Availment of drawback as an eou

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 March 2014 We want to know if an EOU can claim drawback if the firm did not make any import and uses all duty paid inputs in their production procured from local market and does not claim any cenvat refund and no refund of Central excise duties. The only benefit of eou we are taking is income tax rebate.

Querist : Anonymous

Querist : Anonymous (Querist)

28 March 2014 And we have been issued only LOP from the development commissioner and the unit is not custom bonded, nor we have been issued any green card

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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15 July 2024 If your Export Oriented Unit (EOU) does not import any goods and uses only duty-paid inputs sourced locally for production, and if you do not claim CENVAT refund or Central Excise duty refund, you can still explore the possibility of claiming drawback. Here are some considerations based on the details provided:

### Drawback Eligibility for EOUs:

1. **Inputs Procured Locally**:
- EOUs that use duty-paid inputs procured from the local market can potentially claim drawback on the duties and taxes paid on these inputs, provided they are used in the manufacture of goods that are subsequently exported.

2. **No Import of Goods**:
- Not importing any goods means you won't be claiming drawback on customs duties paid on imported goods. However, drawback can still be claimed on duties paid on domestic inputs used in manufacturing.

3. **CENVAT and Central Excise Refund**:
- Since you mentioned not claiming CENVAT refund or Central Excise duty refund, this aligns with the condition of utilizing duty-paid inputs without seeking refunds, which is generally conducive to claiming drawback.

4. **Export Obligations**:
- To claim drawback, the goods manufactured by your EOU must be exported. The drawback is typically claimed on the duties paid on inputs used in the production of goods that are subsequently exported.

5. **Custom Bonded and Green Card Status**:
- Typically, EOUs that are custom bonded or have a green card (issued under the Duty Exemption Entitlement Certificate scheme) have certain advantages and streamlined processes for exports and claiming benefits like drawback. Since your unit is not custom bonded and doesn’t have a green card, it may affect the administrative ease but doesn’t necessarily preclude you from claiming drawback.

6. **Income Tax Rebate**:
- The income tax rebate for EOUs on profits derived from export activities is a separate benefit and does not impact the eligibility or calculation of drawback.

### Documentation and Compliance:

- To claim drawback, ensure you maintain proper documentation, including invoices showing payment of duties on inputs, proof of export, and compliance with all regulatory requirements.
- Consult with a customs and tax expert to understand the specific conditions and procedures for claiming drawback in your jurisdiction and to ensure compliance with all regulations.

In conclusion, while your EOU’s status of not importing goods and using duty-paid local inputs may restrict certain benefits, such as duty exemption on imports, you can still explore claiming drawback on duties paid on domestic inputs used in exported goods. Seek professional advice to navigate the process and maximize benefits under the drawback scheme.

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