Selling of goods after payment of duty

[velayutham panchatcharam]

I am working in MNC and it is located in SEZ. As per FEMA Act we can not sell goods in DTA even after paying duty whereas as per SEZ Act we can sell in DTA even after paying duty. Please clarify which act i should follow or which one is correct.

[Ravi Chopra]

Which provision of FEMA you are referring to. Since as per the policy the provisions of FEMA is applicable where cross border transactions are involved or where the foreign transaction is involved. Any supply from SEZ to DTA is treated as import into DTA for limited purpose of export / import facilities. Therefore, If you have notices any special provision in the way of your decision, kindly specify the same with exact reference.

[velayutham panchatcharam]

As per FEMA - RBI/2004/17/A.P(DIR Series)Circular No.58 dated January 16, 2004 - SEZ unit can not sell in DTA As per SEZ - Rule 48/2006 - SEZ units can sell in DTA. Please clarify.

[Surender Gupta]

There is nothing in FEMA circular 58/2004 dated 16-1-2004 A.P.DIR Series which restrict supply of goods from SEZ to DTA. The restriction contained int the circular read with "Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000" as amended, restrict the business activity of a foreign company who is establishing branch office in India. For the purpose of removal of goods from DTA to SEZ, I like to refer the FEMA circualr no. 105 dated 16-6-2003 in which DTA units are permitted to buy foreign exchange for the purpose of making payment to the SEZ units.

AI Summary

SEZ to DTA supply treated as import; FEMA governs cross border elements and does not categorically bar such sales. SEZ-to-DTA supplies are treated, for limited regulatory purposes, as imports into the DTA while FEMA governs only cross-border or foreign exchange transactions; FEMA circulars do not categorically bar SEZ units from selling into DTA, and related FEMA guidance permits DTA units to acquire foreign exchange to pay SEZ suppliers.