Clarification - DTA

[Gabriel Michaelsamy]

We are supplying packing material to SEZ. The supplies are made under LUT and ARE-1. The Superintendent says that mere getting the proof of export by getting the ARE-1 signed by SEZ Customs authorities would not do. Payment for the supplies has to be received from our customer's Foreign currency account. If payment is made from Indian Rupee account, then he contends the transaction from DTA cannot be considered as deemed exports and the Central excise has to be paid on the clearances. Pl discuss

[Surender Gupta]

The contention of the central excise department is not correct.

[Gabriel Michaelsamy]

Dear Mr.Surendar Gupta, Thank you for your kind reply. Your view is correct. The SEZ are supposed to be foreign territory under our constitution. The proof of export is completed when the Form ARE-1 submitted to the concerned Customs authorities is returned duly acknowledged as "Fully received" completes the transaction. No where the law says that the payment for the transaction is to be received in foreign currency or Indian Rupees. Can some one knowledgable give us further points to clarify the doubts raised by the Excise department ?

The word deemed export itself is clear that the goods are not cleared to abroad, therefore, question of payment in FC does not arise. Secondly, FTP also do not impose any such condition that payment should in FC, therefore, no duty is payable. These are my personal views may not be legally correct.

AI Summary

Deemed export principle: payment currency does not affect treatment of supplies to SEZ when ARE-1 evidence exists.
Supplies of packing material from the DTA to an SEZ, when supported by Form ARE-1 returned as "Fully received," are treated as supplies to SEZ (foreign territory) for excise purposes; payment currency or routing through an Indian rupee account is not a prescribed condition for recognition of such removals, and the Foreign Trade Policy does not require foreign currency receipt to avoid excise liability.