threshold
generation capacity specified therein, in Customs Notification.

Further, supply of goods required for the expansion of existing mega power project as specified
in Sl. no 400A of DoR Notification 21/2002- Customs dated 1.3.2002, as amended shall also be
eligible for deemed export benefits as mentioned in paragraph 8.3 ( a), (b) and (c) of FTP,
whichever is applicable.

(v) Supplies under paragraph 8.2(g) of FTP to new refineries being set up during Ninth Plan
period and spilled over to Tenth Plan period, shall be entitled for deemed export benefits in
respect of goods mentioned in list 17 specified in S.No. 228 of Notification No. 21/2002-
Customs dated 1.3.2002, as amended from time to time. Supplier shall be eligible for benefits
listed in paragraphs 8.3(a) and (b) of FTP, whichever is applicable.

8.4.5

In respect of supplies made under paragraph 8.2(e) of FTP, supplier shall be eligible for benefits
listed in paragraph 8.3(a) and (b) of FTP, whichever is applicable. Benefit of deemed exports
shall be available in respect of supplies of capital goods and spares to Fertilizer Plants which are
set up or expanded / revamped / retrofitted / modernized during Ninth Plan period. Benefit of
deemed exports shall also be available on supplies made to Fertilizers Plants, which have started
in the 8th / 9th Plan periods and spilled over to 10th Plan period.

8.4.6

Supplies of goods to projects funded by UN Agencies covered under para 8.2(i) of FTP are
eligible for benefits listed in paragraph 8.3(a) and (b) of FTP, whichever is applicable.

8.4.7

In respect of supplies made to Nuclear Power Projects under para 8.2(j) of FTP, the supplier
would be eligible for benefits given in para 8.3(a), (b) and (c) of FTP, whichever is applicable.
Supply of only those goods required for setting up any Nuclear Power Project specified in list 43
at S.No. 401 of Notification No. 21/2002-Customs dated 1.3.2002, as amended from time to
time, having a capacity of 440MW or more as certified by an officer not below rank of Joint
Secretary to Government of India in Department of Atomic Energy, shall be entitled for deemed
export benefits in cases where procedure of competitive bidding (and not ICB ) has been
followed.

Eligibility for refund of terminal excise duty / drawback

8.5

Supply of goods will be eligible for refund of terminal excise duty in terms of para 8.3(c) of FTP,
provided recipient of goods does not avail CENVAT credit / rebate on such goods. Similarly,
supplies will be eligible for deemed export drawback in terms of para 8.3(b) of FTP on Central
Excise paid on inputs / components, provided CENVAT credit facility / rebate has not been
availed by applicant. Such supplies will however be eligible for deemed export drawback on
customs duty paid on inputs / components.

8.5.1

Simple interest @ 6% per annum will be payable on delay in refund of duty drawback and
terminal excise duty under deemed export scheme if the case is not settled within 30 days of
receipt of complete application (as in paragraph 9.10.1 of HBP v1).

Supplies to be made by the main / subcontractor

8.6.1
In all cases of deemed exports, supplies shall be made directly to designated Projects / Agencies /
Units / Advance Authorisation / EPCG Authorisation holders. Sub-contractormay, however,
make supplies to main contractor instead of supplying directly to designated projects / Agencies.
Such Supplies shall be eligible for deemed export benefits as per procedure laid down in
paragraph 8.4 of HBP v1.

8.6.2

Supplies made by an Indian sub-contractor of an Indian or foreign main contractor directly to the
designated projects / Agencies, shall also be eligible for deemed export benefits provided sub-
contractor is indicated either originally or subsequently in the contract, and payment certificate is
issued by project authority in the name of sub-contractor as in Appendix 22C of HBP v1.

CHAPTER 6

EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY

PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) AND BIO-
TECHNOLOGY PARKS (BTPs).

