Re-import exemption for FTWZ/SEZ warehoused goods is inapplicable when cleared to DTA; exemption not available.

Transfers of equipment between DTA and FTWZ/SEZ do not qualify as export or re-import for purposes of the cited customs exemption; statutory definitions under the SEZ Act and SEZ Rules treat FTWZ units as holding goods on behalf of foreign suppliers and permit clearance to DTA on payment of duties. Accordingly, goods cleared from FTWZ/SEZ to DTA after warehousing fall within the exclusion for goods exported by FTWZ/FTZ units and are not eligible for exemption under serial number 5 of the notification; the claimed re-import exemption is therefore unavailable on the facts presented.

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Issues: Whether the applicant is eligible to claim exemption from payment of basic customs duty, integrated goods and services tax (IGST) and compensation cess on re-import of equipment from a Free Trade Warehousing Zone (FTWZ)/Special Economic Zone (SEZ) into the Domestic Tariff Area (DTA) under serial number 5 of Notification No. 45/2017-Customs dated 30.06.2017.

Analysis: The issue requires determining whether transfers between DTA and FTWZ/SEZ qualify as 'export' and subsequent returns qualify as 're-import' for the purpose of Notification No. 45/2017-Customs. Relevant statutory provisions include Notification No. 50/2017-Customs (concessional import under serial 404), Section 7, Section 2, Section 30 and Section 51 of the Special Economic Zones Act, 2005, and Rules 18(5), 48 and 49 of the Special Economic Zones Rules, 2006. The statutory scheme assigns distinct meanings to 'import', 'export' and 'procure' under the SEZ Act; movement of goods from DTA to FTWZ or FTWZ to DTA does not amount to import/re-import under the SEZ Act or Customs Act. Units in FTWZ hold goods on behalf of foreign suppliers and may supply to DTA on payment of applicable customs duties; goods exported by FTWZ units to DTA fall within the second proviso to Notification No. 45/2017-Customs which excludes re-imports of goods exported by 100% EOUs or FTZ/FTWZ units. The CBIC Circular No. 21/2019-Customs relates to goods exported for exhibition or consignment contexts and is not squarely comparable to warehousing arrangements in FTWZs. The applicant's transactions involve warehousing in FTWZ and subsequent clearance to DTA rather than re-import from outside India, so the conditions for exemption under serial number 5 of Notification No. 45/2017-Customs are not satisfied.

Conclusion: The exemption under serial number 5 of Notification No. 45/2017-Customs is not available to the applicant for equipment moved from FTWZ/SEZ to DTA in the facts presented; the claimed re-import exemption is not admissible.

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