Mystery shrouds Customs Notification

By Vijay Kumar

CBEC has inserted a new entry in exemption Notification No 12/2012 Cus dated 17.3.2012.

This new entry reads:

142A

2711

Liquefied petroleum gases (LPG), in excess of the quantity of petroleum gases and other gaseous hydrocarbons consumed in the manufacture of polyisobutylene by the unit located in Domestic Tariff Area (DTA), received from the unit located in Special Economic Zone (SEZ) and returned by the DTA unit to the SEZ unit from where such Liquefied petroleum gases (LPG) were received.

Explanation.-

For the purposes of this entry, the quantity of the petroleum gases and other gaseous hydrocarbons consumed in the manufacture of polyisobutylene shall be calculated by subtracting from the quantity of the said gases received by the DTA unit manufacturing polyisobutylene, the quantity of the said gases returned by the said unit to the SEZ unit.

Nil

5".

We are pretty sure that this new entry is worded in such a complex manner that not many could understand this in the first reading.

Let us assume a DTA unit had received 100 kg from a SEZ unit and returned 20 kg to the SEZ unit. The consumed quantity would be 100-20 = 80 kg. The Notification exempts quantity in excess of the consumed quantity. Does it mean the Notification exempts 20 kg of LPG returned to the SEZ? When the goods are returned to the SEZ, is it necessary that the goods should be exempted? As per Rule 50(1) of the SEZ Rules, 2005, a SEZ Unit can remove goods to a DTA Unit for job work without payment of duty and as per Rule 51(4), the goods shall be brought back to the SEZ Unit within 120 days from the date of taking the goods out of the SEZ Unit.

Is the exemption given because of some demands issued against DTA Units on goods returned to the SEZs? Why can't the CBEC emulate DGFT in explaining the effect of important amendments in the Notification itself?

More than two years ago, Gujarat Polybutenes Pvt Ltd (GPPL) a pioneer manufacturer of polyisobutylene (PIB) had requested the Government to permit net billing of LPG used in the manufacture of PIB, for the purposes of customs duty, CVD, SAD and any such levies when the source of LPG/PIB feedstock is an SEZ unit and the PIB manufacturing unit is located in the DTA.

Is it an outcome of that request?

Notification No. , Dated: December 21, 2012