Raw Material Import without duty in SEZ.

[JIGNESH SITAPARA]

Dear Experts,

My client wish to Import from China to Mundra (SEZ) port without any duty. And same raw material will assemble and export to another. Can he do it ?? Please help me.

[YAGAY and SUN]

An SEZ unit duly approved under the SEZ Act, 2005 and the SEZ Rules, 2006 is legally permitted to import raw materials, components, consumables, and capital goods into a notified Special Economic Zone such as Mundra SEZ without payment of customs duty, IGST, or any other taxes, provided such imports are for “authorised operations” as defined in the Letter of Approval (LOA). SEZs are treated as being outside the customs territory of India for the purpose of import of goods, and therefore duty-free procurement is valid so long as the unit complies with Rule 27 and maintains prescribed accounts of receipt, consumption, processing and export of goods. The SEZ unit must also fulfil export/NFE obligations where applicable and follow all conditions imposed by the Development Commissioner and Customs authorities.

However, duty-free benefits are contingent on the imported goods being used exclusively for authorised SEZ operations and for production meant for export. Any removal of finished or semi-finished goods into the Domestic Tariff Area (DTA) triggers applicable customs duties, GST, and other levies as if the goods were imported into India. The unit must therefore ensure strict adherence to SEZ accounting, documentation, and reporting requirements, including Bills of Entry for SEZ import, stock registers, consumption records, and proof of export. Non-compliance, diversion, or unauthorised use of duty-free materials will render the unit liable to duty recovery, interest, and penalties under the SEZ Act, Customs Act, and allied laws.

[JIGNESH SITAPARA]

Thanks your so much.

[JIGNESH SITAPARA]

Sir, as per your reply, Now no need any advance license like ADVANCE AUTHORISATION (DGFT) ?

Am I Right ???

[Shilpi Jain]

If the goods are imported by SEZ and are not cleared for home consumption but later exported, no tax liability.

No requirement of any other benefit schemes like AA.

[YAGAY and SUN]

In addition to above reply, in case you import goods for supply to a DTA Manufacture who in turn export the goods, then you may import such RM/Goods for making final goods which will be used by the DTA Manufacturer for exporting the final goods/Capital Goods out of India, then in such scenarios you may use AA, Otherwise not.

AI Summary

Raw material import into SEZ can be duty-free if used for authorised operations and subsequently exported.
Import of raw materials into a notified SEZ like Mundra is duty-free where an approved SEZ unit imports for authorised operations and complies with Rule 27, required accounting and export/NFE obligations. Duty-free status is conditional on exclusive use for authorised SEZ activities and export; removals to the Domestic Tariff Area attract customs duty, GST and other levies. Non-compliance leads to duty recovery, interest and penalties. Advance Authorisation schemes are generally unnecessary for SEZ imports except in transactions involving supply to DTA manufacturers who export final goods.