SEZ Rules - Highlights
When all the Government offices were closed for Moharrum, the Commerce Ministry – rather the minister told the nation that the SEZ Rules have been notified and surprisingly a copy of the notification bringing in the Rules was not available in the minister’s press conference. On 10th February when the Rules came into force, practically nobody in the country had any knowledge about what the rules looked like. Any way that’s how the Government works. The SEZ Rules are here; it’s a mystery how the Act worked all these days without the Rules. The highlights of the new Rules are:-
++ Area – The SEZ should have a minimum contiguous area of 1000 hectors. An SEZ for Services and the SEZs in the North Eastern states, HP Uttaranchal, Sikkim, J&K, and Goa or in a union territory can have 200 hectors. 25% of the area to be earmarked for developing processing.
++ No unit will be allowed for recycling of plastic, scrap or waste.
++ Units may be setup for providing Services or manufacturing Services to overseas entities.
++ Development Commissioner will issue a letter of approval for setting up of the unit.
++ Procedure for availing exemptions and concessions.
++ Bond cum legal undertaking in Form-H to be executed by the unit and in Form-D by the developer.
++ Bond cum legal undertaking to be jointly accepted by Development Commissioner and by the specified officer who is the Assistant Commissioner/Deputy Commissioner of Customs posted in the zone.
++ Bond cum legal undertaking will cover the movement of goods between the port and the SEZ, the authorized operations in the SEZ, temporary removal of goods to the DTA and re-import of exported goods.
++ Bond cum legal undertaking to be signed by the Managing Director or a person authorized by the Board, shall be for a value of the duties leviable and when the value falls short, additional bond cum legal undertaking has to be furnished.
++ There will be no debit or credit in the bond account but it will be monitored on a quarterly or annual basis.
++ Supplies from Domestic Tariff Area will be treated as export and all benefits allowed.
++ Drawback can be claimed from the Customs Officer in the SEZ.
++ When the goods on which no duty has been paid are not used or not properly accounted for, the duties shall be refunded without prejudice to any other action under other acts like Customs, Excise, Sales Tax etc.,
++ If any permission is required for import under any other law, the Board of approval shall approve the same.
++ All types of goods including capital goods new or second hand goods and Services required for authorized operations for the DTA can be imported without payment of taxes, duties or Cess.
++ In case of doubt whether any goods or Services are required for authorized operations or not, it shall be decided by the Development Commissioner.
++ Goods for the personal use of or consumption by the official staff are not eligible for exemptions.
++ Defective goods can be sent outside for repairs etc., or can be destroyed.
++ Assessment on self declaration basis and no routine examination. Examination if required to be done in the zone.
++ Goods can be imported into the zone through ports, land Customs stations, ICDs, Foreign Post Offices, Authorized Couriers, through personal baggage or via satellite.
++ Import of ITES including software will be allowed through internet, E-mail or any other electronic mode.
++ Goods imported through port will not be subject Customs Examination at the port.
++ For imports, Bill of Entry in quintuplicate to be filed with the authorized officer.
++ For import of computer software or Services through data communication, a consolidated Bill of Entry for the whole month can be filed.
Procedure for domestic procurement.
++ DTA supplier can clear the goods under ARE-1 under bond or under claim of rebate.
++ Goods on which export entitlements are not claimed will be allowed into the unit on the basis of ARE-1
++ Goods on which export entitlements are availed will be allowed in to the zone on the basis of ARE-1 and a bill of export assessed by the authorized officer before arrival of the goods.
++ A copy of the ARE-1 and or copy of the Bill of Export will be forwarded to the Central Excise Officer having jurisdiction over the DTA.
++ At the time of assessment it should be specifically examined whether the goods are required for the authorized operations.
++ When goods bought from DTA units not registered with Central Excise, ARE-1 is not required and invoice will suffice.
++ Goods can also be procured from DTA without availing any exemptions, under the cover of an invoice without ARE-1.
++ Goods can also be procured from a warehouse, another SEZ unit in the same or another zone.
++ Services can be received free of tax for authorized operations in the zone.
++ Goods other than news papers can be brought in without payment of Central Sales Tax.
Validity – Goods to be used within the validity period of letter of approval. Failure will make the goods liable to duty as if they are cleared to the DTA.
++ Goods can be destroyed after intimation to the authorized officer.
Sub-contracting – Part of the production or process may be sub-contracted to units in the DTA, SEZ, EOU etc.,
++ Free samples may be exported without any limit.
++ Exports will be under shipping bills to be filed with the authorized officers.
++ ‘Let export orders’ will be given on the basis of self-certification.
++ Goods and Services may be sold in the domestic tariff area subject to certain restrictions.
++ Certain goods like used packing materials and computer donated to education institutions can be cleared from the SEZ without payment of duty.
++ Certain goods like laptop computers can be removed temporarily to the DTA.
Foreign exchange earnings - The units in the SEZ shall achieve positive net foreign exchange to be calculated cumulatively for a period of five years; that is the FOB value of exports minus the total CIF value of imports shall be greater than zero.
Identity cards - Entry into the processing area of SEZ shall be only on identity cards issued by the Development Commissioner.
Exit Policy - A unit can opt out of the SEZ with the approval of the Development Commissioner and on payment of the appropriate duties.