EXCISE EXEMPTION FOR SEZ UNITS

[MEGACORP IMPEX]

HELLO & GREETINGS!

I WISH TO MAKE A SALE TO A NEWLY REGISTERED INDUSTRY IN A S.E.Z. IN ANDHRA PRADESH. THEY SAY THEY WILL ISSUE FORM 'I' AND HENCE NO EXCISE DUTY SHOULD BE CHARGED. IS THIS CORRECT? CAN I SUPPLY THE MATERIAL WITHOUT CHARGING ANY EXCISE DUTY AGAINST FORM I? IN THIS CASE HOW DO I GET REFUND OF EXCISE PAID BY ME DURING PURCHASE?

[Rajagopalan Ranganathan]

Sir,

Please clarify what is Form I. As far as my knowledge goes there is no such Form in Central Excise or finance Act, 1994 (Service Tax).

[MEGACORP IMPEX]

This form "I" is issued by SEZ companies so that no CST can be charged for purchase from outside their state. However whether even excise should not be charged is the question. As far as my knowledge goes, only CST can be avoided by issuing form "I" not the excise which has to be compulsorily paid. I need clarification as to whether excise should be charged or not.

[Rajagopalan Ranganathan]

Sir,

Rule 30 of SEZ Rules, 2006 gives the procedure which is appended below: -

[MEGACORP IMPEX]

Thank you for your kind attention and efforts sir, the information provided by you is most useful.

AI Summary

Excise exemption for SEZ supplies: Form I grants sales tax relief but does not remove central excise liability. Form I issued by an SEZ entity secures inter state sales tax relief but does not relieve the supplier from Central Excise liability; therefore excise should not be forgone on sales to SEZ units. Procedural recourse for recovery or refund of excise paid on purchases used for such supplies is provided under the mechanism in Rule 30 of the SEZ Rules.