No export duty on transfer of goods to SEZs, rules SC

The Supreme Court today said transfer of goods to special economic zones (SEZs) from areas outside these tax-free enclaves would not attract export duty.

SEZs are legal entities meant for increasing the country’s exports, while areas within India but outside the SEZs are called domestic tariff areas (DTAs).

A Bench comprising Justice D K Jain and Justice H L Dattu dismissed the contention of the Centre that any transfer of goods from a DTA to an SEZ falls within the definition of exports.

The Supreme Court was hearing an appeal filed by the Centre challenging an order of the Gujarat High Court barring export duty on goods supplied to export-oriented SEZs from DTAs.

Passing an order on the plea of Essar Steel, the Gujarat High Court had on November 11, 2009, held that the export duty on the goods supplied by any firm from a

DTA to an SEZ was not justified.

This judgment was appealed by the Centre in the Supreme Court.

During the proceedings in the apex court, senior advocates C A Sundaram and Mahesh Aggarwal, appearing for the Essar group firm, opposed the Centre’s contention.

The dispute revolves around the period between August 2007 and January 2008, when Essar supplied 600,000 metric tonnes of iron ore pellets from its Vizag-based unit to an SEZ unit at Hazira in 12 shipments. The firm did not pay any export duty on the supply of the iron ore pellets from the DTA unit to the SEZ unit.