Import of HR Coils restricted under Import Policy and allowed only against licence-Import of goods falling under Headings 7326 90 99,  8483 10 99 &  8708 10 90 also restricted-DGFT Notification No. 63     PM says India will use fiscal, monetary, public investment and exchange rate measures to tackle global financial meltdown crisis-no effort would be spared to "neutralise" to the "maximum" its adverse impact on India     Sensex Up by 500 Points in intra day trading as bargain hunters enter the market     Anti dumping duty imposed on import of Acrylic Fibre from Korea RP & Thailand-Customs Tariff Notification No.123      Singer Michael Jackson converts to Islam and changes his name to Mikaeel     Debit of advance authorization/DFIA based on balance CIF value of inputs in freely convertible currency-DGFT Circular No.41      Export of edible oils permitted in branded consumer packs of up to 5 Kgs, subject to a limit of 10,000 tons during the next one year up to 31st October, 2009- Export of fish oil allowed freely-DGFT Notification No.60     DTAA between India and Tajikistan signed     Authority for Advance Rulings rules the tax payable on the long term capital gains arising on sale of equity shares of Foseco India Ltd., being listed securities, will be 10 per cent of the amount of capital gains as per the proviso to section 112(1) of the Income-tax Act-While calculating the amount of long term capital gain chargeable to tax interest paid by the applicant to the shareholders of Foseco India Limited as per the directives of the SEBI will also be treated as a part of the cost of acquisition of the shares-AIT-2008-416-AAR   Authority for Advance Rulings rules the income derived by the applicant on the purchase in India and export of gold jewellery accrues or arises in India and is taxable in India-AIT-2008-417-AAR    Exchange Rate for imported goods is Rs 74.03 Per Pound Sterling and Rs 51.22 Per 100 Yen-Exchange Rate for export is Rs 72.45 Per Pound Sterling and Rs 49.94 Per 100 Yen-Customs Non-Tariff Notification No.128      100 per cent EOUs allowed to export non-basmati rice-DGFT Notification No.59      Customs duty of 5 per cent imposed on import of Pig Iron, spiegeleisen, semi-finished products, flat products & long products    Import of Crude Soyabean Oil subjected to 20 per cent customs duty- no change in import duty on refined soyabean oil-Customs Tariff Notification No.122    Time-limit for filing refund of service tax extended to 6 months-Service Tax Notification No.32        Tariff Value for import of Brass Scrap is 3525 and for poppy seeds 5206-Customs Non-Tariff Notification No. 127     CBEC clarifies the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise-Central Excise Circular No.877      SC Ruling-the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act- conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounted to manufacture/production-AIT-2008-413-SC   SC Ruling-Whether any "gift" arose in terms of Section 2(xii) of the Gift-tax Act, 1958 on the allotment of rights issue by the appellant company to its shareholders vide Board's Resolution- Whether there was any element of "gift" as defined under Section 2(xii) in the appellant issuing Bonus shares in the ratio of 1:23-AIT-2008-412-SC    HC Ruling-Income Tax-"reserves" arising out of the acquisition of the business of Tata Cellular Limited could never have the character of "income" in the hands of the petitioners-pre-requisite condition contained in proviso to section 147 to enable the re-assessment to be opened after period of 4 years have elapsed have not been met-AIT-2008-410-HC    HC Ruling-Central Excise- valuation of the goods for the purpose of excise duty and whether excise duty was chargeable under Section 4 or Section 4A of the Central Excise Act 1944-while construing rule 3, who are excluded are only the institutional or industrial consumers as explained in Rule 2A and the industrial or institutional consumers in terms of the proviso to rule 2(p) for the purpose of chapter-II are the same-If the person who purchase the prepacked commodity not directly from the manufacturer or packers, they are consumers and the declaration will be of no effect-AIT-2008-408-HC   Government considering imposition of import duty on steel      Bad News for Consulting Engineers- whether turnkey contract can be vivisected?- The conclusion in Daelim case on the point, prima facie, being not in accordance with law, matter goes to Larger Bench-AIT-2008-405-CESTAT  Larger Bench of CESTAT rules Credit is admissible on an input service relating to the business-AIT-2008-407-CESTAT   credit of the service tax paid on the outdoor catering (canteen) service is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004-AIT-2008-406-CESTAT   The payment for use of "services for MTNL/other companies via the interconnect/port/access/toll by the assessee would not fall within the purview of payments as provided for under section 194J of the Act, so as to be eligible for tax deduction at source-The interconnect charges/port access charges cannot be regarded as fees for technical services-AIT-2008-404-HC   Computation of Value under Section 14 for Levy of Export Duty - Customs Circular No. 18          Export duty of 8 per cent notified in place of earlier rate of Rs. 200 per tonne on export of iron ore fines-Customs Tariff Notification No.121    service tax paid under Section 66A is available as 'input credit' under Cenvat Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service-Service Tax Trade Notice No.43/2008 
 
