Exim Matters : Fresh Norms For Sez Goods Soon

The new Chapter has 15 sections, from Section 76A to 76 N. The central goverment will make rules and regulations relating to goods or class of goods admitted to a special export zone (SEZ), the period for which the goods may remain in SEZ, their utilisation inside SEZ, the bond or bank guarantee to be provided, Customs control, procedure for removal etc.

These new provisions will co-exist with the other provisions in the Customs Act but in the event of a conflict, the provisions of Chapter XA will prevail in regard to goods admitted into SEZ.

All goods admitted to SEZ shall be exempt from duties of customs. All goods supplied to SEZ from domestic tariff area (DTA) shall be subject to export duties and be eligible for duty drawback under Section 75 of the Customs Act, 1962. The exim policy has also been altered to allow duty exemption entitlement passbook (DEPB) for supplies from DTA to SEZ. SEZs are specially delineated geographical areas, which are to be regarded as being outside the territory of India, for the purpose of trade and tariff regulations. Accordingly, the goods cleared from SEZ to DTA will be subject to import policy restrictions and full customs duties, including anti-dumping and safeguard duties. Similarly, goods supplied from DTA to SEZ will be regarded as physical exports.

 

SEZs are expected to provide a hassle free environment to manufacturers and traders but Section 76C (3) gives the Customs officers the right to carry out checks, at any time, on the goods kept or stored in a SEZ.

According to the government, such a right is essential to prevent misuse of the scheme. According to the trade, this power should be subject to suitable safeguards to prevent harassment.

The government must now take the next step to make central excise law inapplicable to operations in the SEZ. If SEZ is to be regarded as foreign territory, there is no warrant to apply central excise law on goods manufactured in the SEZ. A simple amendment to that effect in the Central Excise Act can take away a lot of unwarranted exemption notifications and complexities that central excise law entails. Even under the Customs laws, there is now no need for exemption notifications to admit goods into SEZ. Section 76 E admits goods into SEZ without duty payment.

Any goods being cleared from SEZ to DTA can very well be subject to all the restrictions, taxes and exemptions that any other import is subject to. Similarly, the Exim policy provisions applicable to DTA importers need not be made applicable to SEZ units.

At present, goods manufactured in SEZ are being cleared into DTA under excise invoices of SEZ units, whereas importers clear the goods imported from abroad for home consumption under a bill of entry. It would be interesting to see what procedures are laid down for clearances from SEZ to DTA.

The new changes mark a good beginning but there is still a long way to go Hopefully, the Finance Ministry shares the Commerce Minister