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2023 (7) TMI 316 - AAR - CustomsExemption from payment of customs duty IGST and compensation cess - Re-import of goods/equipment from a SEZ/FTWZ to DTA - applicability of serial number 5 of Notification No. 45/2017-Cus. dated 30.06.2017 - whether the goods are re-imported whether the re-imported goods have been exported by a hundred percent export-oriented undertaking or a unit in a Free Trade Zone (Special Economic Zone)? HELD THAT - It is found from the submissions of the applicant that condition of re-export of the equipment after their import availing exemption under Notification 50/2017-Cus. is a condition built in the contract of the importer with their Contractor and the applicants have themselves admitted that it is not a condition prescribed under Notification No. 50/2017-Cus. However the applicant has attempted to make a case starting with export of such equipment(s) on which exemption vide Notification No. 50/2017-Cus. has been availed. The Notification No. 50/2017-Cus. provides for compliance with conditions prescribed under the notification. Non-fulfilment of such condition(s) will make the importer liable to pay differential duty along with interest fine penalty etc. as the case may be. It appears that the applicant has introduced concept of export in relation to such imported equipment(s) in order to link it with Notification No. 45/2017-Cus which is not warranted but un-necessary as the same appears to have been done to confuse the issue for claiming exemption from payment of duties/taxes. In the instant case goods have not been imported for warehousing in FTWZ but performance of a contract for specified purpose for which exemption from duties at the time of import has been claimed vide serial number 404 of Notification No. 50/2017-Cus. thereby goods transferred from FTWZ to DTA cannot be treated as re-imported goods making the Notification No. 45/2017-Cus. inapplicable. It can be convincingly stated that under the SEZ Act 2005 read with SEZ Rules 2006 words import and procure have been assigned different meanings. It is also important to note that activity of bringing goods from a Unit or Developer in SEZ to DTA is not covered under the definition of the term import under the SEZ Act 2005 therefore such transfer from SEZ to DTA cannot be termed as re-import . Moreover as per dictionary meaning of the word procure is to obtain something but when the goods are being warehoused in FTWZ these are not procured by a Unit or Developer therefore when transfer of goods from DTA to FTWZ or FTWZ to DTA is neither covered under the term procure nor import therefore such transfer/supply of goods cannot be treated as reimport for application of procedures and conditions as applicable in the case of normal re-import of goods from outside India. Notification No. 45/2017-Cus. is not applicable in the instant case. The facts of the application amply indicate that goods have been exported by Unit in FTWZ which again makes the said Notification inapplicable in view of the second proviso of the Notification. Moreover there is no condition for re-export of goods under the Notification 50/2017-Cus. however a deeming fiction has been created by bringing in re-export which appears to have been done to deviate from the issue and the word export/re-export is being un-necessarily equated with warehousing of goods.
Issues Involved:
1. Eligibility for exemption under Notification No. 45/2017-Cus for re-import of equipment from SEZ/FTWZ to DTA. 2. Interpretation of "re-import" and applicability of SEZ Act and Customs Act provisions. 3. Validity of reliance on CBIC Circular No. 21/2019 in the context of the case. Summary: Issue 1: Eligibility for Exemption under Notification No. 45/2017-Cus The applicant, engaged in providing oil field services, sought an advance ruling on whether they are eligible to claim exemption from customs duty, IGST, and compensation cess on re-import of equipment from SEZ/FTWZ to DTA under serial number 5 of Notification No. 45/2017-Cus. The applicant argued that since the equipment was initially sent from DTA to SEZ/FTWZ without availing any duty incentives, its subsequent clearance back to DTA should be considered as re-import and eligible for exemption. Issue 2: Interpretation of "Re-import" and Applicability of SEZ Act and Customs Act Provisions The Customs Authority for Advance Rulings (CAAR) examined whether the goods transferred from FTWZ to DTA could be considered as re-import under the SEZ Act and Customs Act. The authority noted that the terms "imported," "exported," and "procured" have distinct meanings under the SEZ Act. The transfer of goods from FTWZ to DTA does not qualify as "import" or "re-import" under these definitions. Therefore, the activity of transferring goods from FTWZ to DTA cannot be considered as re-import, making Notification No. 45/2017-Cus inapplicable. Issue 3: Validity of Reliance on CBIC Circular No. 21/2019 The applicant's reliance on CBIC Circular No. 21/2019 was contested by the concerned Commissionerate, which stated that the circular was issued in a different context, specifically for goods exported for exhibition or on consignment basis. The CAAR concurred, noting that the applicant's situation did not align with the context of the circular. The circular's clarification does not apply to the applicant's case, as the goods were not exported for exhibition or consignment. Conclusion: The CAAR concluded that Notification No. 45/2017-Cus is not applicable to the applicant's case. The transfer of goods from FTWZ to DTA does not qualify as re-import under the SEZ Act or Customs Act. The reliance on CBIC Circular No. 21/2019 was also deemed incorrect. Hence, the applicant is not eligible for the claimed exemptions.
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