Tax applicability for sale from sez to domestic area

[Anil Jangid]

A company manufactures goods in SEZ area and sold it to domestic market, in this situation what would be the of duties/taxes (Excise/Custom/VAT) applicability on the purchase of raw material and sale of the finish goods.

[KASTURI SETHI]

Clearance from SEZ to DTA are to be in accordance with Section 30 of Special Economic Zones Act, 2005 which is as under:-

Section 30 Domestic clearance by Units.

Subject to the conditions specified in the rules made by the Central Government in this behalf:-

(a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975, where applicable, as leviable on such goods when imported; and

(b) the rate of duty and tariff valuation, if any, applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of duty.

[KASTURI SETHI]

In continuation of my reply dated 7.2.2016, it is added that Section 30 of SEZ Act, 2005 is to be read with Rule 47 of SEZ Rules, 2006.

[Anil Jangid]

Date:09/02/2016

Dear kasturi sir,

Thanks for quick reply.

AI Summary

Duty treatment for SEZ-to-DTA transfers: goods are chargeable to customs duties as per Section 30 timing rules.
Goods removed from a Special Economic Zone to the Domestic Tariff Area are chargeable to customs duties, including anti-dumping and countervailing duties, as leviable when imported; the rate of duty and tariff valuation applicable are those in force on the date of removal, or if not ascertainable, on the date of payment of duty. Section 30 of the SEZ Act is to be read with the SEZ Rules, 2006 concerning domestic clearance procedures.