IX. IT UNITS IN DTA

63. For IT Units located in DTA, the following policies will apply in addition to existing policies:

( i) In the WTO-ITA schedule given in Policy No. 20 in the Extra-Ordinary Gazette Notification, Part-I, Section-I, No. 160 dated July 25, 1998, a schedule of duty reduction with specific reference to Capital Goods, Raw Materials, Components and finished goods shall be as given below:

All Capital Goods for IT Products/

Electronic Hardware Products/

Electronic component products/

Primary products : Zero percent with

immediate effect

All raw materials/piece parts

for electronic components/

primary products : Zero percent with

immediate effect

Duty on components/Sub-assemblies/

Intermediate products :

1-1-99 : Unchanged at present levels (except for 20(a))

1-1-2000 : Unchanged at present levels (except for 20 (a))

1-1-2001 : Unchanged at present levels (except for 20 (a))

1-1-2002 : Zero duty

Duty on finished goods/end-user

products :

1-1-99 : Unchanged at present levels

(except for 20(a))

1-1-2000 : Unchanged at present levels

(except for 20(a))

1-1-2001 : Unchanged at present levels

(except for 20(a))

1-1-2002 : 50% reduction (except for 20(a))

1-1-2003 : Zero duty

Wherever present level of duties are higher than ITA prescribed levels of duties, these will be reduced to the ITA levels.

(ii) In Section 20(a), substantiate 'by 1-1-1999' by 'with immediate effect'

(iii) In 20 (a) line 4, since Integrated Circuits are major components of IT products, the customs duty will be brought down to zero on all ICs for use in IT Products, except that where the price per piece is less than Rs.1000 the incentive of zero duty is subject to the actual user condition based on LUT self-declaration and post-audit .

(iv) In 20(a), after 'HSN-8540.40' qualify by adding, 'with or without deflection yoke' and delete the line 'and Deflective components for Colour Monitor in HSN 8504'.

(v) Colour Graphic Display Tubes shall be treated as 'Primary Product' in 63(i) and hence manufacturers of such items shall be eligible for S-BIT Unit status availing the provisions of Para 4(i) above.

(vi) While zero excise duty is concomitant with zero Customs Duty, all IT products with non-zero customs duties will uniformly attract 8% rate of excise duty with immediate effect.

64. There is some delay in registration for import under the Scheme as the Customs authority verify the details of export from the port of export before allowing imports. However, once the connectivity is provided between offices of DGFT and Customs Houses, there will be no need for such a verification and imports may be allowed instantly.

65. Duty free licenses will be issued to manufacturer-exporters in DTA under a 'Duty Exemption Export Promotion Scheme' as a sum of the following three provisions:

i) A datum provision upto a value of Rs. 20 lakhs

ii) A provision of upto 20% of the average domestic turn over during the preceding two years.

iii) A provision of upto 140% of the average FOB Value of exports during the preceding two years.

66. Amendments in STP/EHTP Scheme will be made to allow foreign exchange realised against training by STP Units to be counted towards discharge of export obligation/calculation of NFEP and such foreign exchange earnings will be eligible for SIL under Para 11.9 of the Handbook of Procedures.

67. Central Excise Notification No. 4/98 shall be withdrawn with respect to DTA sales by EHTP Units.

68. Depreciation norms for levy of Customs duty on the import of used Capital Goods shall be revised.

69. Para 7.38 of the Handbook of Procedures (Vol. I) will be amended to permit transfer of DEPB immediately upon issue and without waiting for realisation of foreign exchange.

70. For exports of IT products to Russia and other CIS countries, the following relaxations will be allowed under the EXIM policy.

i) Export of goods against non-convertible currency will be counted towards discharge of export obligations under various schemes of the EXIM Policy.

ii) DEPB will be given at the rate of 70% entitlement for exports under rupee payment

(iii) Exporters will be permitted to utilize DEPB credit in lieu of payment of basic customs duty and CVD. Modvat credit and Modvat refund will be permitted regardless of whether CVD at the time of import has been paid by Cheque/cash or by debit in DEPB.

71. The Policies given in the following paragraphs will also apply to IT Units in the DTA: 21 to 26, 28, 31, 35, 37, 39, 46, 49, 50 and 52 to 61.