Article on Continue to be EOU & STPI (Exit is Costlier) (December 2018)

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 30^th 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 30^th 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.]]>