FinMin may exempt SEZs from export duty on steel

The issue is with the tax division and a decision is expected shortly," a finance ministry source said.

The Central Board of Excise and Customs (CBEC) on May 10 had levied an export duty of 5-15 per cent on various iron and steel products. The notification is also applicable to supplies from the domestic tariff area (DTA) to SEZs, which has hit the SEZ units, especially the manufacturers of engineering goods and auto components.

"SEZ units are already exempted from ban on cement. Since they are meant for generating additional economic activity in the country, the taxes should not be imposed on them as it would hit exports and jobs," Export Promotion Council for EOUs and SEZs Director General LB Singhal said.

Several SEZ units manufacturing goods such as auto components have protested the government's move and approached the finance ministry and the commerce ministry on the issue.

Earlier, finance ministry officials argued that since the SEZs are "virtually" foreign territories so they should also pay the export duty.

At a meeting convened by Commerce Secretary GK Pillai, the commerce ministry and developers pointed out that supplies to SEZ units and developers for consumption within the zones should not be interpreted as exports.