L. B. Singhal
Director General

Sub: Department of Revenue’s clarification to the Council permitting supply of anufactured goods by EOUs to EPCG Licence Holder

Paragraph 6.9(a) of the Foreign Trade Policy permits EOUs/EHTP/STP/BTP units to make supplies of goods to EPCG Licence Holder and such supplies are to be counted towards net foreign exchange earning. However many EOUs had brought to the notice of EPCES that central excise authorities are not permitting such supplies on the ground that Department of Revenue’s Notification No. 23/2003-Central Excise dated 31-3-2003 does not specifically permits this. Accordingly EPCES had taken up this issue with Department of Revenue and Ministry of Commerce & Industry. Now EPCES has received a letter No. 305/179/2004-FTT dated 1-12-2004 from Shri Ranjit Kumar, Senior Technical Officer (FTT), Department of Revenue, CBEC, Ministry of Finance clarifying that notifications allowing import under EPCG scheme at concessional rate are also applicable for clearance for EOUs subject to the fulfillment of the conditions of the notification. A copy of this letter is annexed along with this Circular.

This letter clarifies as follows:-

“The issue has been examined. In this respect your attention is drawn to the circular issued from File No.305/83/94-FTT dated 15.9.04. It has been clarified that clearances from EOUs are placed on par with “Imports”. It is for this reason that the amount of duty payable thereon is linked to the customs duty normally leviable on like goods imported into India. It has also been clarified that the benefit of end-use based notifications are also applicable to clearances made from EOU.

Therefore, the notifications allowing import under EPCG Scheme at concessional rate are also applicable for clearances from EOUs subject to the fulfillment of conditions of the notification.”

I hope this would resolve the problems of a large number of EOUs. This is for your information please.