Notification No. 277 dated 12^th December 1990 (As amended by notification nos.16/92, 145/91, 101/95, 116/95, 7/97, 76/97, 11/98, 12/98, 40/99, 10/00, 55/2000, 56/2001, 116/2001, Notification No. 64 dated 24^th June 2002)

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the annexure to this notification (hereinafter referred to as the said goods), when imported into India for the purposes of use in the manufacture of jewellery for export out of India, by or on behalf of a hundred percent export oriented undertaking, from the whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), and from the whole of the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act, subject to the following conditions, namely :-

(i)���������� the importer has been authorised to establish a hundred percent export-oriented undertaking for the purpose of manufacture of jewellery;

(ii)���������� omitted;

(iii)��������� the importer has been granted necessary licence for the import of the said goods;

(iv)��������� the importer carries out the manufacturing process or other operations in respect of jewellery in customs bond and subject to such other conditions as the Assistant Commissioner of Customs may, having regard to the circumstances of the case, specify in this behalf.

(v)���������� deleted

(vi)��������� the importer satisfies the Assistant Commissioner of Customs that the said goods shall be used in the manufacture of jewellery of export out of India;

(vii)�������� the importer agrees to execute a bond in such form and for such sum and with such authority as may be specified by the Assistant Commissioner of Customs binding himself to fulfill the export obligation with the prescribed value addition and to fulfill, inter-alia, the conditions stipulated in this notification and in the Letter of Approval of intent or the Industrial Licence issued by the Board of Approval and to pay on demand an amount equal to the duty of customs leviable on the said goods as are not proved to the satisfaction of the Assistant Commissioner of Customs to have been used in the manufacture of the jewellery for export;

(viii)�������� the importer agrees to bring the said goods into the said undertaking and use them within the undertaking in the manufacture of jewellery for export out of India;

(ix)��������� the importer agrees to export out of India all the jewellery manufactured within the said undertaking for the period stipulated by the Board of Approval or such extended period as may be specified by the Board of Approval;

(x)���������� on expiry of the period specified in condition (ix), the importer shall pay the following duties, namely:-

(a) duty of customs on capital goods on depreciated value but at the rate of duty of customs in force on the date of payment of such duty

(b) duty of customs on raw materials and on component on the value at the time of import and at the rates of duty of customs in force at the time of clearances;

(xi)��������� the importer shall maintain proper account of import, consumption and utilisation of the said goods and of exports made by him and shall submit such account to the Assistant Commissioner of Customs, in such form, in such manner, at such intervals and within such time, as may be specified by the Collector of Customs;

(xii)�������� the importer agrees that the jewellery, including the waste, refuse and rejects thereof, manufactured in the said undertaking, shall not be brought to any other place in India, for whatever purpose;

Provided that scrap, dust or sweeping for gold arising in the manufacturing process may be forwarded to the Government Mint by the importer for conversion into standard gold bars and return to the said undertaking in accordance with the procedure specified by the Commissioner of Customs in this regard.

Provided further that jewellery up to 10% of the value of export by the unit in the preceding year, may be allowed clearance into Domestic Tariff Area by the Development Commissioner in consultation with the Assistant Commissioner of Customs, on payment of applicable duties:

Provided also that exchange of plain gold or plain silver or plain platinum jewellery, from any place in India to the said undertaking with the gold or silver or platinum of the equivalent quantity in weight as that of gold or silver or platinum, as the case may be, contained in the said jewellery, permitted subject to such conditions as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs.

(xiii)�������� in the event of such a hundred percent export oriented undertaking ceasing its operation or in the event of the said undertaking failing to discharge the export obligation specified in condition (i), gold, other precious metals, alloys, gems and other material for the manufacture of jewellery shall be transferred to such person, undertaking, agency or authority, as the Government of India in the Ministry of Commerce may specify in this behalf;

(xiv)�������� the Assistant Commissioner of Customs may allow, subject to fulfillment of such conditions as he may specify, the percentage of wastage of gold or platinum specified in column (2) to the Table given below or percentage of wastage of silver as specified in column (3) of the said Table, during the manufacture of jewellery of description specified in the corresponding entry in column (1) of the said Table.

(xv)����� the import and export of the said goods, other than the capital goods, under this notification shall be allowed only by air-freight through the Customs Airports at Bombay, Calcutta, Madras, Thiruvnantapuram, Delhi and Bangalore.

