The Hindu Business Line : `Retain duty foregone principle in SEZ Bill'

THE Export Promotion Council for EOUs and SEZ Units (EPCES) is keen that the internationally accepted `duty foregone principle' be made applicable for sale of goods from SEZ/special economic zone units to domestic tariff areas (DTAs).

The SEZ Bill 2005, cleared by the Cabinet on Wednesday, was welcomed by the EPCES. The council, however, favoured the retention of the `duty foregone principle,' which had been incorporated in the draft SEZ Bill, but is now said to have been dropped.

Elaborating on this principle, Mr L.B. Singhal, Director-General, EPCES, said that the draft SEZ Bill had provided that if a SEZ unit was selling goods in the DTA, then it would not be required to pay duties that are applicable on the finished products.

Instead, the SEZ was required to pay duty applicable on the imported inputs used in the product plus the Central excise duty applicable on the finished product.

The draft SEZ Bill had provided that the SEZ unit would be able to sell to the extent of 30 per cent of the free-on-board value of exports in the DTA based on the duty foregone principle.

However, the EPCES held that this provision appears to have been dropped under the Cabinet - approved Bill and therefore, SEZ units may have to pay 100 per cent duty on the finished products.

This would imply that a SEZ unit would also be required to pay duty for the value addition, Mr Singhal said.

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`Retain duty foregone principle in SEZ Bill'