DTA removal of duty paid goods by SEZ Developer after exit of Unit

[Angre Port]

A unit has exited from an SEZ and, at the time of exit, handed over certain goods/assets to the SEZ Developer. The Developer paid the applicable customs duty and IGST by filing a Bill of Entry for Home Consumption, and the goods were accordingly cleared to the Developer.

Now, after using these goods for some time, the Developer intends to remove the goods from the SEZ to the DTA.

My queries are:

1. Since the Developer had already paid the applicable customs duty and IGST at the time of taking over the goods through a Bill of Entry for Home Consumption, is any further customs duty/IGST payable when the Developer subsequently removes these goods to DTA?
2. If any duty is payable at the time of DTA removal, should it be calculated on the depreciated value of the goods or on some other assessable value?
3. What is the prescribed procedure/documentation for removal of such goods by the SEZ Developer to DTA?
4. Is there any specific provision under the SEZ Act/SEZ Rules or Customs law dealing with subsequent DTA removal of goods that have already suffered customs duty at the time of transfer to the Developer?

I would be grateful if someone could clarify the correct legal position and relevant provisions/circulars, if any.

[Sanjeev Agarwal]

Summary

On the stated facts, the stronger view is that customs duty should not be payable a second time when the SEZ Developer subsequently removes the same goods to DTA, provided:

• the goods were taken over/admitted into the SEZ by the Developer after payment of the applicable customs duty/IGST through a Bill of Entry for Home Consumption;

• the goods remain identifiable; and

• they were used but not processed/transformed in the SEZ.

The key provision is Rule 49(4)(a) of the SEZ Rules, 2006, which permits DTA removal without payment of duty where goods were imported and admitted into the SEZ after payment of applicable duty and are cleared without processing, subject to establishment of identity. Rule 14 extends the relevant Unit procedures to Developers mutatis mutandis.

Depreciated value

Depreciation under Rule 49(1) should not automatically apply. It is relevant where duty is otherwise payable on removal of used capital goods. If the goods squarely qualify under Rule 49(4)(a) as already-duty-paid goods, the better view is that there is no second customs-duty incidence, and hence no need to compute duty on depreciated value.

IGST/GST

Customs duty and GST must be distinguished. No second customs IGST should arise merely because of the DTA removal where Rule 49(4)(a) applies. However, if the Developer subsequently sells/supplies the goods to a DTA person, that transaction may independently constitute a taxable supply under GST law, requiring GST/IGST as applicable.

Procedure

The Developer should obtain Specified Officer permission and follow the applicable DTA-clearance procedure. Maintain:

1. original Bill of Entry and duty-payment evidence;

2. proof of admission into SEZ;

3. asset/goods register;

4. make/model/serial-number records establishing identity;

5. original transfer/exit documents of the Unit;

6. DTA invoice and applicable GST documentation; and

7. prescribed DTA clearance/Bill of Entry documentation, unless the jurisdictional authority specifically permits another procedure.

Important: Section 30 of the SEZ Act creates the general DTA-duty framework, but it operates subject to the Rules. Therefore, Section 30 should be read with the specific relief in Rule 49(4)(a) rather than treated as requiring a second levy in every case.

Overall position: Strong, subject to verification of the original Bill of Entry and exact nature of the goods/transaction.

AI Summary

Duty-paid SEZ goods may enter DTA without second customs duty when identifiable and cleared without processing.
DTA removal of goods by an SEZ Developer may not attract a second customs-duty or customs-IGST incidence where duty and IGST were paid through a Bill of Entry for home consumption, the goods remain identifiable, and they were not processed in the SEZ. Rule 49(4)(a) permits such duty-paid goods to be cleared without processing, while Rule 14 extends relevant Unit procedures to Developers. Depreciation need not apply where this relief operates. Specified Officer permission, clearance documentation, duty-payment evidence, SEZ admission records, and identity records should be maintained.