Comparison Between EOU V/S SEZ SEZ Article
Shreepad B Devale
Exported Oriented Units:
Units undertaking to export their entire production of good & services may be set up under the EOU scheme
Application for setting up, to be made to-
◊ Board of approval '(BOA) for approvals of units in service sector
Development commissioner & EOU:
Development commissioner (DC) issues letter of permission (LOP) or letter of Intent (LOI) to EOU ON approval. Then, WITHIN 3 years, the unit should start commercial production to get a validity period of 5 years from the date of commercial production for its activities. The units shall execute a legal undertaking with the concerned DC. The DC ensures, smooth functioning of EOU and fixing time limits for finalizing the disposal of EOU matters.
Positive net foreign exchange (NFE):
The net foreign exchange earning shall be calculated cumulatively for a block of 5 years.
Start export house status:
Depending on its export performance for last 3 years, it will also be eligible for Fast Track Clearance procedure.
Incentives/Benefits from central government to 100% EOU:
◊ Total Customs & Central excise duty exemption.
How SEZ is different from EOU???
Supplies made to SEZ from DTA are "Exports", in respect to EOU they are treated as "Deemed Export"
Units to be located within specified Zones in respect to SEZ, where as for EOU units can be set up at any prescribed places as declared.
In SEZ there is physical control of over movement of good, no such control in case on EOU
No minimum investment limit for SEZ, where as for EOU minimum investment limit in P&M is Rs.100 lakhs as on date of commercial production
Customs clearance with in zone itself, for EOU fast track clearance scheme for clearance of imported consignments
Supplies from SEZ to DTA is normal, whereas for EOU sale within India on payment of excise duty /customs duty of similar goods is payable and sometimes as a % of normal customs duty
In respect to sales (SEZ) no limit, except to have positive net foreign exchange (NFE), (EOU) sale UPTO 50% (FOB on sales of previous year) in DTA and has to fulfill positive net foreign exchange.
In relation to restriction under companies act on managerial remuneration are not applicable for SEZ, applicable for EOU
Physical exit is necessary in case of de-bonding as SEZ, for EOU unit can exit (de-bond) with permission of Development Commissioner, on payment of applicable duties.
SEZ supplier need not pay CST or service tax, EOU has to pay CST or service tax but eligible for refund.
Procedure for purchase the Imported Raw Material/ Capital Goods
Procedure for purchase the Indigenous Raw Material/ Capital Goods
Procedure for Warehousing & Re-warehousing of Capital Goods / Raw Material
Procedure for Warehousing of Goods in Warehousing Register