Export Processing Zones/Free Trade Zones — Specified goods used by units in EPZ/FTZ exempted

2-9-1994

Notification No. 126/94-Central Excise

            In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods, specified in Annexure I to this notification (hereinafter referred to as the said goods), when required for the use by units (hereinafter referred to as the user industry) located in any Export Processing Zone, specified in Annexure II of this notification, being free trade zone (hereinafter referred to as the zone), and brought by the user industry from the factory of their manufacture or warehouse situated in other parts of India, for use by such user industry

(a)    for the production or manufacture of articles for export out of India; or

(b)    for being used in connection with the production, manufacture or packaging of articles for export out of India; or for export of services out of India; or

(c)    for, carrying out processing of, or operations (including repairs, re-conditioning and re-engineering) in relation to, the articles intended for export out of India; or

(d)    for promotion of such export; or

(e) omitted,

from the whole of, -

(i)    the duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944),

(ii)    the additional duty of excise leviable thereon under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957),

subject to the following conditions, namely :-

(1)    the user industry has been authorised to establish a unit in the zone for the purposes specified in clauses (a) to (d) above;

(2)    the user industry brings the excisable goods directly from the factory of manufacture or warehouse;

(3)    the entire excisable goods so brought are used by the user industry in the zone for the purposes specified in clauses (a) to (d) above;

(4)    the user industry disposes of the said goods or the articles produced, manufactured, processed or packaged in the unit in the zone or the waste, scrap and remanants arising out of such production, manufacture, processing or packaging in the manner as provided in the Export-Import Policy and in this notification;

(5)    the user industry executes a bond with the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise (hereinafter referred to as Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise in the prescribed form and for such sum as may be specified by that Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, for the proper accountal of the receipt, storage and utilization of such goods, to fulfill the export obligations and comply with the conditions stipulated in this notification, and the Export and Import Policy and binding itself to pay on demand an amount equal to the duty leviable on the goods and interest at fifteen per cent per annum on the said duty from the date of duty free procurement of the said goods till the date of payment of such duty, if -

(i)    in the case of capital goods, such goods are not proved to the satisfaction of the Assistant Commissioner of Customs or Central Excise to have been installed or otherwise used within the zone within a period of one year from the date of procurement thereof or within such extended period not exceeding five years as the Assistant Commissioner of Customs or Central Excise may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow;

(ii)    in the case of goods other than capital goods, such goods are not proved to the satisfaction of the Assistant Commissioner of Customs or Central Excise to have been used in connection with the production or packaging of goods for export out of India or cleared for home consumption within a period of one year from the date of procurement thereof or within such extended period as the Assistant Commissioner of Customs or Central Excise may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow;

(iii)    in the case of -

(a)    goods produced or packaged, such goods have not been exported out of India, and

(b)    unused goods (including empty cones, bobbins or containers, if any, suitable for repeated use) as have not been exported or cleared for home consumption,

within a period of one year from the date of procurement of such goods or within such extended period as the Assistant Commissioner of Customs or Central Excise may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow;

(iv)    in the case of raw materials, components, spares and consumables (other than capital goods) procured duty free, the unit fails to achieve Net Foreign Exchange Earning as a Percentage of Exports (NFEP) and Export Performance (EP) as specified in Appendix-1 of the Export and Import Policy, within one year of procurement of such goods or within such extended period not exceeding one year as the Assistant Commissioner of Customs or Central Excise may, on being satisfied that there is sufficient cause, allow:

Provided that the Commissioner of Customs or Central Excise may extend the period for achievement of Net Foreign Exchange as a Percentage of Exports (NFEP) or Export Performance (EP) for further period, not exceeding five years, from the date of procurement;

(6)    the user industry satisfies the Development Commissioner of the zone that the said goods have been used for the purposes specified in clauses (a) to (d) or for any other purposes specified in the Export-Import Policy and in this notification;

(7)    the manufacturer of the said goods follows the procedure contained in rules 11and 20 of the Central Excise Rules, 2002;

(8)    the user industry of the said goods follows the procedure contained in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, with the modification that a certificate in Form CT-3 annexed to this notification as Annexure-III shall be used by the Central Excise officer in charge of the user industry in place of an application in the Form at Annexure-I provided in the said rules;";

2.    The Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise may, subject to such conditions and limitations as may be imposed by him and subject to the provisions of the Export-Import Policy,-

(a)    permit the said goods or goods partially processed, manufactured, produced or packaged in the unit to be taken outside the zone without payment of duty, for repairs, processing, testing, display or jobwork and to be returned to the unit thereafter or remove the same without payment of duty under bond for export from jobworker's premises :

Provided that wastes or scrap or remnants generated during such process at the jobworker's premises is either returned to the unit or is cleared on payment of duty on the said waste or scrap or remnants as if cleared by the said unit;

(b)    permit the said goods or goods manufactured, produced, processed or packaged to be supplied or transferred from a unit in the zone to another unit in the same zone for any of the purposes specified in clauses (a) to (c) of paragraph 1;

Provided that clause (b) shall not apply to said goods for repairs, reconditioning or re-engineering.

