Supply to SEZ

[Vivek anandhan]

Dear Expert

We are one of the manufacturer. We have received an order from a contractor of Developer of Special Economic Zone. The contractor appointed by the Developer of SEZ and provided us approval letter

My query is whether we can supply to a contractor under excise duty exemption.

[Rajagopalan Ranganathan]

Sir,

Excisable goods can be cleared without payment of duty only to a unit located in SEZ or to the Developer of SEZ. You cannot supply excisable goods free of duty to a contractor of the Developer. You can clear the excisable goods on payment of duty stating in the invoice that the Developer is the purchaser bu the consignee is the contractor. The Developer can claim the refund of duty paid from his jurisdictional officer.

[SURESH ASTEKAR]

Rule 10 of the SEZ Rules is reproduced below for your convenience, in terms of which contractors and sub-contractors are also entitled for duty-free procurement.

Special Economic Zones Rules, 2006

10. Permission for procurement of items. - The Approval Committee may permit goods and services to carry on the operations authorized under rule 9: Provided that for the Special Economic Zones set up by the Central Government, the goods and services required for the authorized operations may be approved by the Board: Provided further that exemptions, drawbacks and concessions on the goods and services allowed to a Developer or Co-developer, as the case may be, shall also be available to the contractors including sub-contractors appointed by such Developer or Co-developer, and all the documents in such cases shall bear the name of the Developer or Co-developer along with the contractor or sub-contractor and these shall be filed jointly in the name of the Developer or Co-developer and the contractor or sub-contractor, as the case may be: Provided also that the Developer or Co-developer, as the case may be, or the Special Economic Zone Unit shall be responsible and liable for proper utilization of such goods in all cases. SURESH ASTEKAR

 

AI Summary

Duty-free procurement: contractors of SEZ developers may obtain exempt supplies when joint documentation names the developer and contractor. SEZ Rules, 2006, Rule 10 extends exemptions, drawbacks and concessions to contractors and sub-contractors of a Developer or Co-developer, provided all documents bear the Developer or Co-developer name along with the contractor or sub-contractor and are filed jointly, and the Developer, Co-developer or SEZ Unit is responsible and liable for proper utilization of such goods; absent these conditions suppliers cannot treat supplies to contractors as duty-free.