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Foreign Trade Policy 2004-2009

 

CHAPTER-7

SPECIAL ECONOMIC ZONES

Note:   Special Economic Zones (SEZ) are growth engines that can boost manufacturing, augment exports and generate employment. The private sector has been actively associated with the development of SEZs. The SEZs require special fiscal and regulatory regime in order to impart a hassle free operational regime encompassing the state of the art infrastructure and support services. The proposed legislation on SEZs to be enacted in the near future would cover the concepts of the developer and co- developer, fiscal concessions under the Income Tax and Customs Act, provide for Offshore Banking Units (OBUs) etc . A brief on the facilities available under the SEZ scheme is given as under: 

Eligibility 

7.1

(a)

Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.

 

 

 

(b)

Goods and services going into the SEZ area from DTA shall be treated as exports and goods coming from the SEZ area into DTA shall be treated as if these are being imported.

 

 

 

(c)

SEZ units may be set up for manufacture of goods and rendering of services.

Export and Import of Goods.

7.2

(a)

SEZ units may export goods and services including agro-products, partly processed goods, sub-assemblies and components except prohibited items of exports in ITC (HS). The units may also export by-products, rejects, waste scrap arising out of the production process. Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) shall be subject to fulfillment of the conditions indicated in the ITC (HS) Classification of Export and Import Items.

 SEZ units, other than trading/service units, may also export to Russian Federation in Indian Rupees against repayment of State Credit/Escrow Rupee Account of the buyer, subject to RBI clearance, if any.

 

 

 

(b)

SEZ unit may import/procure from the DTA without payment of duty all types of goods and services, including capital goods, whether new or second hand, required by it for its activities or in connection therewith, provided they are not prohibited items of imports in the ITC(HS). However, any permission required for import under any other law shall be applicable. Goods shall include raw material for making capital goods for use within the unit. The units shall also be permitted to import goods required for the approved activity, including capital goods, free of cost or on loan from clients.

 

 

(c)

SEZ units may procure goods required by it without payment of duty, from bonded warehouses in the DTA set up under the Policy and/or under Section 65 of the Customs Act and from International Exhibitions held in India.

 

 

(d)

SEZ units, may import/procure from DTA, without payment of duty, all types of goods for creating a central facility for use by units in SEZ. The Central facility for software development can also be accessed by units in the DTA for export of software.

 

 

(e)

Gem & Jewellery units may also source gold/ silver/ platinum through the nominated agencies.

 

 

(f)

SEZ units may import/procure goods and services from DTA without payment of duty for setting up, operation and maintenance of units in the Zone.

Leasing of Capital Goods 

7.3

SEZ unit may, on the basis of a firm contract between the parties, source the capital goods from a domestic/foreign leasing company. In such a case the SEZ unit and the domestic/ foreign leasing company shall jointly file the documents to enable import/ procurement of the capital goods without payment of duty.

Net Foreign Exchange Earning (NFE) 

7.4

SEZ unit shall be a positive Net Foreign exchange Earner. Net Foreign Exchange Earning (NFE) shall be calculated cumulatively for a period of five years from the commencement of production according to the formula given in Chapter 7 of the Handbook (Vol-I).

