Clarity regarding Realisation of Payment from SEZ Unit

[kamal chordia]

Dear Sir

We are supplying goods to SEZ Unit under Advance Authorisation.

AS per para 4.21 (iii) of FTP 2015-20 the payment from SEZ unit shall be taken in to account for discharge of export obligation provided payment is realised from Foreign Currency Account of the SEZ Unit.

Is it means that payment should be realised in foreign currency OR in Indian Rupee but from SEZ unit foreign currency account.

because DGFT relax this provision for Advance Auhtirisation issued under FTP 2009-14.

Please clarify the matter.

Thanks & regards

Kamal

A

[KASTURI SETHI]

Sh.Kamal Chordia Ji,

Answer to your question is NO. It is not the intention of Govt.Sometimes Govt. allows one time relaxation. It does notmean Indian Currency except from SEZ. After all, all the benefits in export are for the purpose of earning foreign exchange in the interest of the nation.

DGFT Trade Notice No. 16/2016; Dated: February 10, 2016

 

[CSSANJAY MALHOTRA]

Dear Mr. Kamal,

This is in addition to opinion shared by Sir Sh. Kasturi ji.

Foreign Currency Account refers to an account held / maintained in currency other than the currency of India or Nepal or Bhutan.

SEZ is treated as Foreign Land and Sh. Kasturi ji is right that Govt. can';t be taken for a ride by mentioning that earlier this provision was prevailing and why not continue...........

[Suryanarayana Sathineni]

Dear Kamal Ji,

Recently DGFT, Delhi issued a Trade Notice bearing No. 16/2016 Dated 10.02.2016 clarifying that receipt of payment in Indian Rupees for Exports to SEZ under Advance Authorization Scheme is allowed for closure of licences for the exports effected upto 31.03.2015 in terms of FTP 2009-14. However, for the exports effected from 1.4.2015 , payment has to necessarily be received in Foreign Currency only. The trade notice is self explanatory.

For your ready reference I am re-producing the contents of the said Trade Notice.

[kamal chordia]

Thanks your Sir for your reply.

[KASTURI SETHI]

Sh.Kamal Chordia Ji,

Excellent interpretation by both experts, namely,SH. CS SANJAY MALHOTRA, Sir and Sh. Surya Narayana, Sir.

AI Summary

Foreign currency realisation requirement: payments from SEZ units must be received in foreign currency to discharge export obligations. Payment from an SEZ unit must be realised in a Foreign Currency Account (an account maintained in a currency other than India, Nepal or Bhutan) because SEZs are treated as foreign territory. A Trade Notice created a transitional allowance for rupee receipts under the prior FTP for earlier exports, but under the current policy payment must be received in foreign currency from the SEZ unit's foreign currency account to discharge export obligation under Advance Authorisation.