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Gargi Ranade (Company Secretary)     18 November 2009

DTA Entitlement for EOU

Respected Sir/Madam,
I am working as a Company Secretary of 100% EOU ,I have a Query regarding DTA entitlement.

1. Sale to EPCG License holder is treated as Deemed Export. Can we Add this deemed export in Export while calculating DTA entitlement which is 50% of FOB of Export.

2.If EOU have "NIL" DTA Entitlement can it sale to EPCG Licence holder as same will be treated as deemed export and will not be treated as DTA sale.

3. If sale to EPCG holder is ultimatly for Export promotion then how can it eat Entitlement itself .

I have this doubt due to ambiguous and vegue statement in FTP in para 6.8,6.9

I have one case[2006 (194) E.L.T.344 (Tribunal) ] in which Tribunal decided that EPCG sale should be treated as a Export for computing DTA Entitlement. Can a dec. taken by tribunal is sufficient to prove my side.kindly help its urgent .



Learning

 1 Replies

O. Haridasan (Service)     16 January 2010

Sir,

Your question is very valid as well as tricky.

"Export" is not defined in the FTP. 

Section 2 (18) of the Customs Act defines:“export”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India.

Section 2(e) of the FTDR also gives such a definition.

Para 6.9(a) of the Policy states that "Supplies effected in DTA to holders of advance licence, advance licence for annual requirement/DFRC /EPCG scheme" will be counted for the purpose of fulfillment of positive NFE.

For removals under para 6.9(a) of the FTP, there is no movement of the goods to a 'place out of India'. Therefore, in my humble and personal opinion, such supplies will be treated as 'deemed exports' for the limited purpose of NFE only and not for any other entitlements. Only because of para 6.9(a) of the Policy, such clearances are considered for the purpose of para 6.9.1 of the HBP. With all respect to the Tribunal judgement (the context of the judgement may also have to be fully read and understood), I would beg to differ on the matter. 


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