Kandla SEZ>>Exim Policy

Several representations were received from the trade as well as Office of the Development commissioners in respect to the new restrictions on sub-contracting by EOU/EPZ/SEZ units imposed w.e.f. 01.04.2002. Issue was deliberated upon in the meeting held on 17.05.2002 under the Chairmanship of Shri D.K.Acharya, Member (Customs), CBEC. During the discussions, it was felt unanimously that the new restrictions are seriously affecting the working of EOU/EOZ/SEZ units and that the same need to be relaxed. Accordingly, it was decided that the following guidelines would be enforced in respect of sub-contracting by EOU/EPZ/SEZ units:

(i) In case an EOU wants to send the imported or domestically procured raw material as it is, i.e. without being subjected to any processing in the unit, for job work in the Domestic Tariff Area (DTA), then the unit would be required to furnish 100% bank guarantee to cover the duty foregone on such duty free material being taken out for job work. The bank guarantee shall be required to be furnished to the jurisdictional Range Officer of Central Excise or the Jurisdictional Superintendent of Customs, as the case may be. However, the status holder EOUs having unblemished track record shall be exempt from the requirement of furnishing bank guarantee.

(ii) In case an EOU wants to remove the semi-processed goods for job work in DTA for carrying out further process(es), then it would be required to furnish bank guarantee equivalent to 50% of the duty payable on the goods being taken out for job work. However, in case the unit has furnished a bank guarantee as security along with B-17 bond, and the same is sufficient to cover the duty payable on such goods being taken out, then no fresh or additional bank guarantee would be insisted upon. But, in cases, where only surety is given at the time of execution of B-17 bond or the security given along with B-17 bond is not sufficient to cover the duty payable on such goods being taken out for job work in DTA, then the unit would be required to furnish bank guarantee equal to 50% of the duty payable on goods being sent for job work. The status holders EOUs having unblemished track records shall be exempt from the requirement of furnishing bank guarantee.

(iii) An EOU sending out goods for job work in DTA, shall be required to give an intimation to the jurisdictional Bond Officer and a sample of the goods being sent out for job work would be drawn and retained in the Range Office. On receipt of the goods in the unit after job-work, the Bond Officer would establish the identity of goods so returned with reference to the sample retained by him at the time of removal. He would also retain sample of the processed good so returned for the purpose of record. On expiry of six months, both the samples would be returned to the unit after taking due acknowledgement from the Unit.

(iv) In all cases of job-work in DTA, the goods send for job work shall be required to be returned to the unit within a period of 30 days from the date of removal. Further, extension of time may be considered by the Jurisdictional Assistanct Commissioner only in deserving cases. In case of non-receipt of goods within the stipulated period, the Range Officer may take appropriate measures to recover duty, such as, encashment of the bank guarantee given at the time of removal of goods into DTA for job-work.

(v) The Range Officer in charge of EOU would carry out the checks to verify the premises of job-worker, processing capacity of the job-worker, existence of facility for carrying out the declared processes in the job-worker¡¯s premises. Such verification should necessarily be carried out within a period of one month from the date of granting permission for job-work. The verification may be carried out either by visiting the premises of the job-worker or by sending letters/FAX/E-mail to the jurisdictional Range Officer of job-worker¡¯s premises and getting confirmation in writing.

(vi) The requirements prescribed in the Handbook of Procedure (Vol-I) such as job-worker being a Central Excise Registrant, compulsory carrying out first processing in the unit before sending the goods for job-work, and forwarding the sample to the Range Officer in charge of job-worker¡¯s shall not be applicable henceforth.

(vii) The above-mentioned conditions shall also apply mutates mutandis to units located in Export Processing Zones, Special Economic Zones and to the STP and EHTP units. However in case the job-work is done through another unit in the same EPZ/SEZ the above condition will not apply

2. You are requested to permit sub-contracting as per the above guidelines. Changes in the Exim Policy made w.e.f. 01.04.2002 would be deemed to have been amended accordingly.

(Ali Raza Rizvi)
Deputy Secretary

Copy to : (i) Shri P.K. Mohanty, Director (Customs), CBEC, north Block, New Delhi
(ii) PS to AS(AS)/JS(DKM)

(Ali Raza Rizvi)
Deputy Secretary