Supply to SEZ-Procedure ??

[Sumeet Tholle]

Dear Sir,

'A' is the unit in SEZ. 'B' has taken erection contract with material of 'A'.

My client 'C',who is dealer registered under excise is the supplier of machinery to 'B' which are to be installed at 'A'. 'C' purchase material from manufacturer as well as from some other dealers.

' A' want all purchase without charging excise.

Now my query is,

How can 'C' supply to ' A' through 'B' without charging Excise.

How can 'C' purchase goods from Manufacturer/dealer without excise to supply to SEZ 'A'.

I want detailed procedure/notification/circular etc.

PL. reply positively.

Thanks.

Sumeet Tholle,

CA.

[KASTURI SETHI]

A dealer registered with Central Excise department issues only cenvatable invoices just for passing on cenvat credit to his buyers/manufacturers.Since registered dealer is issued registration only for passing on cenvat credit, he cannot procure excisable goods without payment of Central Excise duty. So now C is out of picture here.

A being a unit in SEZ can procure excisable goods (Capital goods, namely, machinery etc. in your case ) without payment of Central Excise duty from a manufacturer via CT-3 which is issued on the basis of bond. Bond is to be accepted by jurisdictional A.C./D.C. and CT-3 certificate is issued by the jurisdictional Range Officer/Superintendent. Since B is the job worker of A, goods/machinery can be sent direct to the premises of B, job worker by a manufacturer and invoice will be addressed to both B and A with the remarks, "For and on behalf of A (Consignee)" on the invoice itself. Both the addresses of A & B will be given on the invoice itself. Under Notification No.214/86-CE dated 25.3.86 as amended goods can be sent direct to the job worker.

Another issues emerges. CBEC vide Circular No.1001/8/2015-CX.8 dated 28.4.2015 has clarified that since SEZ is deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export and will not be hit by Notification No.6/15-CE & 8/15 both dated 1.3.2015.

Thus the goods supplied to A shall be treated as export goods. Export goods are exempted from Central Excise duty. B is the job worker of A. B is to provide taxable service under the category of 'Erection, Commissioning and installation in the premises of A in SEZ without material i.e Pure labour is involved in this case. Hence service to be provided will not fall under the category of Works Contract Service.

 

[Sumeet Tholle]

Resp. Sir,

Thanks a lot for your advise/reply.

Thanks.

Sumeet Tholle

AI Summary

Duty-free supply to SEZ allowed as export; direct delivery to job-worker via bond and CT-3 permitted. SEZ units may obtain excisable goods duty-free as treated exports; manufacturers can send goods directly to a job-worker on the basis of a bond and CT-3 certificate with invoices addressed to both the job-worker and the SEZ unit marked 'for and on behalf of' the SEZ unit. Registered cenvatable dealers cannot procure excisable goods without paying duty. Supplies to SEZs are treated as export clearances and exempt from Central Excise; pure labour erection and commissioning at the SEZ is taxable as service, not as works contract.