Exemption on Input supplied to EOU

There is a problem in availing the exemption in the above situation.

I presume Cenvat Credit has been availed on the inputs. Therefore the removal for job-work is governed by Rule 4 (5) of the Cenvat Credit Rules, 2004. The sub-rule (6) provides for delivery to the customer directly from the job-worker's premises without bringing the material back to the manufacturer's factory. This needs permission from Dy. Commissioner (Division office) of the manufacturer. Different Commissionerates have issued Trade Notices specifying the procedure for such direct delivery. Essentially, it requires that when the goods are to be delivered from job-worker's premises, the manufacturer should send invoice to the job-worker complete in every respect except the 'date and time of removal'. These details are filled up by the job-worker at the time of actual dispatch.

Now your query is whether goods can be removed under exemption against CT-3 from the job-worker's premises.

Apparently there should be no difficulty. Removal from the job-worker's premises is to be treated at par with the removal from factory of the manufacturer. The manufacturer will have to pay actual amount of duty payable on the consignment - which can obviously be wholly or partially exempted.

However, the notification 22/2003-CE (which exempts the goods supplied to EOU) contains a clause, which can cause difficulty. The very first condition of the notification requires that "the user industry brings the excisable goods directly from the factory of manufacture or warehouse".

A literal interpretation will result in denial of exemption to you.

I would suggest that instead of running the risk, consider
(a) Bringing the goods back to your factory and then dispatching the same;
(b) Paying duty thereon and claim benefits from DGFT.

I would request other members to kindly contribute their view.

Thanks,

Sanjay Dwivedi