No bar on import-free goods in SEZ
CHATROOM
| Notification no. 21/2003-ST dated 20.11.2003 exempted the taxable services specified in sub-section (105) of section 65 of the Finance Act, 1994 provided to any person in respect of which payment was received in India in convertible foreign exchange, from the whole of the service tax leviable thereon under section 66 of the said Act. This notification was rescinded by notification no.10/2005-ST dated 3.3.2005. The notifications providing similar exemption which have since been superceded/rescinded are 55/98-ST dated 7.10 98 and 6/99-ST dated 9.4.99 (since superceded by 2/2003-ST dated 1.3.2003). The new Export of Services, 2005 came into effect from 15th March 2005. |
| "Whether free replacement of exported goods found defective by the overseas buyer is allowed under the Special Economic Zones (SEZ) Rules, 2006" |
| The SEZ Rules do not specifically deal with free replacement of exported goods. However, in my opinion, no specific permission is required for the same, as the same is covered by Para 2.37 of the Foreign Trade Policy. |
| Replacement of goods exported free of charge is allowed without the requirement of filing GR/SDF form in accordance with Regulation 4 (j) of Foreign Exchange (Export of Goods and Services) Regulations, 2000. |
| In your last column, reply to our question 'Can we import goods free of cost in SEZ?' is not clear. Can you please elaborate? |
| There is no bar for importing the goods free of cost in SEZ. However, the CIF value of imports will be counted for the purpose of calculating the Net Foreign Exchange Earning. |
| We have accumulated Cenvat Credit on account of export under bond and we have claimed refund of the same under Rule 5 of Cenvat Credit Rules, 2004 (Notification no. 5/2006-CE(NT) dated 14.03.2006). As per the calculation method/explanation given in the notification, refund amount will cover only part of the accumulated credit. Our Central Excise authorities say that the balance credit accumulated during the quarter should lapse. Is it correct? |
| Refund has 'nexus' only with the goods exported under bond. |
| There is no provision for lapse of Cenvat credit under such circumstances. So, you can use the remaining balance for duty payment on goods cleared for home consumption or for export under rebate claim. |
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