EXCISE DUTY APPLICABLE FOR REMOVAL OF INPUTS AS SUCH TO SEZ

[Eeranna Halakatti]

We are Manufacturer of Sheet Metal Enclosures. We got order from one of our customer who is situated in Special Economic Zone. Before processing his order he has canceled the order due to some problem.

We already bought some excise inputs for processing his order, so we discussed and decided to send the inputs to customer which we bought for processing his order.

Query.

1. Can I raise the excise invoice to him?

I would request you to suggest on this.

Thanks and Regards

Eeranna Halakatti

[Rajagopalan Ranganathan]

Sir,

If you have taken credit of duty paid on such inputs, as per rule 3 (4) the CENVAT credit may be utilized for payment of an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed. Therefore you can raise a invoice on your customer and pass on the credit to him.

[Mahir S]

Yes sir, you can raise the excise invoice as explained above.

[Eeranna Halakatti]

Dear Sir,

Am not understanding why i need to pass credit to him.

Thanks and Regards,

Eeranna Halakatti

[MUKUND THAKKAR]

please don't assume that you are sending goods to SEZ so you need not pay the excise duty,

Have you any order from your SEZ customer?. Have you duty exemption certificate annexure-IV with you? your SEZ customer have submit the details to SEZ authority which material he will procure from DTA, your items is covered under the list of procurement list?

your query does not seems to meet any condition, so you need to pass the excise duty....

[Rajagopalan Ranganathan]

Sir,

Please refer to Circular No.1001/8/2015-CX.8 dated 28.4.2015 in which it is clarified in para 3 that according to the SEZ Act, supply of goods from DTA to the SEZ constitutes export. Further, as per section 51 of the SEZ Act, the provisions of the SEZ Act shall have over riding effect over provisions of any other law in case of any inconsistency. Section 53 of the SEZ Act makes an SEZ a territory outside the customs territory of India. It is in line of these provisions that rule 30 (1) of the SEZ rules, 2006 provides that the DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1.

In view of this clarification you can send the inputs to your customer located in SEZ which you bought for processing his order under the cover of ARE-1 and your invoice.

[Mahir S]

Sir,

If inputs are required to be cleared as such to SEZ , then you can clear without passing credit.

[Eeranna Halakatti]

Dear All,

Thanks for your suggestions.

Regards,

Eeranna Halakatti

AI Summary

Supply to SEZ: inputs may be cleared as export under ARE 1 or CENVAT credit used when removed as such. If inputs bought for an SEZ order are removed to the SEZ after cancellation, a manufacturer who availed CENVAT credit may utilize that credit to meet the obligation when inputs are removed as such or partially processed and may issue an excise invoice passing the credit. Alternatively, supplies to SEZ are treated as exports and may be cleared under bond or as duty paid on ARE 1 with rebate claim, or cleared without passing credit when removed as such, subject to necessary documentation and SEZ procurement conditions.