Monitoring of performance

7.5

(a)

The performance of SEZ units shall be monitored by the Unit Approval Committee.

 

 

(b)

The performance of SEZ units shall be monitored as per the guidelines given in Appendix 14-IG of the Handbook (Vol-I).

Legal Undertaking 

7.6

The unit shall execute a legal undertaking with the Development Commissioner concerned and in the event of failure to achieve positive foreign exchange earning it shall be liable to penalty in terms of the legal undertaking or under any other law for the time being in force.

Approvals and Applications 

7.7

(a)

Applications for setting up a unit in SEZ other than proposals for setting up of unit in the services sector (except software and IT enabled services, trading or any other service activity as may be delegated by the BOA), shall be approved or rejected by the Units Approval Committee within 15 days as per procedure indicated in Appendix 14-IB of the Handbook (Vol-I) . In other cases approval may be granted by the Board of Approval.

 

 

(b)

Proposals for setting up units in SEZ requiring Industrial Licence may be granted approval by the Development Commissioner after clearance of the proposal by the SEZ Board of Approval and Department of Industrial Policy and Promotion within 45 days on merits.

DTA Sales and Supplies 

7.8

(a)

SEZ unit may sell goods, including by-products, and services in DTA in accordance with the import policy in force, on payment of applicable duty.

 

 

(b)

DTA sale by service/trading unit shall be subject to achievement of positive NFE cumulatively. Similarly for units undertaking manufacturing and services/ trading activities against a single LOP, DTA sale shall be subject to achievement of NFE cumulatively.

 

 

(c)

The following supplies effected in DTA by SEZ units will be counted for the purpose of fulfillment of positive NFE:

 

 

 

(i)

Supplies effected in DTA in terms of Chapter 8 of the Policy.

 

 

 

(ii)

Supplies made to bonded warehouses set up under the Policy and/or under Section 65 of the Customs Act.

 

 

 

(iii)

Supplies to other EOU/SEZ/ EHTP/ STP/BTP units provided that such goods or services are permissible to be procured/rendered by these units.

 

 

 

(iv)

Supplies against special entitlement of duty free import of goods.

 

 

 

(v)

Supplies of goods and services to such organizations which are entitled for duty free import of such items in terms of general exemption notification issued by the Ministry of Finance.

 

 

 

(vi)

Supply of services (by services units) relating to exports paid for in free foreign exchange or for such services rendered in Indian Rupees which are otherwise considered as having been paid for in free foreign exchange by RBI.

 

 

 

(vii)

Supplies of Information Technology Agreement (ITA-1) items and notified zero duty telecom/electronic items indicated in the Appendix 14-IC of the Handbook.

Entitlement for Supplies from the DTA 

7.9

Supplies from DTA to SEZ shall be entitled for the following:

 

 

(a)

DTA supplier shall be entitled for:

 

 

 

(i)

Drawback /DEPB/DFRC/Advance Licence

 

 

 

(ii)

Discharge of Export performance, if any, on the supplier.

 

 

(b)

SEZ units shall be entitled for:-

 

 

 

(i)

Exemption from Central Sales Tax.

 

 

 

(ii)

Exemption from payment of Central Excise Duty on all goods eligible for procurement by the unit.

 

 

 

(iii)

Deleted.

 

 

 

(iv)

Reimbursement of Duty paid on fuels or any other goods procured from DTA as per the rate of drawback notified by the Directorate General of Foreign Trade from the date of such notification.

 

 

(c)

Supplier of precious and semi-precious stones, synthetic stones and processed pearls from Domestic Tariff Area to the units situated in SEZ shall be eligible for grant of Replenishment Licenses at the rates and for the items mentioned in the Handbook (Vol. I).

 

 

(d)

The entitlements under paragraphs (a) and (b) (ii) above shall be available provided the goods supplied are manufactured in India.

Export Through Status Holder 

7.10

SEZ unit may also export goods manufactured/software developed by it through a merchant exporter/ status holder recognized under this Policy or any other EOU/SEZ/ EHTP/STP unit.

