Import then assembly and final supply to SEZ

[Guest]

Hello,

 

We are a registered first stage dealer / importer with Central Excise.

We have an order from a company which plans to use a product imported by us in a locally made assembly (made under contract with local manufacturer) and then supply the final product to a unit in a SEZ.

Our buyer is not registered with Central Excise.

The local manufacturer who will make the assembly (product imported by us is a part of this) is registered with Central Excise.

What is the best way to reduce the incidence of ED in the whole sale rpocess ?

[CABALRAM PANDEY]

Dear Karira ji

 

In my opinion the following would be the options available:-

 

1. On import of goods there will be no excise duty only custom duty will be applicable.

2. While clearing goods to SEZ no excise duty will be levied, as clearance to SEZ is deemed export.

3. Now, in between import and clearance to SEZ you are sending the goods to assembly, so, if assembly of the various parts of that goods gives a new distinct product which is movable and marketable separately from its parts then it will be again treated as deemed manufacture and hence excise duty will be payable. here one thing can do, by sending the good on job work basis.

if assembly of goods does not amount to deemed manufacture then u need not to worry.

Thanks

AI Summary

Deemed manufacture can attract excise duty on assembled goods unless treated as job work before supply to SEZ. Import of parts attracts customs duty only; clearance to a SEZ is treated as deemed export and ordinarily attracts no excise duty. However, if local assembly converts parts into a new distinct product that is movable and marketable separately, that assembly constitutes deemed manufacture and excise duty becomes payable. Sending parts to the assembler on a job work basis is suggested to avoid excise liability where assembly would otherwise be treated as deemed manufacture. If assembly does not amount to deemed manufacture, no excise arises on clearance to the SEZ.