Eligibility

6.1

Units undertaking to export their entire production of goods and services (except permissible
sales in DTA), may be set up under the Export Oriented Unit (EOU) Scheme, Electronics
Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP) Scheme or Bio-
Technology Park (BTP) Scheme for manufacture of goods, including repair, remaking,
reconditioning, re-engineering and rendering of services. Trading units are not covered under
these schemes.

Export and Import of Goods

6.2

(a) An EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items
that are prohibited in ITC (HS). Export of Special Chemicals, Organisms, Materials, Equipment
and Technologies (SCOMET) shall be subject to fulfillment of the conditions indicated in
ITC(HS).

Procurement and supply of export promotion material like brochure / literature, pamphlets,
hoardings, catalogues, posters etc. upto a maximum value limit of 1.5% of FOB value of
previous years exports shall also be allowed.

(b) An EOU / EHTP / STP / BTP unit may import and /or procure, from DTA or bonded
warehouses in DTA / international exhibition held in India, without payment of duty, all types of
goods, including capital goods, required for its activities, provided they are not prohibited items
of import in the ITC (HS). Any permission required for import under any other law shall be
applicable. Units shall also be permitted to import goods including capital goods required for
approved activity, free of cost or on loan / lease from clients. Import of capital goods will be on a
self certification basis. Goods imported by a unit shall be with actual user condition and shall be
utilized for export production.

(c) State Trading regime shall not apply to EOU manufacturing units. However, in respect of
Chrome Ore / Chrome concentrate, State Trading Regime as stipulated in export policy of these
items, will be applicable to EOUs.

(d) EOU / EHTP / STP / BTP units may import / procure from DTA, without payment of duty,
certain specified goods for creating a central facility. Software EOU / DTA units may use such
facility for export of software.

(e) An EOU engaged in agriculture, animal husbandry, aquaculture, floriculture, horticulture,

pisciculture, viticulture, poultry or sericulture may be permitted to remove specified goods in
connection with its activities for use outside bonded area.

(f) Gems and jewellery EOUs may source gold / silver / platinum through nominated agencies on
loan / outright purchase basis. Units obtaining gold / silver / platinum from nominated agencies,
either on loan basis or outright purchase basis shall export gold / silver / platinum within 90 days
from date of release.

(g) EOU / EHTP / STP / BTP units, other than service units, may export to Russian Federation in
Indian Rupees against repayment of State Credit / Escrow Rupee Account of buyer subject to
RBI clearance, if any.

(h) Procurement and export of spares / components, upto 5% of FOB value of exports, may be
allowed to same consignee / buyer of the export article, subject to the condition that it shall not
count for NFE and direct tax benefits.

(i) BoA may allow, on a case to case basis, requests of EOU / EHTP / STP / BTP units in sectors
other than Gems & Jewellery, for consolidation of goods related to manufactured articles and
export thereof along with manufactured article. Such goods may be allowed to be imported /
procured from DTA by EOU without payment of duty, to the extent of 5% FOB value of such
manufactured articles exported by the unit in preceding financial year. Details of procured /
imported goods and articles manufactured by the EOU will be listed separately in the export
documents. In such cases, value of procured / imported goods will not be taken into account for
calculation of NFE, DTA sale entitlement & profits accruing out of such procured / imported
goods will not be eligible for income tax benefits. Such procured / imported goods shall not be
allowed to be sold in DTA. BoA may also specify any other conditions.

Second Hand Capital Goods

6.3

Second hand capital goods, without any age limit, may also be imported duty free.

