QUESTION
 

We have two unit in same GST Number. One Unit is EOU Unit and Second Unit is DTA Unit and two separate Stuffing Permission for Export. My quatrain is... - We purchase Raw Martial in Advance License in DTA Unit, Can we Transfer Raw Material from DTA Unit to EOU Unit for manufacturing and direct Export from EOU Unit with Invoice of DTA Unit for fulfillment of Export Obligation ? - Can we required additional Stuffing permission? - Whether this procedure should be done through Job work or Transfer of Material ?

ANSWER
 

Facts of the case: We have two unit in same GST Number. One Unit is EOU Unit and Second Unit is DTA Unit and two separate Stuffing Permission for Export. Can we Transfer Raw Material from DTA Unit to EOU Unit for manufacturing and direct Export from EOU Unit with Invoice of DTA Unit for fulfillment of Export Obligation? Whether this procedure should be done through Job work or Transfer of Material?

Law Applicable: Foreign Trade Policy 2015-20 CHAPTER-6

 

6.14

Sub-Contracting

(a) (i) EOU/EHTP/STP /BTP units, including gems and jewellery units, may on the basis of annual permission from Customs authorities, sub - contract production processes to DTA through job work which may also involve change of form or nature of goods, through job work by units in DTA.

(ii) These units may sub - contract upto 50% of overall production of previous year in value terms in DTA with permission of Customs authorities.

(b) (i) EOU may, with annual permission from Customs authorities, under take job work for export, on behalf of DTA exporter, provided that goods are exported directly from EOU and export document shall jointly be in name of DTA/ EOU. For such exports, DTA units will be entitled for refund of duty paid on inputs by way of brand rate of duty drawback. However, such brand rate of drawback shall be as per Customs and Central Excise Duties Drawback Rules, 2017 and shall be limited to Customs duties and Central Excise Duties (in respect of eligible items covered under Schedule IV of Central Excise Act, 1944).

 

Conclusion: The 2 units are separately registered, therefore they are distinct persons. You have following choices:

1. Keep the raw material in DTA and do fresh import in EOU.

2. If there is scope of intermediate product which can be used by EOU, then you can make intermediate product and supply to EOU. EOU will use intermediate product to manufacture finished products.

Supply from DTA to EOU is covered under Deemed Export and will be calculated in Export Obligation to be achieved for import against Advance Licence. For this you have to get necessary endorsements done on Advance Licence mentioning the intermediate product as Export product.

3. The provision relating to Job Work are given in Para 6.14(a)(ii) of FTP. It allows EOU to get Job Work done from DTA unit.
Para 6.14(b)(i) allows EOU to undertake Job Work for Export on behalf of DTA Exporter. the relevant pares are reproduced above.
 

Corrigendum Please refer to our reply dated 10/11/2020  in which we have considered that your two units i.e. EOU unit and DTA unit are separately registered. However as per your question both units are registered under same GST number.

But our reply will remain same because as per the provisions of FTP they will be considered as distinct persons.(Reply dt.10.11.2020)