Excise - Job Work business by EOU

This query is : Resolved

Amit Kumar (Querist)
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13 December 2016 Sir,
An EOU automobile manufacturer wish to enter in job work business in DTA.. what the legal procedures required with Excise department ?

If not permitted to EOU, what will be the penalty if job work done by the EOU ?

Amit Kumar

Amit Kumar (Querist)
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14 December 2016 Dear Sirs, please help me and revert.... please

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 When an Export Oriented Unit (EOU) wishes to undertake job work in the Domestic Tariff Area (DTA) for another entity, there are specific procedures and considerations they must adhere to with respect to Excise regulations in India. Here’s an outline of the legal procedures and implications:

### Legal Procedures for Job Work by EOU in DTA:

1. **Permission from Development Commissioner:**
- The EOU needs to obtain permission from the Development Commissioner (DC) of the SEZ where it is located to undertake job work in DTA. This permission typically involves submitting an application detailing the nature of job work, the expected volume, and other relevant details.

2. **Bond and Undertaking:**
- The EOU is required to execute a bond with the Customs authorities for undertaking job work in DTA. This bond ensures that all goods processed or manufactured under job work are accounted for and comply with the applicable laws and regulations.

3. **Intimation to Excise Authorities:**
- The EOU must intimate the Excise authorities about their intention to undertake job work in DTA. This involves providing details such as the nature of goods, processes involved, and the entities for whom the job work is being done.

4. **Compliance with Excise Duty:**
- For goods manufactured or processed under job work, excise duty liability may arise depending on the nature of goods and their classification under the Central Excise Tariff Act. The EOU needs to ensure compliance with excise duty rules and regulations applicable to such goods.

5. **Record Keeping and Compliance:**
- Maintain proper records of raw materials received, processes undertaken, and goods dispatched under job work. These records are subject to scrutiny by Excise authorities to ensure compliance with regulations.

### Penalty for Job Work by EOU without Permission:

If an EOU undertakes job work in DTA without obtaining the necessary permissions and fulfilling the required legal procedures, it may lead to penalties and repercussions:

- **Penalty Imposed:** The EOU may be liable to pay a penalty under the provisions of the Foreign Trade (Development and Regulation) Act, 1992, and the SEZ Act, 2005. The penalty could be in the form of a monetary fine or other punitive measures as prescribed.

- **Loss of Benefits:** Non-compliance may also lead to withdrawal of benefits enjoyed under the SEZ scheme, such as exemption from customs duty and other tax benefits.

### Conclusion:

For an EOU planning to undertake job work in DTA, it is crucial to follow the prescribed legal procedures, obtain necessary permissions, execute bonds, and ensure compliance with excise duty requirements. Failure to adhere to these regulations can result in penalties and potential loss of benefits under the SEZ scheme. Therefore, consulting with SEZ authorities and legal experts familiar with SEZ and excise laws is recommended to navigate these requirements effectively.

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