Leasing of Capital Goods

6.4

a) An EOU / EHTP / STP / BTP unit may, on the basis of a firm contract between parties, source
capital goods from a domestic / foreign leasing company without payment of customs / excise
duty. In such a case, EOU / EHTP / STP / BTP unit and domestic / foreign leasing company shall
jointly file documents to enable import / procurement of capital goods without payment of duty.

b) An EOU / EHTP / BTP / STP unit may sell capital goods and lease back the same from a Non
Banking Financial Company (NBFC), subject to the following conditions:

i) The unit should obtain permission from the jurisdictional Deputy / Assistant Commissioner of
Customs or Central Excise, for entering into transaction of ‘Sale and Lease Back of Assets’, and
submit full details of the goods to be sold and leased back and the details of NBFC;

ii) The goods sold and leased back shall not be removed from the unit’s premises;

iii) The unit should be NFE positive at the time when it enters into sale and lease back
transaction with NBFC;

iv) A joint undertaking by the unit and NBFC should be given to pay duty on goods in case of
violation or contravention of any provision of the notification under which these goods were
imported or procured, read with Customs Act, 1962 or Central Excise Act, 1944, and that the lien
on the goods shall remain with the Customs / Central Excise Department, which will have first
charge over the said goods for recovery of sum due from the unit to Government under provision
of Section 142(b) of the Customs Act, 1962 read with the Customs (Attachment of Property of
Defaulters for Recovery of Govt. Dues) Rules, 1995.

Net Foreign Exchange Earnings

6.5

EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner except for sector
specific provision of Appendix 14-I-C of HBP v 1, where a higher value addition shall be
required. NFE Earnings shall be calculated cumulatively in blocks of five years, starting from
commencement of production. Whenever a unit is unable to export due to prohibition /
restriction imposed on export of any product mentioned in LoP, the five year block period for
calculation of NFE earnings may be suitably extended by BoA. BoA may also consider
extension of block period by another one year, for calculation of NFE, on case to case basis, for
those units which complete 5 years block period in between 30.09.2008 and 30.09.2009, keeping
in view the decline in exports in that particular unit, due to economic slow down only.
Letter of Permission / Letter of Intent and Legal Undertaking

6.6

(a) On approval, a Letter of Permission (LoP) / Letter of Intent (LoI) shall be issued by DC /
designated officer to EOU / EHTP / STP / BTP unit. LoP / LoI shall have an initial validity of 3
years, by which time unit should have commenced production. Its validity may be extended
further up to 3 years by competent authority. However, proposals for extension beyond six years
shall be considered in exceptional circumstances, on a caseto- case basis by BoA. Once unit
commences production, LoP / LoI issued shall be valid for a period of 5 years for its activities.
This period may be extended further by DC for a period of 5 years at a time.

(b) LoP / LoI issued to EOU / EHTP / STP / BTP units by concerned authority, subject to
compliance of provision in para 6.2 above, would be construed as an Authorisation for all
purposes.

(c) Unit shall execute an LUT with DC concerned. Failure to ensure positive NFE or to abide by
any of the terms and conditions of LoP / LoI / IL / LUT shall render the unit liable to penal
action under provisions of the FT (D&R) Act and Rules and Orders made thereunder, without
prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL.

Investment Criteria

(d) Only projects having a minimum investment of Rs. 1 Crore in plant & machinery shall be
considered for establishment as EOUs. However, this shall not apply to existing units and units
in EHTP / STP / BTP, Handicrafts / Agriculture / Floriculture / Aquaculture / Animal Husbandry
/ Information Technology, Services, Brass Hardware and Handmade jewellery sectors. BoA may
also allow establishment of EOUs with a lower investment criteria.

Application & Approvals

6.7

(a) Applications for setting up of units under EOU scheme, other than proposals for setting up of
units in services sector (except R&D, software and IT enabled services, or any other service
activity as may be delegated by BoA), shall be approved or rejected by the Units Approval
Committee within 15 days as per criteria indicated in HBP v1.

(b) In other cases, approval may be granted by BoA set up for this purpose as indicated in HBP v
1.

(c) Proposals for setting up EOU requiring industrial licence may be granted approval by DC
after clearance of proposal by BoA and DIPP within 45 days.

(d) Applications for conversion into an EOU / EHTP / STP / BTP unit from existing DTA units,
having an investment of Rs. 50 crores and above in plant and machinery or exporting Rs. 50
crores and above annually, shall be placed before BoA for a decision.

