L&T seeks govt nod to use SEZ jetty to transit goods from outside zone for HPCL project

Amiti Sen New Delhi | Updated on July 17, 2020 Published on July 17, 2020

Construction engineering major L&T Ltd has submitted an unusual request to the government seeking a one-time permission for using a jetty facility of its Special Economic Zone unit in Kattupalli, Ennore, for transit of goods manufactured in another unit outside the zone without payment of Customs duty.

The SEZ unit in Kattupalli belongs to L&T Hydrocarbon Engineering (LTHE), a wholly-owned subsidiary of L&T Ltd, and the company wants to use the SEZ jetty facility there for despatch of modules manufactured by one of its units located outside the zone in the domestic tariff area (DTA) for modernisation of Hindustan Petroleum Corporation Ltd’s Vizag Refinery, according to its proposal made to the government.

“Although the SEZ rules have no provision for DTA goods to be brought into an SEZ merely for the purpose of transit and transport, the Development Commissioner of MPEZ (in charge of the Kattupalli SEZ), has recommended the proposal to the Board of Approval for SEZs as the company believes that the flexibility will benefit the country since the HPCL project is of national interest,” an official aware of the development told BusinessLine.

The BoA, which is scheduled to meet on July 31, will consider the request made by L&T and see if there is a case for making an exception to the SEZ rules and providing a one-time permission for use of the SEZ jetty facility for transit of DTA goods.

HPCL Vizag refinery

LTHE’s DTA unit at Mumbai has received an ‘Engineering, Procurement, Construction’ (EPC) order from HPCL, a Central Public Sector Enterprise, for Residue Upgradation Facility as part of modernisation plan in HPCL’s Vizag Refinery. It is expected to increase the output efficiency of the plant significantly and its success will invite several other projects in India with this technology, the agenda for the BoA meeting stated.

Pointing out that the project site of HPCL at Vizag is congested, that would lead to construction bottlenecks and also difficulties in movement and storage of materials at the site, LTHE proposed to set up a DTA facility at Kattupalli by de-notifying a portion of the L&T Shipbuilding SEZ, fabricate the plant modules at this DTA facility and then commission/erect the modules at HPCL, Vizag, on plug-and-play model.

However, the company will go ahead with the de-notification only if the BoA allows it to use the SEZ jetty, from January 2021 to November 2021, for transiting the goods and despatching them through the sea to HPCL, without paying Customs duty (as SEZ is considered to be deemed foreign territory), per the agenda.

LTHE has said that it will not unload or unpack the goods. This may be necessary to avoid the possibility of a mix-up with SEZ goods. The SEZ Act and rules are very strict about ensuring that the goods that move from an SEZ to the DTA pay customs duties as SEZ goods enjoy a lot of benefits including tax sops and are meant for exports.

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Published on July 17, 2020
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