TMI BlogOperationalisation of the Provision of Chapter X A of the Customs Act, 1962- Issuance of SEZ Rules and Regulations- RegX X X X Extracts X X X X X X X X Extracts X X X X ..... ide section 133 of the Finance Act, 2002, an amendment was made in the Central Excise Act, 1944, so as to make the provisions of the Central Excise Act, 1944, inapplicable to goods manufactured or produced within the Special Economic Zones. This provision was also to come into force from a date to be notified by the Government. 4. It has been decided to bring the amendment in the Central Excise Act, 1944, as proposed under section 133 of the Finance Act, 2002, into force also with effect from 15 th August, 2003 vide notification No. 58/2003-Central Excise (N.T), dated 22-7-2003. 5. As envisaged in the Chapter XA of the Customs Act, 1962, the Special Economic Zone Rules, 2003 and Special Economic Zone (Customs Procedure) Regulations, 2003, have also been notified. (Ref: notification Nos. 52/2003-Customs (NT) and 53/2003-Customs (NT), both dated 22-7-2003). These SEZ Rules and Regulations will also come into force with effect from 15 th August, 2003. 6. The new chapter XA in the Customs Act, 1962 on Special Economic Zone, alongwith SEZ Rules and Regulations, envisage a major departure from the existing concept and functioning of Special Economic Zones. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered as foreign territory for purposes of duties taxes. In other words, supplies from DTA units to SEZ units will be considered as exports by the DTA units supplies to DTA units from SEZ units will be considered as imports by the DTA units. 9. The salient features of SEZ Rules, 2003, are as under:- (i) The SEZ should have clearly demarcated processing area and non-processing area. Units will be allowed to be set up in the processing area of SEZ only and that too for the purpose of carrying out authorised operations; (ii) Motor vehicles for personal use or goods for consumption by the workers, staff and officials of the SEZ unit / SEZ developer can not be admitted into the SEZ without payment of duty. [There will be no restriction of movement of vehicle in out of the SEZ for use by the units or their employees] (iii) The goods shall be allowed entry in the SEZ only for the purpose of carrying out “authorised operations” in the zone, which also includes development, operation and maintenance of SEZ and for providing public utility in the zone; (iv) The SEZ unit or Develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured goods/ semi-finished goods/capital goods at the time of closure of the zone. The depreciation shall be allowed at the rate of twenty percent or part there of, of the original assessable value in respect of computer and computer peripherals and ten percent, in case of other capital goods, on a straight line method. The depreciation upto hundred percent may be allowed. However duty would be payable on the transaction value or the depreciated value whichever is higher. 10. The SEZ Regulations, broadly, envisages all procedural aspects that are to be followed by SEZ unit in its day-to-day operations. The procedure incorporated in the regulation covers areas of import, export, inter-unit transfer, DTA procurement, clearance of goods in DTA, valuation of goods in DTA, temporary removal of goods in DTA, sub-contracting of production or production process in DTA or abroad, destruction of goods etc. Further, the requirement of procurement certificate, CT-3 certificate, Transit Permit and AR- 3A has been done away. As supplies of goods made by DTA unit to the SEZ unit or Developer for the purpose of carrying out authorized operation shall be treated as export f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loper to import /procure goods duty free for the purpose of development, operation and maintenance of the Zone; 12. Under the new dispensation, supplies from DTA units to SEZ units will be considered as exports by the DTA units supplies to DTA units from SEZ units will be considered as imports by the DTA units. The supplies to and from SEZ units will be governed by the provisions of the Customs Act, 1962, and not by the provisions of the Central Excise Act, 1944. In view of this, the above stated notifications have been rescinded (Ref: notification Nos. 115/2003-Customs, dated 22-7-2003 and 59/2003-Central Excise, dated 22-7-2003). However, to continue exemption to castor oil cake as mentioned above and the exemption from payment of Special Additional Duty (SAD) on goods brought to any other place in India as referred above, new notifications have been issued under section 25(1) of the Customs Act, 1962 (Ref: notifications Nos. 113/2003-Customs and 114/2003-Customs, both dated 22-7-2003) 13. As per section 76 A of the Customs Act, 1962, the Central Government may, by notification in the Official Gazette, specify special economic zone comprising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecify, and all monitoring regarding SEZ shall be done by the Customs /Central Excise staff nominated for the purpose. Once an Assistant Commissioner or Deputy Commissioner of Customs with attendant staff is specifically posted for the zone , all further documents will be filed before him. It is imperative for the SEZ developer to create infra-structural facilities for Customs staff at the earliest so that all Customs formalities could be done in the zone itself. Till such infrastructural facilities are created in the zone itself, the SEZ units shall be allowed to import / procure construction materials only, but the developer can import any item required for development, operation maintenance of the zone. 17. It is also envisaged that since supplies from domestic tariff area to the special economic zone developer or to a unit, are eligible for duty drawback or DEPB, or for discharge of any other export obligation by the DTA supplier, the payment for such supplies shall be required to be made by SEZ developer or unit in freely convertible foreign exchange. If the payment is not made in foreign exchange, no drawback or DEPB will be allowed and it will not be treated as ful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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