Import then assembly and final supply to SEZ

[Asked by 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 ?

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.