DTA Sale of Finished Products / Rejects / Waste / Scrap / Remnants and Byproducts

6.8

Entire production of EOU / EHTP / STP / BTP units shall be exported subject to following:

(a) Units, other than gems and jewellery units, may sell goods upto 50% of FOB value of
exports, subject to fulfilment of positive NFE, on payment of concessional duties. Within
entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported
or expected to be exported from units. However, units which are manufacturing and exporting
more than one product can sell any of these products into DTA, upto 90% of FOB value of
export of the specific products, subject to the condition that total DTA sale does not exceed the
overall entitlement of 50% of FOB value of exports for the unit, as stipulated above. No DTA
sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, books,
tea (except instant tea), pepper & pepper products, marble and such other items as may be
notified from time to time. Such DTA sale shall also not be permissible to units engaged in
activities of packaging / labeling / segregation / refrigeration / compacting / micronisation
/pulverization / granulation / conversion of monohydrate form of chemical to anhydrous form or
vice-versa. Sales made to a unit in SEZ shall also be taken into account for purpose of arriving at
FOB value of export by EOU provided payment for such sales are made from Foreign Exchange
Account of SEZ unit. Sale to DTA would also be subject to mandatory requirement of
registration of pharmaceutical products (including bulk drugs). An amount equal to Anti
Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of import,
shall be payable on the goods used for the purpose of manufacture or processing of the goods
cleared into DTA from the unit.

(b) For services, including software units, sale in DTA in any mode, including on line data
communication, shall also be permissible up to 50% of FOB value of exports and /or 50% of
foreign exchange earned, where payment of such services is received in foreign exchange.

(c) Gems and jewellery units may sell upto 10% of FOB value of exports of the preceding year in
DTA, subject to fulfillment of positive NFE. In respect of sale of plain jewellery, recipient shall
pay concessional rate of duty as applicable to sale from nominated agencies. In respect of
studded jewellery, duty shall be payable as applicable.

(d) Unless specifically prohibited in LoP, rejects within an overall limit of 50% may be sold in
DTA on payment of duties as applicable to sale under sub-para 6.8(a) on prior intimation to
Customs authorities. Such sales shall be counted against DTA sale entitlement. Sale of rejects
upto 5% of FOB value of exports shall not be subject to achievement of NFE.

(e) Scrap / waste / remnants arising out of production process or in connection therewith may be
sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional
duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap /
waste / remnants shall not be subject to achievement of positive NFE. In respect of items not
covered by norms, DC may fix ad-hoc norms for a period of six months and within this period,
norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms
are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA
sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste /
remnants may also be exported.

(f) There shall be no duties / taxes on scrap / waste / remnants, in case same are destroyed with
permission of Customs authorities.

(g) By-products included in LoP may also be sold in DTA subject to achievement of positive
NFE, on payment of applicable duties, within the overall entitlement of subpara 6.8(a). Sale of
by-products by units not entitled to DTA sales, or beyond entitlements of sub-para 6.8 (a), shall
also be permissible on payment of full duties.

(h) EOU / EHTP / STP / BTP units may sell finished products, except pepper and pepper
products and marble, which are freely importable under FTP in DTA, under intimation to DC,
against payment of full duties, provided they have achieved positive NFE. An amount equal to
Anti Dumping duty under section 9A of the Customs Tariff Act, 1975 leviable at the time of
import, shall be payable on the goods used for the purpose of manufacture or processing of the
goods cleared into DTA from the unit.

(i) In case of units manufacturing electronics hardware and software, NFE and DTA sale
entitlement shall be reckoned separately for hardware and software.

(j) In case of DTA sale of goods manufactured by EOU / EHTP / STP / BTP, where basic duty
and CVD is nil, such goods may be considered as non-excisable for payment of duty.

(k) In case of new EOUs, advance DTA sale will be allowed not exceeding 50% of its estimated
exports for first year, except pharmaceutical units where this will be based on its estimated
exports for first two years.

