Page 165 - COMBINED QUESTIONS AND ANSWERS - EDITION 2019 - PART II_Neat

Q-636: Explain the 100% Export Oriented Scheme (EOU)
A-636: 100% Export Oriented Scheme is one of the Export Promotion Schemes. Under this
scheme, any person can set up 100% Export Oriented Unit (100% EOU). This scheme
envisages manufacture/produce some goods and export the entire goods
produced/manufactured in the unit. A person operating under this scheme is entitled to
import or procure indigenously without payment of any duty, the machinery, equipment,
raw materials, handling equipment etc. Required to set up the unit and manufacture certain
goods. All the goods manufactured in 100% EOU must be exported. However, after
fulfillment of the prescribed export obligation in a particular period, the unit may be
permitted to clear the manufactured goods into the Domestic Tariff Area (DTA) on payment
of appropriate duties. 100% EOU have to function in Customs Bonded Warehouses. 100%
EOU may set up to manufacture different kinds of goods or to develop software or to
develop Electronic Hardware and also in the field of Horticulture, Animal Husbandry, Marine
Products, etc. The units set up in the fields of Horticulture, Animal Husbandry; Marine
Products etc. need not function in the Customs Bonded Warehouses.
The procedure to set up 100% EOU, export of the manufactured goods, DTA
clearances, fulfillment of export obligation, de-bonding of the warehoused goods etc. is
explained below:
A person/firm intending to set up 100% EOU should make an application in the
prescribed format to the Development Commissioner having jurisdiction over his proposed
unit. The Development Commissioner functions under the Ministry of Commerce,
Government of India. The Development Commissioner, on scrutiny of the application may
grant permission to set up 100% EOU. The Development Commissioner also certifies the list
of capital goods and the related equipment required to set up the 100% EOU indicating the
description, quantity and value.
After obtaining the permission from the Development Commissioner, the person
concerned in setting up the 100% EOU must obtain a Private Bonded Warehouse License
from the Customs/Central Excise Authorities having jurisdiction over the unit. The person
concerned must execute a bond in form B 17. This bond contains various conditions like
fulfillment of export obligation within the prescribed period, quantity and value of the goods
to be exported, realization of foreign exchange and liability to pay the duty and interest and
penalty in the event of non-compliance of any of the conditions stipulated under the Export
Oriented Scheme read with the Foreign Trade Policy and the relevant Customs notifications.
After obtaining the Private Bonded Warehouse License, the person concerned may import
the capital goods and other related equipment required to set up a unit and manufacture
the specified goods.

All the goods imported under the scheme must be utilized only for the purpose for
which they have been imported. The goods imported or procured indigenously without
payment of duty must be used only for the purpose for which they have been
imported/procured. Diversion of such goods for any other purpose, the importer is liable to
pay the duty, fine and penalty.

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