Renewbale Energy Generation Unit - EOU / SEZ

[Ramakrishna Malapaka]

As we all know, the current trend is ...transition to new technologies in power sector for achieving net zero position. One amongst them is making Green molecules such as Hydrogen / ammonia / etc., Making of green molecules is nothing but using of Renewable Energy as a source and produce said items. And this sector has been given much importance and promotional support with many incentive proposals.

At the same time setting up of RE unit (such as Wind / Solar / etc.,) in DTA and supply power to Green Molecules manufacturing unit would be a very expensive proposition in terms of levy of very high rates of Indirect taxes i.e., Customs & GST on the capital goods required for the same and duties paid cannot be setoff as no output GST on supply of Electricity.

Therefore is it possible for one to setup RE units in EOU/SEZ with duty exemptions and undertake to supply RE power to such Green molecules manufacturing units in EOU/SEZ, since there seems to be no restrictions imposed in Chapter 6 of FTP or SEZ Policy, for setting up of a stand alone (non-captive) RE unit as an EOU / SEZ, by undertaking to export offshore or to SEZ or from an EOU to SEZ/EOU/STP,etc and meets positive NFE.

For information, currently, some of thermal power generation units already setup in SEZ with duty exemption benefits and supplying to Offshore and also to other SEZs.

[Sadanand Bulbule]

Dear Sir

According to my unconfirmed sources, the GOI has issued fresh guidelines allowing a power plant, the fiscal exemptions of the Special Economic Zone if it is set up in the 'processing' area of the tax-free zone. The norms allow the plants set up in the processing area for captive energy consumption would also stand to benefit. So you need to capture the details from the nearest office of the Development Commissioner, SEZ.

[Ramakrishna Malapaka]

Yes sir, that is for SEZ purpose they have issued power guidelines in 2016 and several amendments made upto 2021, we have already verified that and it seems you too are referreing to the same. A point to note here is... a Standalone power generation unit to be setup on exclusive export basis..so does it mean those power units setup in sez wont be able to supply any surplus / unutilised power to DTA? Secondly, for EOU there is no such restrictions imposed or guidelines were given.. ..

May pls. share your expert views..

[Sadanand Bulbule]

Dear Sir,

PFA the following for information and contact the nearest SEZ, Development Commissioner for the present position:

INSTRUCTION NO.P.6/3/2006-SEZ (VOL.III)

DATED 16-2-2016

 

 

[Ramakrishna Malapaka]

Thank you sir, as mentioned para no. (ii) was amended in Jan- 2019, and allowed stand-alone power generation unit with NFE subject to exclusive export basis. EOU cases no such references / clarifications made.

Thanks

AI Summary

Exploring Duty Exemptions for Renewable Energy Units in SEZs and EOUs: Clarifying Power Supply and Tax Implications A discussion on setting up Renewable Energy (RE) units within Export Oriented Units (EOU) or Special Economic Zones (SEZ) highlights the potential for duty exemptions on capital goods. The conversation explores whether RE units can supply power to Green Molecules manufacturing units without incurring high indirect taxes. It is noted that SEZ guidelines allow power plants in processing areas for captive consumption, but questions remain about surplus power supply to Domestic Tariff Areas (DTA) and the lack of specific guidelines for EOUs. Participants suggest consulting SEZ Development Commissioners for updated regulations and clarifications.