The Hindu Business Line : Units in SEZs to be treated as `foreign territory'

THE Revenue Department of the Finance Ministry has notified new rules and regulations governing special economic zones (SEZs) effective from May 11 under which units located in SEZs would be treated as `foreign territory' for the purpose of trade operations and duties and charges.

In a statement issued here, the Director-General of Export Promotion Council for Export-Oriented Units and SEZs (EPCES), Mr L.B. Singhal, said the rules and regulations were notified earlier in July 2003 and were supposed to become operational from August 15, 2003. But they were deferred on a couple of occasions. However, after consultations with the Ministry of Commerce and EPCES, some amendments have been made in the rules and regulations now.

Accordingly, supplies from domestic tariff area (DTA) to SEZs shall be treated as physical exports and such supplies should be entitled for DEPB (Duty Entitlement Passbook) and duty drawback benefits. As there was some lack of clarity from June 5, 2002 till May 11, 2004 over the issue with the revenue department not accepting the rules devised by the DGFT and Exim Policy in this regard, the EPCES hoped that the revenue department would settle the issue in respect of supplies effected as well as DEPB already issued under earlier Exim Policy and Department of Revenue circular.

On the amendments built into the rules and regulations for SEZs, it is pointed out that earlier rules and regulations envisaged dual monitoring system of SEZ units by Commissioner of Customs and Development Commissioners. Now the Unit Approval Committee comprising Development Commissioner and Commissioner of Customs or his nominee would monitor export performance. Supplies from DTA to SEZs would be under Bill of Exports. However, as per new provisions, duty paid goods would be admitted in SEZs on the basis of invoice only.

Supplies of goods from DTA to SEZs where DEPB/drawback benefit has not been taken should be allowed entry on the basis of domestic procurement and ARE-1 and in respect of such supplies also Bill of Exports should not be required. Bond amount for capital goods, which was prescribed as 100 per cent of the duty leviable on capital goods, has been reduced in the revised rules and regulations to 25 per cent of the duty leviable on capital goods.

Depreciation norms in the earlier rules and regulations were not in accordance with the Exim Policy, which had been now revised to be in line with the Exim Policy provisions. As per the new rules and regulations, import by the SEZ units would have to be against Bill of Entry. This, Mr Singhal said, might create some problems for SEZs, which are situated away from the main port like Kandla SEZ, or Cochin SEZ as currently they are importing against procurement certificate.

As filing of Bill of Entry might delay clearance of consignments for such SEZ units, he requested Customs authorities to facilitate filing of Advance Bill of Entries for these units and to ensure that there is no delay in clearance of import consignments for such SEZ units on account of implementation of the new rules.

The Chairman, EPCES, Mr Sharad Jaipuria, stated that it would be appropriate if uniform rules and regulations are implemented for EOUs as well and suggested merger of EOU and SEZ schemes so as to declare EOUs as "Virtual SEZ units" since both of them are operating on the same parameters.

He said currently there exists a plethora of notifications and circulars, which are in operation for EOUs. Merger of these two schemes would simplify procedures vastly and would make the operation of the units in SEZs and EOUs simpler, besides helping the Development Commissioners, Commissioners of Customs and Central Excise who are implementing these schemes on the ground.

More Stories on : Policy | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Units in SEZs to be treated as `foreign territory'

Kerala doctors hail move to raise retirement age

YSR is next AP CM