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K.R. Srivats

New Delhi , May 23

EXPORT-oriented units (EOUs) have been permitted to make supplies to export promotion capital goods (EPCG) licence holder in the domestic tariff area (DTA).

This nod from the Government, however, comes with the caveat that the EOUs should fork out, for such supplies, an excise duty that is equivalent to the effective Customs duty payable on like goods imported.

The Directorate-General of Foreign Trade's (DGFT) clarification to this effect is expected to settle the long-standing uncertainty surrounding the clearances of EOU supplies to EPCG licence holders in the DTA.

Excise authorities have not been inclined to allow EOUs to make supplies to EPCG licence holders in the DTA without payment of excise duty. They had been contending that there are no excise exemption notifications to allow such supplies without payment of excise duty.

Informed sources said that the requirement of payment of excise duty (although concessional duty) may place the EOUs at some disadvantage vis-a-vis other DTA units that are looking to make supplies to EPCG licence holders in DTA.

So far, EPCG licence holders in DTA were not bearing any excise duty on their domestic procurement.

DTA suppliers were availing deemed export benefits (refund of terminal excise duty) on their supplies to EPCG licence holders in DTA.

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