TIOL-DDT 302 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
302</font><br>
14 02 2006<br>
Tuesday</b></font></p>
<p align="center"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ
Rules - Highlights</font></b></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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:-<br>
<br>
++ <b>Area</b> – 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.<br>
<br>
++ No unit will be allowed for recycling of plastic, scrap or waste.<br>
<br>
++ Units may be setup for providing Services or manufacturing Services to overseas
entities.<br>
<br>
++ Development Commissioner will issue a letter of approval for setting up of
the unit.<br>
<br>
++ Procedure for availing exemptions and concessions.<br>
<br>
++ Bond cum legal undertaking in Form-H to be executed by the unit and in Form-D
by the developer.<br>
<br>
++ 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.<br>
<br>
++ 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.<br>
<br>
++ 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.<br>
<br>
++ There will be no debit or credit in the bond account but it will be monitored
on a quarterly or annual basis.<br>
<br>
++ Supplies from Domestic Tariff Area will be treated as export and all benefits
allowed.<br>
<br>
++ Drawback can be claimed from the Customs Officer in the SEZ.<br>
<br>
++ 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.,<br>
<br>
++ If any permission is required for import under any other law, the Board of
approval shall approve the same.<br>
<br>
++ 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.<br>
<br>
++ In case of doubt whether any goods or Services are required for authorized
operations or not, it shall be decided by the Development Commissioner.<br>
<br>
++ Goods for the personal use of or consumption by the official staff are not
eligible for exemptions.<br>
<br>
++ Defective goods can be sent outside for repairs etc., or can be destroyed.<br>
<br>
++ Assessment on self declaration basis and no routine examination. Examination
if required to be done in the zone.<br>
<br>
++ Goods can be imported into the zone through ports, land Customs stations,
ICDs, Foreign Post Offices, Authorized Couriers, through personal baggage or
via satellite.<br>
<br>
++ Import of ITES including software will be allowed through internet, E-mail
or any other electronic mode.<br>
<br>
++ Goods imported through port will not be subject Customs Examination at the
port.<br>
<br>
++ For imports, Bill of Entry in quintuplicate to be filed with the authorized
officer.<br>
<br>
++ For import of computer software or Services through data communication, a
consolidated Bill of Entry for the whole month can be filed.<br>
<br>
<b>Procedure for domestic procurement.</b><br>
<br>
++ DTA supplier can clear the goods under ARE-1 under bond or under claim of
rebate.<br>
<br>
++ Goods on which export entitlements are not claimed will be allowed into the
unit on the basis of ARE-1<br>
<br>
++ 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.<br>
<br>
++ 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.<br>
<br>
++ At the time of assessment it should be specifically examined whether the
goods are required for the authorized operations.<br>
<br>
++ When goods bought from DTA units not registered with Central Excise, ARE-1
is not required and invoice will suffice.<br>
<br>
++ Goods can also be procured from DTA without availing any exemptions, under
the cover of an invoice without ARE-1.<br>
<br>
++ Goods can also be procured from a warehouse, another SEZ unit in the same
or another zone.<br>
<br>
++ Services can be received free of tax for authorized operations in the zone.<br>
<br>
++ Goods other than news papers can be brought in without payment of Central
Sales Tax.<br>
<br>
<b>Validity</b> – 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.<br>
<br>
++ Goods can be destroyed after intimation to the authorized officer.<br>
<br>
<b>Sub-contracting</b> – Part of the production or process may be sub-contracted
to units in the DTA, SEZ, EOU etc.,<br>
<br>
++ Free samples may be exported without any limit.<br>
<br>
++ Exports will be under shipping bills to be filed with the authorized officers.<br>
<br>
++ ‘Let export orders’ will be given on the basis of self-certification.<br>
<br>
++ Goods and Services may be sold in the domestic tariff area subject to certain
restrictions.<br>
<br>
++ Certain goods like used packing materials and computer donated to education
institutions can be cleared from the SEZ without payment of duty.<br>
<br>
++ Certain goods like laptop computers can be removed temporarily to the DTA.<br>
<br>
<b>Foreign exchange earnings - </b> 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.<br>
<br>
<b>Identity cards - </b>Entry into the processing area of SEZ shall be only
on identity cards issued by the Development Commissioner.<br>
<br>
<b>Exit Policy</b> - A unit can opt out of the SEZ with the approval of the
Development Commissioner and on payment of the appropriate duties. <br>
<br>
<b><a href="http://www.taxindiaonline.com/RC2/pdfdocs/final_sez_rules.pdf">Click
on SEZ RULES</a></b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Titanium
ores and concentrates – DGFT amend ITC(HS) classification</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT
has amended the Appendix 3 to Schedule 2 of ITC(HS) Classification of Export
and Import Items to prescribe that Titanium ores and concentrates and Zirconium,
its alloys and compounds and minerals shall remain prescribed substances only
till such time as the Policy on Exploitation of Beach Sand Minerals notified
vide Resolution under 8/1(1)/97-PSU/1422 dated 6th October, 1998 is adopted
/ revised / modified by the Ministry of Mines or till the 1st January 2007,
whichever occurs earlier and shall cease to be so thereafter.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2005/dgft05not044.htm">NOTIFICATION
NO. 44 (RE-05)/2004-2009, Dated: February 10, 2006</a></font></p>
<P class=section1 style="TEXT-ALIGN: center" align=center><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt.jpg" width=375></B></P>
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<TD><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> ab
initio </I></B> <O:P><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><B><IMG height=18 src="http://www.taxindiaonline.com/RC2/image/ddt/ab_initio.gif" width=118></B></font></O:P></TD>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
From the beginning. An agreement is said to be "void ab initio" if
it has at no time had any legal validity. A party can be a trespasser, an agreement
or deed can be <b>void</b>, or a marriage or can be unlawful, ab initio. The
illegality of the conduct or can make the entire situation illegal ab initio
(from the beginning), not just from the time the wrongful behavior occurs. If
a sheriff enters property under the authority of a court order requiring him
to seize a valuable painting, but instead he takes an expensive marble sculpture,
he would be a trespasser from the beginning. Since the officer abused his authority,
a court would presume that he intended from the outset to use that authority
as a cloak from under which to enter the property for a wrongful purpose. This
theory, used to correct abuses by public officers, is not popular now a days.
The Courts have held that the seizure in an illegal search need not be illegal.<br>
<br>
++ A show-cause notice and demand contrary to existing circulars of the Board
are ab initio bad.<br>
<br>
++ the impugned order not being found to be void ab initio, no further curative
steps may be taken</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Electricity under the Central Excise Act, 1944 read with Central Excise Tariff
Act, 1985 is not excisable goods. The proposal to bring in the provisions of
Rule 6 of Cenvat Credit, 2002 cannot be upheld ab initio as that rule is applicable
only to goods which are excisable and further exempt or at Nil rate of duty.<br>
<br>
<font color="#663399"><b>People say I've had brushes with the law. That's not
true. I've had brushes with overzealous prosecutors. </b></font>- <i>Mark
Duffy</i><br>
<br>
<font color="#FF6666"><b>Until tomorrow with more DDT<br>
<br>
Have a nice day.<br>
<br>
Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com
</a></font></p>
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