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Circular No. 22/2009-Cus

F.No.:DGEP/EOU/57/2009
Govt. of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Directorate General of Export Promotion

New Delhi, the 19th August, 2009

Sub: Use of duty free raw material for capital goods manufactured within EOU for captive use-reg.

An Export Oriented Unit has represented regarding difficulties faced in grant of exemption from Customs & Central Excise duty on raw materials common for manufacture of both finished goods and capital goods (e.g. jigs, moulds, dies etc) within the EOU for captive use.

2. The issue has been examined. It is viewed that there may not be any difficulty in allowing duty free import/domestic procurement of raw materials common for the manufacture/production of finished goods as well as for the manufacture of capital goods for use within the unit. The usage of inputs, imported or procured domestically, for manufacture of finished goods is allowed as per Standard Input Output norms (SION) [condition (d) (I) (ii) of opening paragraph of notification No. 52/2003-Cus dated 31.03.2003].

3. Raw materials for making capital goods for use within the unit is allowed vide Sl. No. 16 of Annexure-I of notification No. 52/2003-Cus dated 31.03.2003. Capital goods manufactured out of duty free inputs for use within the EOU are required to be accounted for and bonded as per the usual bonding procedure. While following the into-bond procedure, the value of such capital goods woud be assessed by following the computed value method in terms of the Customs valuation Rules, which would inter alia account for the raw material captively consumed in manufacture of capital goods. Such goods would be liable to duty as applicable in case of clearance outside the unit or debonding or exit from EOU scheme. Exemption from payment of duty of excise leviable under section 3 of the Central Excise Act, 1944 vide notification No. 24/2003-CE dated 31.03.2003 shall not be applicable in such cases.

4. Hence, it is clarified that the capital goods manufactured for captive use should be accounted & bonded by following the usual procedure and shall be liable for payment of duty while making clearances outside the unit or debonding or exit from the EOU scheme.

5. This issues with the approval of Central Board of Excise & Customs.

6. Wide publicity may please be given to these instructions by way of issuance of Public/Trade Notice. Difficulties, if any, in implementation of these instructions, may be brought to the notice of the Directorate General of Export Promotion.

7. Receipt of this circular may kindly be acknowledged. .

Yours faithfully

(Praveen Mahajan)
Director General

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GST India Solution is an effort of firm of professionals who welcome implementation of GST. This is an interactiveplatformthat aspires to disseminate right knowledge to professionals, practitioners and public at large. This platform has beenfloatedbya firm of Chartered Accountants relentlessly working in field of direct and indirect taxes since early 1985.

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The senior partner of the firm has to his credit several professional publications viz., Delhi Sales Tax Right to Use Goods Act, Delhi VAT, Maharashtra VAT, West Bengal VAT, Haryana VAT published by Taxmann. Madhya Pradesh VAT and Chhattisgarh VAT were published by Suvidha Law House, Bhopal. He has also addressed seminars on indirect taxes organized by professional bodies like ICAI, IMA, NIFM etc. and has also contributed articles on subjects of pro. . . . .