Question 1

What is the IGCR Rules framework and which notification governs it for EOUs?

Accepted Answer

The Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 notified under Notification No. 32/2017-Customs (N.T.) govern duty concessions on imports by EOUs. Rule 4 requires the unit to file an intimation in Form IGCR-1 on the ICEGATE portal before importing, and Rule 6 mandates a monthly statement in Form IGCR-3 by the 10th of the following month reporting end-use of each consignment.

Question 2

What annual reporting obligation does an EOU have under the Foreign Trade Policy 2023?

Accepted Answer

Under Para 6.07 of the Foreign Trade Policy 2023 read with HBP 2023, an EOU must file an Annual Performance Report (APR) with the Development Commissioner (DC) each year. The APR reconciles import entitlements, actual imports, production, and Net Foreign Exchange (NFE) earned. Failure to maintain positive NFE over the 5-year period exposes the unit to duty demands under Notification No. 52/2003-Customs as amended.

Question 3

What triggers a duty demand and interest if IGCR end-use conditions are not met?

Accepted Answer

Under Rule 7 of the IGCR Rules 2017, if imported goods are not used for the declared purpose within the specified period, the importer must pay the differential duty along with interest at 15% per annum under Section 28AA of the Customs Act, 1962. Where fraud or wilful misstatement is established, a penalty under Section 114A (equal to the duty amount) can also be levied.

Question 4

How does IGST interact with EOU imports — is it also exempt?

Accepted Answer

Imports by EOUs are exempt from Basic Customs Duty under Notification No. 52/2003-Customs, but IGST on imports is governed separately. EOUs can claim IGST exemption on imports only if the goods fall within Notification No. 78/2017-Customs. Where IGST is paid, it is available as Input Tax Credit under Section 16 of the CGST Act 2017, subject to Section 17(5) exclusions. Exports of finished goods must be made under a Letter of Undertaking (LUT) filed under Rule 96A of the CGST Rules 2017 to avoid paying IGST on outward supply.

Question 5

For how long must an EOU retain IGCR records, and who can audit them?

Accepted Answer

Rule 9 of the IGCR Rules 2017 requires the importer to maintain records of each consignment imported at concessional duty, showing receipt, storage, consumption, and any duty paid on diversion. Under Section 130 of the Customs Act, 1962 read with the Customs (Audit) Regulations 2018, these records must be retained for five years from the date of the relevant import and must be produced on demand by the jurisdictional Customs Audit officer.

Eou Igcr Compliance

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