No interest on capital goods cleared into DTA after use in bonded warehouse

Manufacturing in bonded warehouses is covered under Section 65 of the Customs Act, 1962 (CA 62) and Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 (MOOWR)

We have an EOU for research & development (R&D) services. We import inputs like reagents duty free. We now want to provide R&D services to a special economic zone (SEZ) unit. Do we have to pay the duty on the inputs that we use for providing such services?

 

Para 11 of notification 52/2003-Cus dated 31.3.003 says that ‘nothing contained in this notification shall apply to the goods imported by a service sector export-oriented undertaking… who does not directly export services out of India’. However, Para 3 of the notification requires you to reverse only the BCD on the inputs, ‘notwithstanding