Export Products to SEZ - Payment by Foreign Currency Account
1. SOME exporters supplied export products to some SEZ Units under Advance Authorisation.
2. SEZ units made payments to these exporters from the account other than Foreign Currency Account as required under Rule 30(8) of SEZ Rules.
3. Requests for closure/redemption of the Advance Authorisation holders were held up due to the reason that payments received by the Authorisation holders are not from Foreign Currency Account(FCA) of SEZ Units.
The Government has received a number of representations from exporters to solve the above problem.
The issue was discussed at a High Level Meeting of senior officers and the decision of the meeting is:
As per Rule 30(8) of SEZ Rules, the units are required to make payments from their FCA, in cases of supplies received by them towards fulfilment of export obligation against the Advance Authorisation of the DTA supplier .
The DGFT has advised the SEZ Division of Department of Commerce that all Development Commissioners may be directed to advise concerned SEZ Units to make payment from their FCA to the suppliers in respect of such cases failing which they would-be liable for action under FT(DR) Act, 1992.
DDT understands that DGFT has already initiated action against some exporters who have received payment in Indian Rupees against supplies made to SEZ Units.
What if there is no Foreign Currency Account?: An assessee brings to our notice another issue. In terms of Rule 30 (8) of the SEZ Rules, Drawback is admissible provided payments for the supply are made from the Foreign Currency Account of the Unit. As per RBI Regulations, Foreign Currency Account cannot be opened unless there is Foreign Exchange Remittance for the Unit. An SEZ Unit in the project stage would purchase construction materials required for setting up the project from DTA. To enable availment of Drawback, such Units buy Foreign Exchange from the Banks on Free Sale Basis after undergoing the " financial rigour" of such purchases. Foreign Exchange so purchased, is paid to the DTA supplier and the BRC is obtained accordingly.
Now if it is insisted that the payment is made from the Foreign Currency Account of the SEZ Unit, this would be an impossible situation - even though payment is made in foreign currency.
DGFT Office Memorandum in F.No.01/94/180/80/AM14/PCA/294., Dated: July 15, 2015