Export Oriented Units Rules, 1998
15th April, 1998
In exercise of the powers conferred by section 219 of the Customs Act, 1969 (IV of 1969), section 37 of the Central Excises Act, 1944 (I of 1944) and section 50 of the Sales Tax Act, 1990, the Central Board of Revenue is pleased to make the following rules, namely : —
1. Short title and application : — (1) These rules may be called the Export Oriented Units Rules, 1998.
(2) They shall apply to the imported goods as specified in the First Schedule to the Customs Act, 1969 (IV of 1969), excisable goods as set forth in the First Schedule to the Central Excises Act, 1944 (I of 1944), and goods/supplies chargeable to sales tax as specified in the Sales Tax Act, 1990, without payment of customs duty, central excise duty and sales tax, as the case may be, for the manufacture of goods primarily meant for export.
2. Definitions : — In these rules, unless there is anything repugnant in the subject or context,-
(a) “Act” means the Customs Act, 1969 (IV of 1969), the Central Excises Act. 1944 (I of 1944), and the Sales Tax Act, 1990;
(b) “Analysis Certificate” means a certificate issued by the Collector of Customs under rule 6;
(c) “bond” means a bond in the prescribed form executed by the licensee, binding himself for abiding by the required conditions and payment of government dues and penalties, if any, in case of default;
(d) “export oriented unit” means a bonded warehouse licensed by the Collector of Customs under rule 3.
(e) 'input goods” means all goods and crimped polyester staple fibre, 51mm to 64mm staple length, above five denier, hollow and solid, for use in filling (quilting) purposes only and not suitable for spinning, except any other polyester staple fibre required for the manufacture of finished goods meant for export, such as raw materials, accessories, sub-components, components, sub-assemblies, assemblies and includes unrecorded media for development of software and recorded software used as tools for development of software as approved by the Collector of Customs in the Analysis Certificate;
(f) “licensee” means a person or firm which is registered under the Sales Tax Act, 1990, and has been granted by the Collector of Customs a licence to operate an export oriented unit under these rules;
(g) “manufacture” means any process incidental or ancillary undertaken in the manufacture of finished goods under these rules and includes re-cycling, re-conditioning, repairs, re-engineering, re-packing and labelling; and
(h) “vendor” means a person who is registered under the Sales Tax Act, 1990, and to whom goods are provided by the licensee for further manufacture of goods.
3. Licensing : — (1) Any person desirous of operating an export oriented unit shall apply to the concerned Collector of Customs in the form as set out in Appendix I along with the following documents, namely : —
(a) the site plan of the proposed export oriented unit;
(b) details of the type of machinery installed in the export oriented unit;
(c) total value of the exported goods by the applicant in the previous one financial or calendar year (if applicable) and value of goods intended to be manufactured in the export oriented unit;
(d) national tax number card or certificate issued by the concerned Income Tax Authority;
(e) banker's certificate regarding financial transactions of the applicant in the last two years;
(f) memorandum and articles of association in case where the applicant is registered under the Companies Ordinance, 1984 (XLVII of 1984), or partnership deed if it is a partnership firm;
(g) copy of the national identity card of owner/directors of the export oriented unit;
(h) lease/tenancy agreement with written permission from the landlord to use the premises as export oriented unit;
(i) certificate from supplier of fire fighting equipment installed in the premises regarding its validity date;
(j) comprehensive insurance policy covering all risks such as fire, burglary, etc., issued by an insurance company registered with the Controller of Insurance, Ministry of Commerce, in the sum equal to the amount of customs duties, central excise duty and sales tax involved on the imported as well as locally procured customs duty, central excise duty and sales tax free input goods intended to be stored in the export oriented unit;
(k) an undertaking by an insurance company duly approved by the Controller of Insurance, Ministry of Commerce, on the stamp paper undertaking that-
(i) no change whatsoever shall be made in the insurance policy issued without prior intimation to the concerned Collector of Customs;
(ii) full premium under the aforesaid insurance policy has been duly received;
(iii) in case the licensee does not make the required stock declaration in time the company shall immediately inform the concerned Collector of Customs;
(iv) breach of warranty by the licensee or non-compliance or omission of any nature by the licensee shall not prejudice any claim lodged by the concerned Collector of Customs; and
(l) recommendations of the relevant representative Trade Association or Chamber of Commerce and industry to Export Promotion Bureau.
(2) On receipt of an application alongwith the documents prescribed in sub-rule (1), the concerned Collector of Customs, after such verification as he deems necessary, may issue a non-transferable licence valid for three years without any fee or establishment charges within seven days of such verification to the applicant to operate an export oriented unit.
4. Premises of export oriented unit : — (1) The licensee shall either own the premises of export oriented unit (hereinafter called the premises) or have a lease thereof in his name for the period for which the licence is sought to be issued.
(2) The premises shall be on an independent area having an independent entry or exit from a public area and having no other entry or exit.
5. Insurance of export oriented unit : — The licensee shall obtain the insurance policy in the sum equal to the amounts of customs duty, central excise duty and sales tax leviable on the input goods imported or locally procured from insurance company duly approved by the Controller of Insurance, Ministry of Commerce.
6. Analysis Certificate : — (1) The licensee shall apply to the concerned Collector of Customs in the form set out in Appendix II for issuance of an Analysis Certificate showing the input and output ratio of input goods viz., finished goods and wastage.
(2) The concerned Collector of Customs, or an officer of customs authorised by him in this behalf, shall after such verification as he deems necessary, issue an Analysis Certificate within seven days showing the actual quantity of input goods used and wastage occurred in the manufacture of one unit of finished goods.
(3) The Analysis Certificate shall not be required for every consignment of input goods if the finished goods are the same for which the Analysis Certificate has already been issued.
(4) A separate Analysis Certificate shall be applied for and issued for every new finished goods.
(5) In case of expensive samples such as leather jackets or garments, etc., instead of complete finished goods e.g., a 6” x 6” piece of leather or lining material, a button or a piece of thread, or a three inches long zipper, etc., may be retained by the concerned Collector of Customs for the purpose of issuance of the Analysis Certificate.
7. Procurement of input goods for production of finished goods meant for export : — The input goods for production of finished goods according to the specifications approved in the Analysis Certificate shall be procured by the licensee in any of the following manners:
(a) Duty-free import of input goods:
(i) The input goods may be imported by the licensee without payment of customs duty, central excise duty and sales tax;
(ii) the licensee shall file a bill of entry for the input goods imported and shall specifically declare that input goods are being imported under export oriented unit scheme for manufacture of export goods;
(iii) the licensee shall maintain record as set out in Appendix III and one copy thereof in the form of a return shall be endorsed to the concerned Collector of Customs under signatures and seal of the owner/director of the company owning the export oriented unit duly verified by the customs officer in charge of the export oriented unit;
(iv) the input goods received in export oriented unit shall be entered in the record as provided in sub-clause (iii) and the input goods removed shall be debited therefrom and the export goods made therefrom shall be credited in the record of export goods;
(v) the quantity of factory rejects shall be accounted for separately; and
(vi) the quantity of input goods equivalent to the waste shall be accounted for separately.
(b) Procurement of input goods without central excise duty against AR-3:
(i) The input goods produced in the local excisable unit shall be procured by the licensee without payment of central excise duty against AR-3 or any other rule for the time being in force;