"(c) permit the goods manufactured or produced in the unit to be supplied or transferred from a unit in the zone to a unit in another zone, special economic zone, Software Technology Park, Electronics Hardware Technology Park or a hundred per cent export oriented undertaking for the purposes specified in clauses (a) to (c) of paragraph 1.

(d) permit the capital goods to be supplied or transferred from a unit in the zone to a unit in another zone, special economic zone, Software Technology Park, Electronics Hardware Technology Park or a hundred per cent export oriented undertaking the purpose of manufacture and export or for the use within the unit.";

3.    Subject to the satisfaction of the Assistant Commissioner, duty shall not be leviable in respect of -

(a)    the said goods used for imparting training to workers of the user industry;

(b)    the said goods or goods manufactured, produced, processed or packaged in the unit, if such goods are destroyed within the zone in the presence of the Central Excise Officer;

(c)    the scrap or waste materials or remnants arising in the course of such production, manufacture, processing or packaging, if such scrap or waste material or remanants are destroyed within the zone in the presence of the Central Excise Officer.

(d)     the capital goods, if such goods are destroyed within the zone where it is not possible or permissible to destroy the same within the said Zone, in the presence of the Central Excise officer.

           Explanation.- For the purposes of this notification, "Export and Import Policy" means the Export and Import Policy, 1^st April, 2002 - 31^st March, 2007, published by the Government of India in the Ministry of Commerce and Industry vide notification No.1/2002-07, dated 31^st March, 2002, as amended from time to time;

4.    Notwithstanding anything contained in paragraph 1, in the case of user industry engaged in the development of computer software, the exemption contained therein shall also apply to said goods procured by such user industry for training, and for development and testing of software for export and for providing consultancy services for development of software "on site" abroad:

Provided that -

(a)    the conditions stipulated in this notification are complied with by such software development unit; and

(b)    the procedure specified by the Assistant Commissioner is followed.

Explanation. -The consultancy fees received by software development units in convertible foreign currency for consultancy service for development of software 'on site' abroad shall be deemed to be exports for the purposes of fulfilment of export obligation under this notification.

5.    Notwithstanding anything contained in this notification the exemption contained herein shall also apply to the said goods used for the purposes of production, manufacture, processing or packaging of articles in a unit in the zone and such articles (including rejects, waste, scrap and remanants arising out of such production, manufacture, processing or packaging of such articles) even if not exported out of India are allowed to be cleared outside the zone under and in accordance with the Export-Import Policy and subject to such other limitations and conditions as may be specified in this behalf by the Development Commissioner of the zone, on payment of appropriate duty of excise or where such articles are cleared to the warehouse appointed or registered under notification of the Government of India in the Ministry of Finance, Department of Revenue, number 26/98-Central Excise (NT), 15th July, 1998 or cleared to the warehouse authorised to carry on manufacturing process or other operations under section 65 of the Customs Act, 1962 ( 52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulations, 1966, or cleared to the licence holders referred to in clause (e) of paragraph 9.10 of the Export and Import Policy, without payment of duty.

Provided that goods which have been repaired, reconditioned or re-engineered shall not be allowed to be cleared outside the zone.

Provided further that where such articles (including rejects, waste and scrap materials) are not excisable, excise duty equal in amount to that leviable on the inputs obtained under this notification and used for the purpose of manufacture of such articles, which would have been paid but for the exemption under this notification, shall be payable at the time of clearance of such articles.

6.    Without prejudice to any other provisions contained in this notification, the Assistant Commissioner of Customs may, subject to such conditions and limitations as he may deem fit to impose under the circumstances of the case for the proper safeguard of the revenue interest and also subject to such permission of the Development Commissioner of the zone where it is exclusively required under Export and Import Policy, allow any unit in the zone to clear any of the said goods for being taken outside the zone to any other place in India, in accordance with the Export-Import Policy -

(a)    such clearance of capital goods, material handling equipment, office equipment and captive power plants or as the case may be, captive generating sets may be allowed on payment of an amount equal to the excise duty leviable on such goods on the depreciated value thereof and at the rate in force on the date of payment of such duty;

(b)    such clearance of used packing materials such as cardboard boxes, polyethylene bags of a kind unsuitable for repeated use, may be allowed without payment of any excise duty;

(c)    such clearance of goods [other than those specified in clauses (a) and (b) above] may be allowed on payment of excise duty leviable on such goods, on the full value at the time of their clearance from the factory of manufacture and at rates in force on the date of payment of such excise duty.

Explanation. -The depreciation in respect of goods covered by clause (a) shall be allowed for the period from the date of commencement of commercial production of the unit or the date of receipt of the goods in the unit, whichever is later, till the date of payment of duty.

