Transfer of Used Capital Goods by SEZ units - DOC Instructions - No Unilateral Decisions by Development Commissioners
DEPARTMENT of Commerce has been receiving a number of representations especially from IT/ITES SEZ units about their requests for transfer of capital goods from their STPI units to their newly formed SEZ units. In one case, the DC concerned [please note, not the concerned DC] permitted the transfer subject to no income tax benefits being availed by the SEZ unit, permitted the STPI unit de-bond and issued the requisite sanction for transfer of the goods from STPI to SEZ. After nearly five months of the issuance of the LOA, the permission sanctioned to the SEZ unit was cancelled on the ground that such a transfer is not permitted. In other cases, the request for transfer was not approved.
Now the DOC clarifies that there are no provisions in the SEZ Act / Rules preventing such a transfer of goods. The only deterrent for transfer of such goods is not getting the exemption under the Income Tax Act when the value of the used goods exceed 20% of the total capital goods installed by the unit in a year. Instruction No.11 [Please see DDT 1122 - 01.06.2009] is reiterated wherein detailed guidelines have been prescribed for transferring of used/second hand capital goods from DTA including from an EOU/EHTP/STP/BTP unit.
DOC requests that all the DCs may kindly follow the instruction prescribed in this regard. If DCs have any doubts, they should refer the cases to DoC but they should not take unilateral decisions.
This is the difference between the Department of Commerce and the Department of Revenue. The DOC will allow what is not specifically prohibited while the DOR will not allow even what is clearly given.
What is not specifically barred by law may be regarded as impliedly allowed by it.
MOC, Department of Commerce Instruction No. 68; Dated October 28 2010.