Export & Import - Export Financing - EOUs. - Conditions

DTA Sales
The entire production of EOU/EPZ/EHTP/STP Units shall be exported subject to the following :

(a) Rejects upto 5% of the value of production may be sold in the Domestic Tariff Area (DTA). Sale of rejects above 5% may be approved by the Development Commissioner concerned in consultation with the local Customs authority. These sales shall be subject to payment of applicable duties.
(b) 25% of the production in value terms may be sold in the DTA subject to payment of applicable duties. DTA sale shall be subject to fulfillment of minimum net foreign exchange earning as a percentage of exports prescribed in appendix I of the Policy. No DTA sale shall be permissible in respect of motor cars, alcoholic liquors and such other items as may be stipulated by Director General of Foreign Trade by a Public Notice issued in this behalf.
(c) However, an EOU/EPZ unit in agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and sericulture may, in accordance with the DTA sale guidelines notified in this behalf, sell upto 50% of the production in value terms in the DTA subject to positive net foreign exchange earning.
(d) The electronics hardware products may be sold in the DTA on the following basis:-

Net foreign exchange earnings as a percentage of exports	Permissible sale in the DTA
(i) Less than 10%	NIL
(ii) 10 - 25%	Up to 30% of the production in value terms of the electronic items, including components manufactured in the unit
(iii) More than 25%	Upto 40% of the production in value terms of electronic items including components manufactured in the units.

(e) EOU / EPZ / EHTP / STP units may be permitted to sell finished products , which are either freely importable under the policy, or against other import licenses, in the DTA , over and above the levels permissible under sub paragraphs (b) and (c) above against payment of full duties, on annual basis, provided they have achieved the stipulated NFEP and export obligation.
(f) Notwithstanding anything stated in above, electronic hardware units in EOU/ EPZ/ EHTP shall have an alternative facility to sell one half of the value of their production on an annual basis, in the domestic market and export the other half of production , in value terms, without any minimum foreign exchange earning stipulation, on payment of applicable duties as specifically notified for this facility. Units desirous of availing this facility shall exercise a one time option in this regard. Such units shall not be eligible for DTA sale facility provided for in paragraph stated above.
(g) For software units, sale in the DTA in any mode, including data communication, shall be permissible upto 25% of their production in value terms

NOTE :- In the case of units manufacturing electronics hardware and software, the net foreign exchange earning as a percentage of exports and DTA sale entitlement shall be reckoned separately for hardware and software.

Other supplies in DTA
The following supplies in DTA shall be counted towards fulfilment of export performance/obligation.

(a) Supplies effected in DTA in terms of paragraph below of the Policy.
(b) Supplies effected in DTA against payment in foreign exchange.
(c) Supplies to other EOU/EPZ/EHTP/STP units provided that such goods are permissible for procurement in terms of paragraph 9.2 of the Policy.

Exports through Export House/Trading House/ Star Trading House/ Super Star Trading House
An EOU / EPZ / EHTP / STP unit may export goods manufactured by it through a merchant exporter / Export House / Trading House / Star Trading House / Super Star Trading House recognised under this Policy or any other EOU / EPZ / EHTP / STP unit. This permission extends only to the marketing of the goods by the merchant exporter / Export House / Trading House / Star Trading House / Super Star Trading House or other EOU / EPZ / EHTP / STP unit. The manufacture of the goods shall be done in the EOU / EPZ / EHTP / STP unit concerned. The level of net foreign exchange earning and export performance as well as any other obligation relating to the imports and exports as prescribed shall continue to be discharged by the EOU / EPZ / EHTP / STP unit concerned.

EOU / EPZ / EHTP /STP units may, with the permission of the concerned Customs authorities:
(a) Supply or sell in the DTA, samples of goods produced by EOU/EPZ//EHTP/STP units for display /market promotion, upto 1% of the value of previous year's export or maximum of Rs. 5 lakhs in case of new unit going into production, on payment of applicable duties. Samples may also be allowed to be removed from the unit, without payment of duty, on furnishing a suitable undertaking to the Custom authority for return of such goods. Samples may also be exported including through courier agencies authorised by the Commissioner of Customs.
(b) Bring back for repair the goods sold in DTA but found defective.
(c) Transfer goods to DTA for repair/replacement, testing or calibration and return.
(d) Transfer goods for quality testing/R & D purpose to any recognised laboratory/ institution upto a maximum of Rs. 2 lakhs per annum for items appearing in the Negative List of Imports and Rs. 5 lakh per annum for other items, without payment of duty, on giving suitable undertaking to the customs for return of the goods. However, if the goods have been consumed/destroyed in the process of testing etc., a certificate from the laboratory/ institution to this effect shall be furnished to the Customs.

Benefits for supplies from the DTA
a) Supplies from the DTA to EOU/EPZ/EHTP/STP units will be regarded as "deemed exports" and, besides being eligible for the relevant benefits under paragraph 10.3 of this Policy, will be eligible for the following benefits :
i) Refund of Central Sales Tax;
ii) Exemption from payment of Central Excise Duty on capital goods, components and raw materials; and
iii) Discharge of export obligation, if any, on the supplier.
(b) EOU/EPZ/EHTP/STP units shall, on production of a suitable disclaimer from the DTA suppliers, be eligible for obtaining the benefits of Deemed exports. For this purpose, they shall get Brand Rates fixed by the DGFT. Such supplies would, however, be eligible for benefits specified in paragraph above.

The benefits stated above shall be available provided the goods supplied are manufactured in the country.