6A. Without prejudice to other provisions of this notification, where the Assistant Commissioner or Deputy Commissioner of Central Excise is satisfied that the unit, which has been permitted by the concerned State Electricity Board in this behalf, has been permitted by Development Commissioner to sell into Domestic Tariff Area (DTA) or transfer to other hundred per cent. export oriented undertaking or units in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone, the surplus power generated in its diesel generating sets or captive power plant subject to fulfilment of such conditions as may be specified by the Assistant Commissioner or Deputy Commissioner of Central Excise on this behalf, the Assistant Commissioner or Deputy Commissioner of Central Excise may allow the unit -

(i)   to sell such surplus power in Domestic Tariff Area on payment of an amount equal to the duty leviable on consumables and raw materials but for the exemption of duty thereon, used for generation of each unit of power so sold in the Domestic Tariff Area on the basis of norms approved by the Board of Approvals appointed by the notification of the Government of India in the Ministry of Commerce and Industry, Department of Commerce, number 14/1/2001-EPZ dated 7^th August, 2001;

(ii)   to transfer such surplus power to other hundred per cent. export oriented undertaking or unit in Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park or Special Economic Zone without payment of duty:

Provided that both supplying and receiving unit shall maintain account for the quantity of consumables and raw materials used in generation of each unit of power so transferred as quantified on the basis of norms approved by the said Board of Approval, for the purpose of calculation of Net Foreign Exchange earning as a Percentage of Export.".

7. (1)    The notifications of the Government of India in the Ministry of Finance in the Department of Revenue and Insurance or Department of Revenue, as the case may be, specified in Annexure IV to this notification are hereby rescinded.

(2)    Notwithstanding such rescission, anything done or action taken under the notifications so rescinded shall be deemed to have been done or taken under the corresponding provisions of this notification.

ANNEXURE - I
(see paragraph 1)

ANNEXURE - II
(see paragraph 1)

Name of the Zone

Explanation. -For the purposes of this notification, -

(a)    the "Santa Cruz Electronics Export Processing Zone" shall comprise of the places specified in clause (xiva) of rule 2 of the said rules;

(b)    the "Kandia Free Trade Zone" shall comprise of the places bearing survey numbers and enclosed by the boundaries specified in clause (viia) of rule 2 of the said rules;

(c)    the "Falta Export Processing Zone" and the "Madras Export Processing Zone" shall comprise of places bearing the survey number and enclosed by boundaries specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 236/85-Central Excises, dated the 15th November, 1985;

(d)    the "NOIDA Export Processing Zone" shall comprise of the places bearing the khasra numbers or survey numbers, as the case may be, and enclosed by the boundaries specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 4/86-Central Excises, dated the 20th January, 1986;

(e)    the "Cochin Export Processing Zone" shall comprise of the places bearing the survey numbers, location, area and enclosed by the boundaries specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 397/86-Central Excises, dated the 26th August, 1986;

(f)    the "Vishakapatnam Export Processing Zone" shall comprise of the places bearing the khasra numbers or survey numbers, as the case may be, and enclosed by the boundaries specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 38/94-CentralExcises (N.T.), dated the 2nd September, 1994.

(g)    the "Surat Export Processing Zone" shall comprise of the places bearing the Block numbers, location, area and enclosed by the boundaries specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 7/96-Central Excises (N.T.), dated the 15th March, 1996.

ANNEXURE - III

(see paragraph 1)

No.____________                                                                                                                                 Date ____________

FORM C.T. 3
 Certificate for removal of excisable goods under bond

This is to certify that:

            (1)    Mr./Messrs __________ (Name and address) is/are bona fide licensee holding licence No. ______ valid upto 

            (2)    That he/they has/have executed a bond in Form B-16 (General Surety/General Security).

            No. ______________ date ___________________ for Rs.____________ with the Assistant Commissioner of Central Excise___________________ and as such may be permitted to remove___________ (quantity) of _________(excisable goods) from the unit at _______________________________ to their undertaking___________ at ____________

            (3)    That the specimen signatures of his/their authorized agent namely Shri___________ are furnished herebelow duly attested;

Specimen Signatures of the                         Sd/-
owner or his authorized
agent

                Attested                                                                                                         Central Excise Officer-in-charge
                                                                                                                                      of the unit in Export Processing Zone.
 
 

        1. Notification No; 186/75-Central Excises/ dated the 21st August, 1975.
        2. Notification No. 272/ 79-Central Excises, dated the 18th October, 1979.
        3. Notification No. 237/85-Central Excises, dated the 15th November, 1985
        4. Notification No. 238/85-Central Excises, dated the 15th November, 1985.
        5. Notification No. 5/86-Central Excises, dated the 20th January, 1986.
        6. Notification No. 398/86-Central Excises, dated the 26th August, 1986.
 

Notification No. 126/94-C.E., dated 2-9-1994 as amended by Notifications No. 96/95-C.E., dated 26-5-1995; No. 112/95-C.E., dated 14-9-1995; No. 5/96-C.E., dated 15-3-1996; No. 221/97-C.e, dated 11-4-1997; No. 25/99-C.E., dated 19-5-1999,
No. 2/2000-C.E., dated 28-1-2000, No. 40/2000 dated 22-5-2000, No. 29/2001-C.E., dated 18-5-2001 , No. 52/2001-C.E., dated 8-5-2001, No.35/2002 dated 24-6-2002.and No.36/2002 dated 25-6-2002
 

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