Re-import exemption denied for FTWZ-to-DTA clearance where goods were not treated as re-import under customs law.

Equipment first imported for use under Notification No. 50/2017-Customs and later moved from a Domestic Tariff Area to a Free Trade Warehousing Zone did not qualify as re-import when cleared back into the Domestic Tariff Area. The Authority found that the exemption under Notification No. 45/2017-Customs applies only where goods are re-imported in the contemplated sense, and that mere movement from FTWZ to DTA is neither import nor re-import under the SEZ Act, 2005 or customs law. Rule 48 of the SEZ Rules, 2006 was held inapplicable, Circular No. 21/2019-Customs was distinguished on facts, and the second proviso to the notification also supported denial of the benefit. The exemption from customs duty, IGST and compensation cess was therefore rejected.

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Issues: Whether equipment moved from a Domestic Tariff Area to a Free Trade Warehousing Zone and later cleared back into the Domestic Tariff Area could be treated as re-import so as to claim exemption from customs duty, IGST and compensation cess under Notification No. 45/2017-Customs dated 30.06.2017.

Analysis: The exemption under Notification No. 45/2017-Customs was examined in the context of its requirement that the goods must be re-imported. The Authority held that the applicant had first imported the equipment for use under Notification No. 50/2017-Customs and later transferred it to FTWZ for warehousing, which was not the same as re-import of goods that had earlier been exported in the sense contemplated by the notification. The Authority further relied on the separate statutory meanings of import, export and procure under the Special Economic Zones Act, 2005, and noted that movement from FTWZ to DTA does not amount to import or re-import for the purpose of SEZ law or customs law. Rule 48 of the Special Economic Zones Rules, 2006 was found inapplicable to support the claimed exemption, and Circular No. 21/2019-Customs was held to be distinguishable as it dealt with a different factual setting. The second proviso to Notification No. 45/2017-Customs was also invoked to deny the benefit.

Conclusion: The claim for exemption was rejected and the goods cleared from FTWZ to DTA were held not to qualify as re-import for the purpose of Notification No. 45/2017-Customs.

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