Subject :    100% EOU / EPZ / EHTP units - Permission to send out goods for job work outside the unit - regarding.

        I am directed to refer to the Board's instructions issued from F.N. 305/ 147/93- FTT dated January 31, 1994 wherein it has been prescribed that the EOU / EPZ may be allowed to sub - contract part of their production process provided the substantial activity of manufacture is carried out within the EOU / EPZ/ EHTP units and that it is possible to identify the finished products received after job work with the raw materials.

2.    The Trade Associations have requested for revision of the above instructions requesting that EOU unit may be allowed to sub-contract part of their production process which may also result in the change of form or identity of the goods. It was also requested that these units may be permitted to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns of drawing to the premises of the sub-contractors subject to the condition that these shall be brought back to the bonded premises of the parent unit on completion of the job work within a stipulated period.

3.    The matter has been examined by the Board and it has been decided that EOU / EPZ / EHTP units may be permitted to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns or drawings to the premises of the sub-contractor subject to the condition that these shall be brought to the premises of the EOU on completion of the jobwork within a stipulated period. The Notifications No. 133/ 94- Cus. dated 22.6.94, and 53/97 dated 3.6.97 and 95/93 & 96/93 both dated 2.3.98 have since been amended by Notification No. 12/98- Cus. dated 27.4.98 to incorporate the above facility. In addition, Board has agreed to permit EOU/ EPZ units to sub-contract part of their production process where the raw materials sent out for processing will lose its identity or where its substantial manufacturing activity does not take place in the parent unit subject to the condition that input/ output norms in such cases would be specified by the Assistant Commissioner of Customs.

4.    However, the suggestion that the EOU/ EPZ units using predominantly indigenous raw materials may be allowed to sub - contract a part of their production for job work has not been agreed to as this would covert EOU / EPZ units to trading units rather than manufacturing units and accounting raw materials may become more difficult.

5.    In view of the above, Board's instructions dated 31.1.94 cited in paragraph 1, above stand modified to the above extent.