(xva)������� gems and jewellery manufactured in the units situated in municipal limits of Calcutta, Chennai, Delhi and Mumbai and sold to foreign bound passenger may be transferred, in accordance with Export and Import Policy, to Customs Warehouse at respective Customs Airport for being handed over to the said passenger for the purpose of export as per procedure specified by the respective Commissioner of Customs in this regard;

(xvaa) gems and jewellery manufactured in the said undertaking may be supplied to the retail outlets or showrooms set up in the departure lounge at international airports at Calicut, Chennai, Cochin, Delhi, Hyderabad, Kolkata, Mumbai, Thiruvananthapuram and Visakhapatnam in accordance with the Export and Import Policy and the Handbook of Procedures Volume - I, for sale to a tourist as defined in the Baggage Rules, 1998, leaving India in accordance with the procedure specified by the Commissioner of Customs;

(xvb)������� the export of gems and jewellery manufactured in the Export Oriented Units may be made through the authorised couriers as per procedure specified by Commissioner of Customs.

Provided that the exports are made through customs Houses at Mumbai, Calcutta, Chennai, Delhi, Jaipur, Bangalore, Ahmedabad or Hyderabad and the Free On Board (FOB) value of any consignment through authorised courier shall not exceed rupees twenty lakhs.

(xvi)�������� The Assistant Commissioner of Customs may subject to such conditions and limitation as may be imposed by him and subject to provisions of the Export and Import Policy 1 April, 1997-31 March, 2002.

(a) Permit re-export of imported goods and export of domestically procured goods including goods generated out of partial processing/manufacture from such goods;

(b) Permit supply of unsuitable or broken cut and polished diamonds, precious and semi-precious stones or rough diamonds up to 5% of value of import or indigenously procured goods to the Domestic Tariff Area against the valid REP or GEM REP or Diamond Imprest Licence as applicable on payment of appropriate duty.

(c) Permit with the approval of Development Commissioner, personal carriage of precious metals jewellery or precious or semi-precious stones or beads as samples upto US $ 1,00,000 for export promotion tours and temporary display abroad subject to the condition that the exporter would bring back the jewellery or its sale proceeds within 45 days from the date of its clearance;

(ca) permit, with the approval of Development Commissioner, export of jewellery for holding, or participating in, an exhibition abroad subject to the condition that jewellery not sold shall be re-imported within 60 days of the close of the exhibition;

(d) Permit export of jewellery included branded jewellery for display and sale in the permanent shops set up abroad, provided that such items not sold abroad within 180 days, shall be re-imported within next 45 days�.

(e) Permit clearance of used packing materials, such as cardboard boxes and polyethylene bags of a kind unsuitable for repeated use, without payment of any customs duty;

(f) Permit clearance of parts and tools of machinery in Domestic Tariff Area without payment of duty for repairs and return thereof;

(g) Permit clearance of capital goods on payment of an amount equal to the customs duty leviable on such goods on the depreciated value thereof at the rate in force on the date of payment of such duty:

Provided thatthe importer shall not be eligible to avail of the exemption applicable to goods falling under heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), or the exemption available to imported goods under the Export Promotion Scheme other than the Export Promotion Capital Goods Scheme permitting import of capital goods at the rate of duty of 5% ad valorem, or at zero rate of duty in terms of notification in force at the time of de-bonding.

2.���� Notwithstanding anything contained in paragraph 1, the exemption contained therein shall also apply to silver and gold falling under Heading Nos. 71.06 and 71.08, respectively of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) imported by the Minerals and Metals Trading Corporation of India Limited the Handicraft and Handloom Export Corporation, the State Trading Corporation and State Bank of India and any agency authorised by Reserve Bank of India for being supplied to the hundred percent export oriented undertakings under the Scheme for Export of gold/ silver and platinum jewellery and articles from Export Processing Zone (EPZs) and from Export Oriented Unit (EOU) Complexes specified� in paragraph 88 of the Export and Import Policy read with Chapter 6 of the Handbook of Procedures Volume-I of the Government of India in the Ministry of Commerce:

���������� Provided that where the silver or gold is imported on behalf of a jewellery unit, the exemption shall apply only if-

(a)��������� the procedure as may be specified by the Collector of customs is followed by such jewellery unit; and

(b)��������� the conditions stipulated in paragraph 1 are complied with by such a jewellery unit.

ANNEXURE