TMI BlogProcedures Governing Operation of Units in Special Economic Zones (SEZs) - RegX X X X Extracts X X X X X X X X Extracts X X X X ..... d for reference. 2. The SEZ scheme envisages a simple and transparent policy and procedures for the promotion of exports with minimum paper work. The scheme is detailed under paragraphs 9.30 to 9.43 of the Exim Policy and paragraphs 9.41 to 9.46 of Handbook of Procedures (Vol-1). The most important feature of the scheme is that the SEZ area shall deemed to be a foreign territory for the purpose of duties and taxes. Therefore, goods supplied to SEZ from the Domestic Tariff Area (DTA) will be treated as deemed exports and goods brought from SEZ to DTA will be treated as imported goods. It may be seen from paragraph 9.30 of the EXIM Policy that in any SEZ, goods may be imported/procured from DTA duty free for the purpose of manufacture of goods and services, production, processing, assembling, trading, repair, reconditioning, re-engineering, packaging or in connection therewith and export thereof. The notifications referred to above have been issued to implement the above Policy provisions. It may be seen that the duty-free import facility is not applicable to prohibited goods under the EXIM Policy. The details of other salient features of the scheme are given below:- Import an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsit of such cargo, the customs authorities may examine the consignments when there is a specific information/intelligence. For this purpose, the orders of the Assistant Commissioner/Deputy Commissioner of Customs will have to be obtained. Sub-contracting: 4.1 The Assistant Commissioner / Deputy Commissioner of Customs may permit the clearance of goods to DTA without payment of duty for jobwork/further processing on the basis of a bond furnished by the unit. The bond will be discharged as and when the goods are received back after job work/processing. The goods so processed may be cleared from the jobworker's premises for export directly, provided the jobworker is registered with Central Excise and the procedure as applicable to the EPZ is followed. In such cases, the bond will be discharged after the proof of export is produced. Scrap/waste/remnants/rejects generated at the jobworker's premises may be cleared therefrom on payment of applicable customs duty or returned to the SEZ unit. 4.2 The SEZ units may also undertake job-work for export on behalf of DTA units, provided the goods are exported directly from SEZ units. The export document shall be in the name of the DTA u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain platinum jewellery from DTA in exchange of gold/silver/platinum of same purity and quantity in weight as that of gold/silver/platinum jewellery as the case may be. The unit shall not be eligible for any wastage or manufacturing loss against exchange of such machine-made or hand-made plain jewellery. The DTA unit exchanging the gold/silver/platinum jewellery with the units in SEZ shall not be allowed any deemed export benefits. The units may also be permitted to take out gold, silver or platinum for job-work in the DTA. This is subject to the condition that they will bring back the jewellery finished or semi-finished, including studded jewellery containing quantity and purity equal to the gold/silver/platinum so taken out within 30 days. However, no diamonds, precious stones and semi-precious stones shall be allowed to be taken out of the zone for sub-contracting. As in the case of exchange of gold/silver/ platinum for jewellery of equal quantity and purity, the DTA unit supplying jewellery against job-work shall not be entitled for deemed export benefits and the said unit in the Zone shall not be eligible for wastage or manufacturing loss against such jewellery. 8. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to mint for assaying. The assessment may be finalized when the reports are received from the mint. Inter-Unit transfer 10. Inter unit transfer of goods amongst units in a SEZ shall not require any permission, but the supplying and receiving units shall maintain proper accounts of the transaction. Duty remission on destruction of goods: 11.1 A provision has been made in the notifications that duty would not be levied on capital goods, raw materials, components, waste or scrap etc. if these goods are destroyed in the presence of the Customs authorities. The notifications may be referred to for details. This provision will, however, not apply to gold, silver, platinum, diamond, precious stones and semi-precious stones. 11.2 The officers supervising destruction may ensure that goods are destroyed fully rendering them unfit for further use and give certificate to that effect. After destruction of capital goods, raw materials, components, waste or scrap etc., if the remains have scrap value, the same may be cleared by the unit in DTA on payment of duty applicable to scrap. DTA Sale: 12.1 The Assistant Commissioner/ Deputy Commissioner of Customs may permit sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, no duty shall be charged on clearance of used packing materials such as cardboard boxes, polyethylene bags of a kind unsuitable for repeated use. Paragraph 5 of the notifications may be referred to for further details. Valuation of Goods Cleared into DTA: 14 . Under the SEZ scheme, the goods cleared from the Zone will be treated as imported goods. Therefore, in case of DTA clearances, though the duty charged will be central excise duty, this duty will be equal to the aggregate of all duties of customs. In other words, the SEZ units will have to pay full customs duty (applied duty) on their DTA clearances. In view of this, in case of sale/clearance of goods referred to in the preceding paragraphs, the valuation will be made as per the provisions of the Customs Act, 1962 and the Customs Valuation Rules, 1988. Further, the DTA sales will be subjected to the same assessment and examination procedure as applicable to imported goods. Licences, wherever applicable, will have to be produced before clearing the goods into DTA. Maintenance of Accounts. 15. A SEZ unit shall maintain proper account in the format convenient to it and financial year-wise, of all foreign exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifications provide that the same shall be utilized within the period of five years. In case of failure to utilize the imported / indigenously procured goods within the period of five years, the unit shall be liable to pay duty on the said unutilized goods along with the interest at the rate of 24% per annum from the date of importation or procurement of the said unutilized goods till the date of payment of such duty. Transitional arrangements:- 18.1 An existing EPZ unit can opt for SEZ scheme. On conversion, its previous obligations as an EPZ unit shall be subsumed by its obligations under the SEZ scheme. The raw materials, components, consumables and finished goods lying in stock with the unit at the time of conversion shall be taken as its opening balance under the SEZ scheme. All un-utilised DTA sale entitlements of the unit shall cease to exist from the date of conversion as notified by the Ministry of Commerce and Industry. 18.2 In case an existing EPZ unit decides not to work under the SEZ Scheme, it will have to either debond itself on payment of applicable duties on unutilised raw materials, depreciated value of capital goods and other goods imported / procured loca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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