(l) Units in Textile and Granite sectors shall have an option to sell goods into DTA in terms of
sub- paras 6.8 (a), (d), (e), (g) and (k) above, on payment of an amount equal to aggregate of
duties of excise leviable under section 3 of the Central Excise Act, 1944 or under any other law
for the time being in force, on like goods produced or manufactured in India other than in an
EOU, subject to the condition that they have not used duty paid imported inputs in excess of 3%
of the FOB value of exports of the preceding year and they have achieved positive NFE. Once
this option is exercised, the unit will not be allowed to import any duty free inputs for any
purpose.

Other Supplies in DTA

6.9

Following supplies effected from EOU / EHTP / STP / BTP units to DTA will be counted for
fulfillment of positive NFE:

(a) Supplies effected in DTA to holders of Advance Authorisation / Advance Authorisation for
annual requirement / DFIA under duty exemption / remission scheme / EPCG scheme. However,
printing sector EOUs (or any other sector that may be notified in HBP v 1), can not supply
goods, where basic customs duty and CVD is nil or exempted otherwise, to holders of Advance
Authorisation / Advance Authorization for annual requirement.

(b) Supplies effected in DTA against foreign exchange remittance received from overseas.

(c) Supplies to other EOU / EHTP / STP / BTP / SEZ units, provided that such goods are
permissible for procurement in terms of para 6.2 of FTP.

(d) Supplies made to bonded warehouses set up under FTP and / or under section 65 of Customs
Act and free trade and warehousing zones, where payment is received in foreign exchange.

(e) Supplies of goods and services to such organizations which are entitled for duty free import
of such items in terms of general exemption notification issued by MoF, as may be provided in
HBP v 1.

(f) Supplies of Information Technology Agreement (ITA -1) items and notified zero duty
telecom / electronics items.

(g) Supplies of items like tags, labels, printed bags, stickers, belts, buttons or hangers to DTA
unit for export.

(h) Supply of LPG produced in an EOU refinery to Public Sector domestic oil companies for
being supplied to household domestic consumers at subsidized prices under the Public
Distribution System (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by
the Ministry of Petroleum and Natural Gas vide notification No. E-20029/18/2001-PP dated
28.01.2003 (hereinafter referred to as PDS Scheme) subject to the following conditions:-

(a) Only supply of such quantity of LPG would be eligible for which Ministry of
Petroleum and Natural Gas declines permission for export and requires the LPG to be
cleared in DTA; and

(b) The Ministry of Finance by a notification has permitted duty free imports of LPG for
supply under the aforesaid PDS Scheme.

Export through others

6.10

An EOU / EHTP / STP / BTP unit may export goods manufactured / software developed by it
through another exporter or any other EOU / EHTP / STP / SEZ unit subject to conditions
mentioned in para 6.18 of HBP v1.
Entitlement for supplies from the DTA

6.11

(a) Supplies from DTA to EOU / EHTP / STP / BTP units will be regarded as “deemed exports”
and DTA supplier shall be eligible for relevant entitlements under chapter 8 of FTP, besides
discharge of export obligation, if any, on the supplier. Notwithstanding the above, EOU / EHTP /
STP / BTP units shall, on production of a suitable disclaimer from DTA supplier, be eligible for
obtaining entitlements specified in chapter 8 of FTP. For claiming deemed export duty
drawback, they shall get brand rates fixed by DC wherever All Industry Rates of Drawback are
not available.

(b) Suppliers of precious and semi-precious stones, synthetic stones and processed pearls from
DTA to EOU shall be eligible for grant of Replenishment Authorisations at rates and for items
mentioned in HBP v1.

(c) In addition, EOU / EHTP / STP / BTP units shall be entitled to following:-

i) Reimbursement of Central Sales Tax (CST) on goods manufactured in India.

Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not
settled within 30 days of receipt of complete application (as in paragraph 9.10.1 of HBP v1).

ii) Exemption from payment of Central Excise Duty on goods procured from DTA on goods
manufactured in India.

iii) Reimbursement of duty paid on fuel procured from domestic oil companies / Depots of
domestic oil Public Sector Undertakings as per drawback rate notified by DGFT from time to
time. Reimbursement of additional duty of excise levied on fuel under the Finance Acts would
also be admissible.

iv) CENVAT Credit on service tax paid.

Other Entitlements

6.12

Other entitlements of EOU / EHTP / STP / BTP units are as under:

(a) Exemption from Income Tax as per Section 10A and 10B of Income Tax Act.
(b) Exemption from industrial licensing for manufacture of items reserved for SSI sector.

(c) Export proceeds will be realized within 12 months.

(d) Units will be allowed to retain 100% of its export earning in the EEFC account.

(e) Unit will not be required to furnish bank guarantee at the time of import or going for job
work in DTA, where unit has

(i) a turnover of Rs. 5 crores or above;

(ii) unit is in existence for at least three years; and

(iii) The unit :

(a) has achieved positive NFE / export obligation wherever applicable;

(b) has not been issued a show cause notice or a confirmed demand, during the preceding 3
years, on grounds other than procedural violations, under the penal provision of the Customs
Act, the Central Excise Act, the Foreign Trade (Development & Regulation) Act, the Foreign
Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or
the rules made thereunder, on account of fraud / collusion / willful mis-statement / suppression of
facts or contravention of any of the provisions thereof;

(f) 100% FDI investment permitted through automatic route similar to SEZ units.

(g) Units shall pay duty on the goods produced or manufactured and cleared into DTA on
monthly basis in the manner prescribed in the Central Excise Rules.

Inter Unit Transfer

6.13

(a) Transfer of manufactured goods from one EOU / EHTP / STP / BTP unit to another EOU /
EHTP / STP / BTP unit is allowed with prior intimation to concerned DC and Customs
authorities, following procedure of in-bond movement of goods. Transfer of manufactured goods
shall also be allowed from EOU / EHTP / STP / BTP unit to a SEZ developer or unit following
procedure prescribed in SEZ Rules, 2006.

(b) Capital goods may be transferred or given on loan to other EOU / EHTP / STP / BTP / SEZ
units, with prior intimation to concerned DC and Customs authorities.

(c) Goods supplied by one unit of EOU / EHTP / STP / BTP to another unit shall be treated as
imported goods for second unit for payment of duty, on DTA sale by second unit.

Sub-Contracting

6.14

(a) (i) EOU / EHTP / STP / BTP units, including gems and jewellery units, may on the basis of
annual permission from Customs authorities, subcontract production processes to DTA through
job work which may also involve change of form or nature of goods, through job work by units
in DTA.

(ii) These units may subcontract upto 50% of overall production of previous year in value terms
in DTA with permission of Customs authorities.

(b) (i) EOU may, with annual permission from Customs authorities, undertake job work for
export, on behalf of DTA exporter, provided that goods are exported directly from EOU and
export document shall jointly be in name of DTA / EOU. For such exports, DTA units will be
entitled for refund of duty paid on inputs by way of brand rate of duty drawback.

(ii) Duty free import of goods for execution of export order placed on EOU by foreign supplier
on jobwork basis, would be allowed subject to condition that no DTA clearance shall be allowed.

(iii) Subcontracting of both production and production processes may also be undertaken without
any limit through other EOU / EHTP / STP / BTP / SEZ units, on the basis of records maintained
in unit.

(iv) EOU / EHTP / STP / BTP units may subcontract part of production process abroad and send
intermediate products abroad as mentioned in LoP. No permission would be required when
goods are sought to be exported from subcontractor premises abroad. When goods are sought to
be brought back, prior intimation to concerned DC and Customs authorities shall be given.

(c) Scrap / waste / remnants generated through job work may either be cleared from job worker’s
premises on payment of applicable duty on transaction value or destroyed in presence of
Customs / Central Excise authorities or returned to unit. Destruction shall not apply to gold,
silver, platinum, diamond, precious and semi precious stones.

