STP / EHTP units are eligible for converting from STP / EHTP scheme to EoU
scheme as per clause 6.19 of Foreign Trade Policy 2015-2020.
Following are the documents required to be filed with STPI for obtaining NOC for the
above. As part of the process Director / CEO / Sr. representatives of the unit should meet
Addl. Director /Director, STPIB to discuss issues related to the conversion;
1. Formal request for conversion from STP scheme to EoU scheme.
2. Reason for conversion from STP scheme to EoU scheme in detail.
3. Board resolution from the company w.r.t. the proposed conversion
4. The performance details as per the enclosed format (Refer Annexure 23 A). The
import details as per Annexure 21. The statement/Annexure should have been certified
by the Chartered Accountant on Yearly Basis.(from the date of inception as STP
Unit). The annexure should also include the details of CG re-exported, de- bonded,
permanently shifted, destructed, donated etc. In case of EHTP units the details w.r.t
import of raw materials is required to be indicated, both in Annexure
21 and 23 A.
5. Surrendering of the following original documents to STPI.
a. Approval letter for setting up the STP /EHTP unit.
b. List of attested capital goods and indigenous goods.
c. Legal agreement
d. Registration cum Membership Certificate (RCMC)
e. Green Card
f. Importer and Exporter Code (IEC), if the same had been issued by STP
5. Payment of pending service charges dues if any.
6. Pending Softex form submission /certification or any other approvals from STPI
7. IT Return copy for the date of inception.
8. Copy of the Annual Performance Report
9. In case unit propose to convert into EOU scheme without de-bonding the CG and
proposes to operate in the same/existing premise, accordingly a declaration need
to be produced.
10. Declaration for taking over of balance export obligation and other statutory
obligations along with the obligation that is required to be met after conversion
any on an Rs.100/-. stamp paper.
11. Copy of the application filed with Office of the EOU for such conversion is to be
Document-proof for the following (if any):
1. Proof of Re-export of the imported goods. (Loan Equipments).
2. Proof of Shifting of the imported goods to the 100% EOU units. (on
3. Proof of De-bonding of the Imported Capital Goods.
4. Proof of De-bonding of the Central Excise Exemption Goods (Indigenous-CT3
5. Proof of Destruction / Scrapping of Imported CG / Central Excise Exemption
6. Proof of Donating the Imported CG / Central Excise Exemption Goods.
7. Proof for de-bonding of premise if any
8. Proof for payment of applicable customs/excise duty, if any.
Upon receipt of the above documents and clearance of service charges dues, the export
obligation is computed. The export obligation for the past years of operations and for the
future period of operations based on the CG imported is computed. The unmet export
obligation and the balance export obligation has to be met by the unit after the conversion
including the EO that is required to be met as per EOU norms after conversion.
Accordingly a declaration will be obtained and NOC for conversion will be issued. The
unit should approach customs and amend the customs bonded ware house license and
copy of the same is required to be filed with STPI. Accordingly, IEC /ROC (wherever
applicable) is required to be amended by DGFT/ Registrar office and copy is required to
be filed with STPI.
Government is giving focus on EOU Scheme and therefore EOU Scheme has been liberalized. There is no requirement of warehousing and also procedural matter has been simplified. Domestic procurement for EOU is kept at par with domestic unit and EOU units are allowed to import duty free by following the procedure under Import of Concessional Rate of Duty (IGCRD).
Earlier DTA Sale used to attract more duty which includes 50% of Basic Custom Duty and additional duties in terms of Section 3 and Section 5 of Custom Tariff Act 1975. Whereas after implementation of GST, if EOU is making DTA Sale, EOU unit is required to pay custom duty saved on imports contents in export products.
Whereas, EOU Unit is required to clear the surplus capital goods or raw material or any other inputs in terms of para 6.15 of Foreign Trade Policy then such unit will have to pay back custom duty saved. Similar provisions have been incorporated in the Notification No. 52/2003 Cus dtd. 31.03.2003 as amended vide Notification No. 79/2018 dtd. 05.12.2018, when the goods are cleared / de-bonded form EOU Scheme and these amendments will have far reaching effect.
Let us closely look into the changes made and impact thereof.
|Sr||Original Wording||Amended Wording||Impact Analysis|
|Para 4 – Second proviso(a)||a. Such clearance of capital goods may be allowed on payment of duty on depreciated value thereof and at the rate in force on the date of clearance.||Such clearance of capital goods may be allowed on payment of duty but for the exemption on the depreciated value thereof.||It means custom duty saved on depreciated value will have to be paid. Custom duty includes Basic Custom Duty + CVD (Section 3(3) of Customs Tarff Act 1975) + SAD (Section 3(5) of Customs Tariff Act 1975) and Section 3(7) of Customs Tariff Act 1975. If such goods are imported prior to 30th June 2017 then duty will have to be paid equivalent to Basic Custom Duty + CVD + SAD and ITC will not be available for the same. However, if goods are imported after 30th June 2017, then Basic Custom Duty + IGST will be payable and ITC of IGST paid will be available based on Bill of Entry which is the document for availment of ITC. Till the time, GSTN system is not integrated with Ice Gate and NSDL for SEZ and also with Private / Public Bonded Warehouse, there will be no issues of availing ITC based on the bill of entry filed at the time of assessment. |
|Para 4 – Second proviso(b)||b. Such clearance of goods (including empty cones, bobbins, containers, suitable for repeated used) other than those specified in clause (a) may be allowed on payment of duty on the value at the time of import and at the rates in force on the date of payment of such duty||Such clearance of goods (including empty cones, bobbins, containers, suitable for repeated used) other than those specified in clause (a) may be allowed on payment of duty but for the exemption on the value at the time of import|
Undoubtedly, EOU, STPI & EHTP Scheme has been made trade friendly focusing for exports and achieving positive NFE. Till the time, NFE is positive, EOU, STPI & EHTP Unit should continue to maintain the status and not required to exit. However, once exit is decided then there will be some additional cost if goods are imported pre-GST regime.
Other changes have been made in the amending Notification 52/2003 Cus dtd. 31.03.2003 Vide Notification No. 79/2018 dtd. 05.12.2018 is mainly aligning with the changes in terms of notification numbers and aligned to provisions of Foreign Trade Policy, substance remains the same, except above two amendments.
Object of this amendment seems to encourage EOU, STPI & EHTP Scheme focusing on export and positive NFE rather than converting into Domestic Unit.