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EOU - Sales in DTA exceeding 50% of Exports

HBJ Mumbai (Director) (125 Points)

29 September 2009

We are in process of setting up EOU. We are sure of achieving Positive NFEP. However we cannot achieve the requirement that DTA sales to be maximum 50% of FOB value of exports. Our DTA sales are going to be equal if not more than exports FOB value. Anyone have any experience or knowledge of what happens if this occurs. Even over a 5 year period we do not see the total DTA sales to be 50% of exports FOB, it will be more. Are there any penalties or we only have to pay more duty for DTA sales.

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4 Replies

Harshad Patil (Industrial Training) (130 Points)
Replied 03 October 2009

i think you shud chk with the Articles of the co., does it provide so- This is from Audit point of view.

Regards legality, chk for the ceiling limit provided into bye-laws of regulations. It certainly doesnt provide for more than 50% DTA, and stands for revocation of EOU license.

Alok Bansal (Consultant) (52 Points)
Replied 03 October 2009

Till 50% of DTA sale you have to pay concessional duties and after that you have to pay full duty provided you have achived positive NFE

M.Aravinda Kumar (Finance) (83 Points)
Replied 28 November 2009

Originally posted by :H.B.Jesrani
"	We are in process of setting up EOU. We are sure of achieving Positive NFEP. However we cannot achieve the requirement that DTA sales to be maximum 50% of FOB value of exports. Our DTA sales are going to be equal if not more than exports FOB value. Anyone have any experience or knowledge of what happens if this occurs. Even over a 5 year period we do not see the total DTA sales to be 50% of exports FOB, it will be more. Are there any penalties or we only have to pay more duty for DTA sales.	"

Dear Mr.Jesrani,

If you are exceeded the 50% sales of DTA entitlement you have to pay full duty subject to NFE positive, but the same time you can apply for advance DTA license for concessional duty with your respective (MEPZ/CSEZ/WSEZ/....). If they receommend your case to BOA by recommending valid reasons, the policy may be relaxed by the Policy Relaxation Committee (DGFT).

If you have any clarifications you may contact 9597625285- M.Aravinda Kumar