(d) Sub-contracting / exchange by gems and jewellery EOUs through other EOUs or SEZ units
or units in DTA, shall be as per procedure indicated in HBP v1.

Sale of Unutilized Material

6.15

(a) In case an EOU / EHTP / STP / BTP unit is unable to utilize goods and services, imported or
procured from DTA, it may be

(i) transferred to another EOU / EHTP / STP / BTP /SEZ unit; or

(ii) disposed off in DTA with approval of Customs authorities on payment of applicable duties
and submission of import authorization; or

(iii) exported. Such transfer from EOU / EHTP / STP / BTP unit to another such unit would be
treated as import for receiving unit.

(b) Capital goods and spares that have become obsolete /surplus, may either be exported,
transferred to another EOU / EHTP / STP / BTP / SEZ unit or disposed off in DTA on payment
of applicable duties. Benefit of depreciation, as applicable, will be available in case of disposal in
DTA only when the unit has achieved positive NFE taking into consideration the depreciation
allowed.

No duty shall be payable in case capital goods, raw material, consumables, spares, goods
manufactured, processed or packaged, and scrap / waste / remnants / rejects are destroyed within
unit after intimation to Customs authorities or destroyed outside unit with permission of Customs
authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond,
precious and semi precious stones.

(c) In case of textile sector, disposal of left over material / fabrics upto 2% of cif value or
quantity of import, whichever is lower, on payment of duty on transaction value, may be
allowed, subject to certification of Central Excise / Customs officers that these are leftover items.

(d) Disposal of used packing material will be allowed on payment of duty on transaction value.

Reconditioning / Repair and Re-engineering

6.16

EOU / EHTP / STP / BTP units may be set up with approval of BoA to carry out reconditioning,
repair, remaking, testing, calibration, quality improvement, up-gradation of technology and re-
engineering activities for export in foreign currency. Provisions of paragraphs 6.8, 6.9, 6.10,
6.13, 6.14 of FTP and para 6.28 of HBP v1 shall not, however, apply to such activities.

Replacement / Repair of imported / Indigenous Goods

6.17

(a) General provisions of FTP relating to export / import of replacement / repair of goods would
also apply equally to EOU / EHTP / STP / BTP units. Cases not covered by these provisions
shall be considered on merits by DC.

(b) Goods sold in DTA and not accepted for any reasons, may be brought back for repair /
replacement, under intimation to concerned jurisdictional Customs / Central Excise authorities.

(c) Goods or parts thereof, on being imported / indigenously procured and found defective or
otherwise unfit for use or which have been damaged or become defective subsequently, may be
returned and replacement obtained or destroyed. In the event of replacement, goods may be
brought back from foreign suppliers or their authorized agents in India or indigenous suppliers.
The unit can take free of cost replacement (duty paid) from the authorized agents in India of
foreign suppliers, provided the defective part is re-exported or destroyed. However destruction
shall not apply to precious and semi precious stones and precious metals.

Exit from EOU Scheme

6.18

(a) With approval of DC, an EOU may opt out of scheme. Such exit shall be subject to payment
of Excise and Customs duties and industrial policy in force.

(b) If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.

(c) In the event of a gems and jewellery unit ceasing its operation, gold and other precious
metals, alloys, gems and other materials available for manufacture of jewellery, shall be handed
over to an agency nominated by DoC, at price to be determined by that agency.

(d) An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit from the scheme at
any time on payment of duty on capital goods under the prevailing EPCG Scheme for DTA
Units. This will be subject to fulfillment of positive NFE criteria under EOU scheme, eligibility
criteria under EPCG scheme and standard conditions indicated in HBP v 1.
(e) Unit proposing to exit out of EOU scheme shall intimate DC and Customs and Central Excise
authorities in writing. Unit shall assess duty liability arising out of debonding and submit details
of such assessment to Customs and Central Excise authorities. Customs and Central Excise
authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has
achieved positive NFE, taking into consideration the depreciation allowed. After payment of
duty and clearance of all dues, unit shall obtain “No Dues Certificate” from Customs and Central
Excise authorities. On the basis of “No Dues Certificate” so issued by the Customs and Central
Excise authorities, unit shall apply to DC for final debonding.

