Export to SEZs to get duty benefits

Consignments from domestic areas to Customs-bound special economic zones (SEZs) should be treated as exports, thus becoming eligible for duty rebates as applicable to offshore shipments, the revenue department has clarified.

“The settled position is that rebate under Rule 18 of the Central Excise Rules, 2002, is admissible for supplies made from Domestic Tariff Area (domestic market) to SEZ...,” the Central Board of Excise and Customs (CBEC) has said in a directive to its field staff.

The Rule 18 grants rebate on duty on raw materials used to manufacture goods for export purposes. CBEC had to come out with a clarification following a confusion on whether duty benefits given to exports should be extended to supplies going to SEZs.

The clarification was given because a view was put forth that rebate under Rule 18 was admissible only when the goods were exported out of the country and not when supplies were made to an SEZ.

The department had received representations from its various field formations and various units on the issue of admissibility of rebate.

To boost exports, the government provides several incentives, like refund of duty on imported raw material and concessional finance.