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Circular No.13/2017-Cus

F. No. DGEP/FTP/07/2015(Part -I)
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Directorate General of Export Promotion
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New Delhi, dated the 10
th
April, 2017

To

All Principal Chief Commissioners/ Chief Commissioners of Central Excise,
Customs & Service Tax,

All Principal Chief Commissioners/Chief Commissioners of Customs,

All Principal Chief Commissioners/Chief Commissioners of LTU.

Sub: DTA clearance of goods procured by EOUs/EHTP/STP units from
indigenous sources – charging of Duty – reg.


Madam/Sir,

Attention is drawn to Circular No.74/2001-Cus dated 04.12.2001 issued on the
above subject.

2. Vide the above circular, it was clarified that in case raw materials/ capital goods
etc., procured from indigenous sources by EOUs/EPZ/SEZ /EHTP/STP units are
transferred/ sold back to DTA except for the purpose of replacement, the deemed export
benefits already availed of against such goods shall be required to be refunded back and
that the export benefits shall be deposited through TR in the designated bank. It was
further clarified that the goods will be allowed to be cleared to DTA only on production of
a certificate from the jurisdictional Development Commissioner to the effect that such
deemed export benefits are paid back. In cases, where no deemed benefits were availed,
a certificate to this effect from the jurisdictional Development Commissioner shall be
produced. Only after production of such certificate, these raw materials/capital goods
could be cleared on payment of appropriate central excise duty.

3. It has been brought to the notice of the Board that following difficulties are
normally being faced in getting the certificate from the Development Commissioner:

• Some of the indigenous manufacturers would have shifted their
manufacturing units and/or have closed their manufacturing activities.
• The suppliers may not entertain correspondence pertaining to capital goods
procured from them several years ago.
• From commercial perspective, it is unfair to expect indigenous
manufacturers to refund / surrender deemed export benefits availed by
them several years ago (to enable their Customer units to de -bond
indigenously procured goods).

• Deemed export benefits provided to indigenous manufacturers under
Foreign Trade Policy, should not hinder de-bonding of such goods.
4. Matter has been examined. Attention is drawn to the amendment made to the
Notification No.23/2003-CE dated 31.03.2003 vide Notification No.29/2007-CE dated
06.07.2007 whereby an ‘Explanation’ was added to the principal notification stating that
“goods received from Domestic Tariff Area under the benefits of deemed exports under
Paragraph 8.3(a) and (b) of the Foreign Trade Policy shall be treated as imported goods.”
This amendment has been made for the purpose of levy of duty on goods manufactured
by such procured raw material so as not to treat them at par with goods manufactured
out of wholly indigenous material. This has been amply brought in para 12 of Circular
no. 12/2008-Cus dated 24-7-2008. Therefore, goods procured domestically by
EOUs/EPZ/SEZ/EHTP/STP units on which deemed export benefits have been availed
shall be treated as imported goods and applicable Customs Duty has to be paid (after
granting applicable depreciation on capital goods) at the time of clearance of such goods.
5. However, it appears that field formations are insisting on production of a certificate
from the Development Commissioner as required under Circular no. 74/2001-Cus dated
04-12-2001 even after payment of applicable Customs Duties on clearance of capital
goods procured from DTA by EOU/STP/EHTP units where deemed export benefits have
been availed.
6. It is therefore, clarified, that the indigenous goods supplied to the
EOUs/EPZ/SEZ/EHTP/STP units after availing the deemed export benefits are to be
treated as ‘imported goods’ and accordingly, duty as applicable to the imported goods is
liable to be paid. Once the goods are treated as imported goods and applicable Customs
Duty is paid at the time of their transfer/sale back into DTA or exit, there is no
requirement of refund of the deemed export benefits availed on such goods or for the
production of a certificate from the Development Commissioner regarding refund or non-
availment of deemed export benefits at the time of clearance of such goods or exit.
Alternatively, the EOU/STP/EHTP units would also be allowed to clear the
domestically procured goods or on exit, on payment of Excise Duty as per Notification
No. 22/2003-CE dated 31.03.2003 only on production of certificate from Development
Commissioner to the effect that deemed export benefits have been paid back or not
availed, as the case may be , as envisaged in Circular No.74/2001-Cus dated
04.12.2001.
7. Circular No. 74/2001-Cus dated 04.12.2001 is modified to the above extent.
8. This issues with the approval of Board.
9. This may be brought to the notice of all the field formations and also the trade.

Yours faithfully,


(Saroj Kumar Behera)
Joint Director