In case there is no proceeding pending under FT(D&R) Act, DC shall issue final debonding
order within a period of 7 working days. Between “No Dues Certificate” issued by Customs and
Central Excise authorities and final debonding order by DC, unit shall not be entitled to claim
any exemption for procurement of capital goods or inputs. However, unit can claim Advance
Authorisation / DEPB / Duty Drawback. Since the duty calculations and dues are disputed and
take a long time, a BG / Bond / Installment processes backed by BG shall be provided for
expediting the exit process.

(f) In cases where a unit is initially established as DTA unit with machines procured from abroad
after payment of applicable import duty, or from domestic market after payment of excise duty,
and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA
after debonding would be without payment of duty. Similarly, in cases where a DTA unit
imported capital goods under EPCG Scheme and after completely fulfilling export obligation
gets converted into EOU, unit would not be charged customs duty on capital goods at the time of
removal of such capital goods in DTA when debonding.

(g) An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit under Advance
Authorization as a one time option. This will be subject to fulfillment of positive NFE criteria.

Conversion

6.19

(a) Existing DTA units may also apply for conversion into an EOU / EHTP / STP / BTP unit, and
Income Tax benefits under Section 10A and 10B will be available for plant, machinery and
equipment already installed.

(b) Existing EHTP / STP units may also apply for conversion / merger to EOU unit and vice-
versa. In such cases, units will remain in bond and avail exemptions in duties and taxes as
applicable.

Monitoring of NFE
6.20

Performance of EOU / EHTP / STP / BTP units shall be monitored by Units Approval
Committee as per guidelines in HBP v1.

Export through Exhibitions / Export Promotion Tours /showrooms abroad /Duty Free
Shops

6.21

EOU / EHTP / STP / BTP are permitted to:

(i) Export goods for holding / participating in exhibitions abroad with permission of DC.

(ii) Personal carriage of gold / silver / platinum jewellery, precious, semi-precious stones, beads
and articles.

(iii) Export goods for display / sale in permitted shops set up abroad.

(iv) Display / sell in permitted shops set up abroad, or in showrooms of their distributors / agents.

(v) Set up showrooms / retail outlets at International Airports.

Personal Carriage of Import / Export Parcels including through Foreign bound Passengers

6.22

Import / export through personal carriage of gems and jewellery items may be undertaken as per
Customs procedure. However, export proceeds shall be realized through normal banking
channel. Import / export through personal carriage by units, other than gems and jewellery units,
shall be allowed provided goods are not in commercial quantity. An authorized person of Gems
& Jewellery EOU may also import gold in primary form, upto 10 Kgs in a financial year through
personal carriage, as per guidelines prescribed by RBI and DoR.

Export / Import by Post /Courier

6.23

Goods including free samples, may be exported / imported by airfreight or through foreign post
office or through courier, as per Customs procedure.
Administration of EOUs / Powers of DC

6.24

Details of administration of EOUs and powers of DC are given in HBP v1.

Revival of Sick Units

6.25

Subject to a unit being declared sick by appropriate authority, proposals for revival of the unit or
its take over may be considered by BoA .

Approval of EHTP / STP

6.26

In case of units under EHTP / STP schemes, necessary approval / permission under relevant
paragraphs of this Chapter shall be granted by officer designated by Ministry of Communication
and Information Technology, Department of Information Technology, instead of DC, and by
Inter- Ministerial Standing Committee (IMSC) instead of BoA.

Approval of BTP

6.27

Bio-Technology Parks (BTP) would be notified by DGFT on recommendations of Department of

Biotechnology. In case of units in BTP, necessary approval / permission under relevant
provisions of this chapter will be granted by designated officer of Department of Biotechnology.