Reversal of Custom duty as per para 6.08 FTP 2023 for DTA sales done by EOU unit

Sir/Madam

We operate as an Export Oriented Unit (EOU) and currently benefit from import duty exemption on inputs under Notification No. 52/2003 Customs dated 31.03.2003, which are used in the production of our final finished goods. We also procure indigenous goods for the same production process.

As per FTP Para 6.08, we occasionally make DTA (Domestic Tariff Area) sales of our finished products.

My question is regarding the reversal of customs duty on these DTA sales. Specifically, should we reverse the customs duty only on the imported inputs consumed in the production of the finished goods sold in DTA, or should the reversal apply to the customs duty equivalent of both imported inputs AND indigenous goods that went into the production of those final finished products?

As an Export Oriented Unit (EOU) operating under Notification No. 52/2003-Customs, you're allowed to import goods duty-free for manufacturing export goods.

When making DTA (Domestic Tariff Area) sales, you're required to pay customs duty on the imported inputs used in the production of the goods sold.

*Reversal of Customs Duty:* The reversal of customs duty applies to the imported inputs used in the production of the finished goods sold in DTA.

You don't need to reverse customs duty on indigenous goods used in production, as they weren't imported duty-free. *Key Points:* -

*Imported Inputs*: Calculate the customs duty on the imported inputs used in the production of the finished goods sold in DTA.

- *Indigenous Goods*: No customs duty reversal is required for indigenous goods used in production. -

*Duty Calculation*: Calculate the duty based on the value of imported inputs used in the production of the goods sold in DTA. *Important Considerations:* -

*Record-Keeping*: Maintain accurate records of imported inputs, indigenous goods, and finished goods to ensure correct duty calculation.

- *Duty Payment*: Pay the calculated customs duty on imported inputs used in DTA sales.

Consult the relevant notifications, such as Notification No. 52/2003-Customs, and the Foreign Trade Policy (FTP) to ensure compliance with the regulations.