We are an EOU. We want to buy some capital goods earlier imported and used by a SEZ unit. The proviso to Rule 34 of SEZ Rules, 2006, at the relevant part (ii), says that in case a unit is unable to utilise goods or services imported or procured from DTA, it may sell them to another unit or to EOU/STP/EHTP/BTP, without payment of duty; or (iii) sell to EOU/STP/EHTP/BTP -- (a) on payment of IGST as applicable under section 5 of the IGST Act, 2017; and (b) without payment of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and additional duty, if any, leviable thereon under sub-sections (1), (3) and (5) of section 3 of the said Act and such sale shall also be made without payment of IGST and compensation cess leviable thereon under sub-sections (7) and (9) of section 3 of the said Act, as per notification issued by the Department of Revenue and such exemptions, as applicable. This is very confusing. Could you please clarify?
This provision is badly drafted, because at (iii)(a), it says IGST must be paid, and at (iii)(b) it says IGST need not be paid. Since (iii)(a) and (iii)(b) are joined with “and”, it means both conditions have to be fulfilled, which is impossible. The way to reconcile is to read this provision in harmony with Section 30 of the SEZ Act, 2005 and Rules 46(12) and 46(13) of the SEZ Rules, 2006 and arrive at a conclusion that the word “and” between (iii)(a) and (iii)(b) must be read as “or”.
Then the meaning that emerges is that in case the SEZ unit sends the goods to EOU/STP/EHTP/BTP under the relevant Customs exemption notification 52/2003-Cus dated March 31, 2003, the exemption from BCD and IGST will be available. The Commerce Ministry should amend the Rule 34 suitably and also the Rules 46(12) and 46(13), as the procurement certificate has been replaced with the intimation prescribed under Rule 5 of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.
We had imported an item of capital equipment but during the commissioning stage, it was found that there was a design mistake. Foreign suppliers have asked us to return the equipment and they will refund the purchase price. Does it require the EDF/GR waiver route, because there will be a refund of the amount? Can we export it as our routine merchandise, as we regularly export products?
From what you say, it appears you have remitted the payment against original import and so that transaction is closed in IDPMS. Against the export of the imported capital goods, you expect to get the remittance. So, there is no case for seeking a GR/EDF waiver. You can re-export the machine and claim drawback of the duty paid under Section 74 of the Customs Act, read with the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 and notification 19-Cus dated February 6, 1965.
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