Guidelines to close an EOU, EHTP or STP units part 1

 

How to shut down a STP/EHTP/EOU unit?

 

GUIDELINES FOR EXIT OF EOU/EHTP/STP UNITS

 

Guidelines to close an EOU, EHTP or STP units part 1This post explains about the procedures and formalities to exit STP,EOU or EHTP unit. The below details are the extract of Foreign Trade Policy of India.

 

As per FTP, with approval of Deputy commissioner, an EOU may opt out of scheme. Such exit shall be subject to payment of Excise and Customs duties and industrial policy in force. If unit has not achieved obligations, it shall also be liable to penalty at the time of exit. In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gems and other materials available for manufacture of jewellery, shall be handed over to an agency nominated by DoC, at price to be determined by that agency. An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit from the scheme at any time on payment of duty on capital goods under the prevailing EPCG Scheme for DTA Units. This will be subject to fulfilment of positive NFE criteria under EOU scheme, eligibility criteria under EPCG scheme and standard conditions indicated in HBP.

 

Unit proposing to exit out of EOU scheme shall intimate DC and Customs and Central Excise authorities in writing. Unit shall assess duty liability arising out of de-bonding and submit details of such assessment to Customs and Central Excise authorities. Customs and Central Excise authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has achieved positive NFE, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain “No Dues Certificate” from Customs and Central Excise authorities. On the basis of “No Dues Certificate” so issued by the Customs and Central Excise authorities, unit shall apply to DC for final de-bonding. In case there is no proceeding pending under FT(D&R) Act, as amended, DC shall issue final de-bonding order within a period of 7 working days. Between “No Dues Certificate” issued by Customs and Central Excise authorities and final de-bonding order by DC, unit shall not be entitled to claim any exemption for procurement of capital goods or inputs. However, unit can claim Advance Authorisation / DFIA / Duty Drawback. Since the duty calculations and dues are disputed and take a long time, a BG / Bond / Instalment processes backed by BG shall be provided for expediting the exit process.

 

In cases where a unit is initially established as DTA unit with machines procured from abroad after payment of applicable import duty, or from domestic market after payment of excise duty, and unit is subsequently converted to EOU, in such cases removal of such capital goods to DTA after de-bonding would be without payment of duty. Similarly, in cases where a DTA unit imported capital goods under EPCG Scheme and after completely fulfilling export obligation gets converted into EOU, unit would not be charged customs duty on capital goods at the time of removal of such capital goods in DTA when de-bonding.

 

An EOU / EHTP / STP / BTP unit may also be permitted by DC to exit under Advance Authorization as one time option. This will be subject to fulfillment of positive NFE criteria. A simplified procedure may be provided to fast track the De-bonding/ Exit of the STP / EHTP Unit which has not availed any duty benefit on procurement of raw material, capital goods etc.

 

Also read: Procedures to exit EOU/EHTP/STP/BTP unit as per FTP

 

This post explains about the procedures and formalities to exit STP,EOU or EHTP unit. If you would like to add your views about exit of STP,EOU,EHTP or BTP, write below.

 

 

Share your thoughts about this post, Guidelines to close an EOU, EHTP or STP units.

 

The above information is a part of Export Import Online Tutorial

 

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Comments


Nazim Idrees: In regard to the process of Exit from EOU Scheme. What if the exit process take more than 6 months and may be go beyond 1 year, can the EOU apply for any Advance Authorisation and start importing raw material and also export till the process of EOU is completed ? If so kindly provide the details if any in this regard because the Customs / Central Excise Authorities will stop issuing Procurement Certificates once you apply for exit from EOU and will not issue PC's till the process is completed.

Kiran Sawale: In case capital goods procured duty free from domestic in preGST now at the time of exit in GST regime & goods will remain in the factory, whether duty/tax is payable.

manisha: Your information on your website really helps. Can you please guide if we have lost all the export documents done in the year 209-2014 under EPCG License .We want to close the EPCG but we do not have S/b,Inv,BL, etc. How to get the record for EPCG Redemption ?

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