Customs Authority denies exemption under Notification 45/2017 for re-import of equipment from FTWZ to DTA

The Customs Authority for Advance Rulings (CAAR) determined that the applicant was not eligible for exemption under Notification No. 45/2017-Cus for re-import of equipment from SEZ/FTWZ to DTA. The transfer of goods from FTWZ to DTA did not meet the criteria for re-import under the SEZ Act or Customs Act, rendering the notification inapplicable. Additionally, the reliance on CBIC Circular No. 21/2019 was deemed inappropriate as it did not align with the circumstances of the case. Consequently, the applicant was not granted the claimed exemptions.

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Issues Involved:
1. Eligibility for exemption under Notification No. 45/2017-Cus for re-import of equipment from SEZ/FTWZ to DTA.
2. Interpretation of "re-import" and applicability of SEZ Act and Customs Act provisions.
3. Validity of reliance on CBIC Circular No. 21/2019 in the context of the case.

Summary:

Issue 1: Eligibility for Exemption under Notification No. 45/2017-Cus
The applicant, engaged in providing oil field services, sought an advance ruling on whether they are eligible to claim exemption from customs duty, IGST, and compensation cess on re-import of equipment from SEZ/FTWZ to DTA under serial number 5 of Notification No. 45/2017-Cus. The applicant argued that since the equipment was initially sent from DTA to SEZ/FTWZ without availing any duty incentives, its subsequent clearance back to DTA should be considered as re-import and eligible for exemption.

Issue 2: Interpretation of "Re-import" and Applicability of SEZ Act and Customs Act Provisions
The Customs Authority for Advance Rulings (CAAR) examined whether the goods transferred from FTWZ to DTA could be considered as re-import under the SEZ Act and Customs Act. The authority noted that the terms "imported," "exported," and "procured" have distinct meanings under the SEZ Act. The transfer of goods from FTWZ to DTA does not qualify as "import" or "re-import" under these definitions. Therefore, the activity of transferring goods from FTWZ to DTA cannot be considered as re-import, making Notification No. 45/2017-Cus inapplicable.

Issue 3: Validity of Reliance on CBIC Circular No. 21/2019
The applicant's reliance on CBIC Circular No. 21/2019 was contested by the concerned Commissionerate, which stated that the circular was issued in a different context, specifically for goods exported for exhibition or on consignment basis. The CAAR concurred, noting that the applicant's situation did not align with the context of the circular. The circular's clarification does not apply to the applicant's case, as the goods were not exported for exhibition or consignment.

Conclusion:
The CAAR concluded that Notification No. 45/2017-Cus is not applicable to the applicant's case. The transfer of goods from FTWZ to DTA does not qualify as re-import under the SEZ Act or Customs Act. The reliance on CBIC Circular No. 21/2019 was also deemed incorrect. Hence, the applicant is not eligible for the claimed exemptions.

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