SEZ - DTA- Exports Clarification

[DK AGGARWAL]

Dear Sir or Ma’am,

We are a business house in New Delhi and want to get material made on job work basis in an SEZ in Mangalore. Alternatively, we want to BUY material from SEZ in Mangalore for exports. We don’t want to pay customs duty or IGST. What is the procedure for buying material from an SEZ unit for exports without payment of IGST or Customs Duty when we are buying or getting the product manufactured for Exports. We request for clarification and your assistance. There are two scenarios:

1: Can the SEZ Manufacturer do a BILL TO SHIP TO Transaction for Exports where the BILL TO party is in India and the SHIP to party is outside India?

2. What is the procedure for Job Work done by an SEZ unit for exports by the DTA Customer.

3. Are there any statutory requirements and which is the best course forward.

Thank You!

[KASTURI SETHI]

DTA will purchase from SEZ on payment of IGST and after exporting the said goods and you can claim refund/rebate as Merchant Exporter.

Replies to queries are as under:-

1. Yes. Subject to the fulfillment of conditions of export i.e.Foreign exchange and other related docs.

2. Procedure laid down in Rule 43 of SEZ Rules, 2006.

3. Statutory requirements are laid down in Rules 41, 42 & 43 of SEZ Rules, 2006.

AI Summary

SEZ sales require IGST payment with refund mechanism for exports; bill to ship to and job work subject to export compliance.
DTA purchasers buying from SEZ units for export must pay IGST on acquisition and may claim refund or rebate as merchant exporters. Bill to ship to transactions are permitted subject to fulfillment of export conditions such as foreign exchange realisation and supporting export documentation. Job work done by an SEZ unit for a DTA customer destined for export must follow the procedures prescribed in the SEZ regulatory framework, which also contains the statutory requirements for compliance and claiming tax relief.