Inter-unit Transfer

7.11

(a)

SEZ units may transfer manufactured goods, including partly processed/semi-finished goods and services from one SEZ unit to another SEZ/EOU/ EHTP/STP unit.

 

 

(b)

Goods imported/procured by a SEZ unit may be transferred or given on loan to another unit within the same SEZ which shall be duly accounted for, but not counted towards discharge of export performance.

 

 

(c)

Capital goods imported/procured may be transferred or given on loan to another SEZ/EOU/ EHTP/ STP unit with prior permission of the Development Commissioner and Customs authorities concerned.

 

 

(d)

Transfer of goods in terms of sub-paras (a) and (b) above within the same SEZ shall not require any permission but the units shall maintain proper accounts of the transaction.

Other Entitlements 

 

Other entitlements of SEZ units are indicated in the Chapter 7 of the Handbook (Vol-1).

Sub- Contracting 

7.12

(a)

SEZ unit, may subcontract a part of their production or production process through units in the DTA or through other SEZ/EOU/ EHTP/ STP, with the annual permission of Customs authorities. Subcontracting of part of production process may also be permitted abroad with the approval of the Development Commissioner.

 

 

(b)

Sub-contracting by SEZ gems and jewellery units through other SEZ units or EOUs or units in DTA shall be subject to following conditions

 

 

 

i)

Goods, finished or semi-finished, including studded jewellery, taken outside the zone for sub- contracting shall be brought back to the unit within 90 days. No cut and polished diamonds, precious and semi-precious stones (except precious and semi precious stone having zero duty) shall be allowed to be taken outside the zone for sub-contracting.

 

 

 

ii)

Receive plain gold/silver/platinum jewellery from DTA in exchange of equivalent quantity of gold/silver/ platinum, as the case may be, contained in the said jewellery.

 

 

 

iii)

SEZ units shall be eligible for wastage as applicable for sub-contracting and against exchange

 

 

 

iv)

The DTA unit undertaking job work or supplying jewellery against exchange of gold/silver/platinum shall not be entitled to export benefits.

 

 

(c)

All units, including gem and jewellery, may sub-contract part of the production or production process through other units in the same SEZ without permission of Customs authorities subject to records being maintained by both the supplying and receiving units.

 

 

(d)

SEZ units other than gems and jewellery units may be allowed to undertake job-work for export, on behalf of DTA exporter, provided the finished goods are exported directly from SEZ units. For such exports, the DTA units will be entitled for refund of duty paid on the inputs by way of Brand Rate of duty drawback.

 

 

(e)

Scrap/waste/remnants generated through job work may either be cleared from the job worker’s premises on payment of applicable duty or returned to the unit.

 

 

(f)

SEZ units engaged in production/processing of agriculture/horticulture products, may on the basis of annual permission from the Customs authorities take out inputs and equipments to the DTA farm subject to the procedure indicated in Chapter 7 of the Handbook (Vol-I).

Exit from SEZ Scheme

7.13

(a)

SEZ unit may opt out of the scheme with the approval of the Development Commissioner. Such exit from the scheme shall be subject to payment of applicable Customs and Excise duties on the imported and indigenous capital goods, raw materials etc. and finished goods in stock. In case the unit has not achieved positive NFE, the exit shall be subject to penalty, that may be imposed by the adjudicating authority under Foreign Trade (Development and Regulation) Act, 1992.

 

 

(b)

SEZ unit may also be permitted by the Development Commissioner, as one time option, to exit from SEZ scheme on payment of duty on capital goods under the prevailing EPCG Scheme, subject to the unit satisfying the eligibility criteria of that Scheme and standard conditions for exit indicated in Appendix 14-IL of the Handbook (Vol-I).

Export through Exhibitions/Export Promotion Tours/Export through show rooms abroad/Duty Free Shops 

7.14

SEZ, units may :

 

 

(i)

Export goods for holding/ participating in exhibitions abroad with the permission of Development Commissioner.

 

 

(ii)

Personal carriage of gold/ silver/ platinum jewellery, precious, semi-precious stones, beads and articles.