Export to SEZ units from DTA - Receipt in Indian Rupees
REPRESENTATIONS have been received by the DGFT from Trade, Industry and Export Promotion Council for EOU and SEZ on the pending requests for allowing closure/ redemption/EODC in cases where the Advance Authorisation holder had made supplies to SEZ units and realised the proceeds in Indian Rupees as per the extant provisions laid down in Para 4.1.6(a) of FTP 2009-14.
DGFT clarifies:
1. Para 4.1.6 (a) of FTP 2009-14 had not stipulated that DTA supplying goods under Advance Authorisation to an SEZ unit has to realise payment from Foreign Currency Account of SEZ unit.
2. Moreover, Rule 30(8) of SEZ Rules 2006 also do not mention that it is mandatory for SEZ unit to make payment to Advance Authorisation holder from Foreign Currency Account (FCA).
3. The above condition was made applicable for Advance Authorisation in the FTP (2015-2020), as per para 4.21 (iii) w.e.f. 1st April, 2015 only.
As a matter of trade facilitation, DGFT has decided to allow closure/redemption/EODC where the Advance Authorization holder or DFIA holder has made supplies to SEZ units and realised the proceeds in Indian Rupees as per the extant provisions laid in para 4.1.6(a) of FTP 2009-14.
DGFT further clarifies that in the new FTP 2015-20 it has been stipulated in the para 4.21 (iii) that "Export to SEZ Units shall be taken into account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ unit." Hence conditions of para 4.21 (iii) of FTP will have to be complied in respect of the Advance Authorisations issued during FTP 2015-20.
DGFT has actually taken a U-turn. By letter dated 15.7.2015 on the same subject, DGFT had clarified;
In pursuance of the decision taken in SOM, SEZ Division of Department of Commerce is requested to instruct all concerned SEZ units that as per Rule 30(8) of SEZ, that the unit were 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. Therefore, 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 had covered this in 02 12 2015.
Though the present decision is a reversal of the earlier view, it will be accepted happily as it is beneficial. Further, there is no change in Rule 30(8) which is relied upon in both the instructions! DDT had raised another important related issue in the same capsule.
DGFT Trade Notice No. 16/2016; Dated: February 10, 2016