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DTA Sales - 100% EOU

Sreejith S (Manager-Finance) (95 Points)

03 June 2011

Hi All

Would like to clarify few doubts regarding DTA Sales.

1. What is the benefit of taking DTA Sales permission from STPI to do DTA Sales? If the DTA Sales permission is granted by STPI, Can a 100% EOU sell its product without collecting and remitting applicable Central Excise duty?

2. Suppose a 100% EOU (Software Development Firm) has DTA permission for 5 crores. The unit has sold 2 crores in India and also has collected 1 crore as software consultancy charges from other Indian firms. In that case what would be the " DTA Sales Permission utilised "? 2 crore or 3 crore (2+1)?

3. If a 100% EOU planning to provide Software consultancy services in India should obtain DTA Sales permission? There will not be any domestic sales (software product) for this firm

Thank You
Sreejith

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7 Replies

RAMESH KUMAR VERMA ( CS PURSUING ) (43853 Points)
Replied 04 June 2011

DTA Sale of Finished Products/ Rejects/ Waste/ Scrap/ Remnants and By-products

para 6.8 of foreign trade policy,

The entire production of EOU/EHTP/STP/BTP units shall be exported subject to the following:

(a) Units, other than gems and jewellery units, may sell goods upto 50% of FOB value of exports subject to fulfillment of positive NFE on payment of concessional duties. Within the entitlement of DTA sale, the unit may sell in DTA its products similar to the goods, which are exported or expected to be exported from the units. No DTA sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, tea (except instant tea), pepper & pepper products, marble and such other items as may be notified from time to time. Such DTA sale shall also not be permissible to units engaged in the activities of packaging / labeling / segregation / refrigeration /compacting/ micronisation/ pulverization/ granulation/ conversion of monohydrate form of chemical to anhydrous form or vice-versa.

(In above (a) from third sentence to vice-versa. has been amended vide NTF. NO. 24/2005, DT. 31/08/2005)

for more information link is :-

https://dgftcom.nic.in/exim/2000/policy/chap-06.htm

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RAMESH KUMAR VERMA ( CS PURSUING ) (43853 Points)
Replied 04 June 2011

another link is:-

https://121.241.246.157/customs/cs-manual/manual_22(b).htm

Sreejith S (Manager-Finance) (95 Points)
Replied 05 June 2011

Dear Ramesh

Thanks for the reply. So does it mean that

1) A 100% EOU (Software development and consultancy firm) need not collect central excise duty for its DTA Sales if it has got DTA Sales permission from STPI?

2) What if it does DTA Sales without obtaining the DTA Sales permission from STPI?

3) Should a software consultancy firm (100% EOU) apply for DTA sales permission for doing Software consultancy servcices in India (It is pure consultancy services and service tax are being collected and remitted to central govt account).

Could you pls clarify

Thanks

Sreejith

sandeep (Audit Firm) (46 Points)
Replied 15 July 2011

How to calculate duty when the product is taxable under MRP valuation

sandeep (Audit Firm) (46 Points)
Replied 15 July 2011

When export sale is made at what rate i have to account in books. my client (EOU) is accounting as per the rate given by customs department for customs duty calculation.

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U S Sharma (glidor@gmail.com) (21056 Points)
Replied 15 July 2011

sales are always done at contract value, when they have taken foreign order in convertible foreign exchange, they have to deliver goods and after conversion of forex, the result value is taken for assessable value.

if you are supplier to EOU , you have to make invoice for assessable value as per agreement between buyer and seller for value to be paid.