TaxTMI 
TaxTMI 
2023 (6) TMI 595
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....ipment from a Special Economic Zone (SEZ)/Free Trade Warehousing Zone (FTWZ) to Domestic Tariff Area (DTA) is the proposed activity as stated in the application and the applicant, vide the aforesaid application has sought ruling on the question of applicability of serial number 5 of the Notification No. 45/2017-Cus. dated 30.06.2017 for such re-import of goods/equipment from a SEZ/FTWZ to DTA. 3. In the application for advance ruling, the applicant has inter-alia stated that, they will be providing mining services or support services to mining to oil & gas exploration and production companies across India such as Oil & Natural Gas Corporation and Cairn India; in pursuance to providing the mining services or support services to mining, they will be importing equipment(s) required for providing such services; the equipment being used for oil and gas exploration projects will be imported from outside India at a concessional rate of customs duty under SI. No. 404 of the Notification No. 50/ 2017 - Customs dated 30.06.2017 on the basis of the essentiality certificate from the respective customer; the said certificate is issued by the customer with a stipulated condition in the contra....
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....ption from duties, taxes and cess should be equally applicable to re-import of equipment from SEZ/ FTWZ to a DTA as envisaged under serial no. 5 of Notification No. 45/2017-Cus. The applicant has also stated that under various legal provisions, concept of duty exemption on re-import i.e. clearance from SEZ to DTA has been contemplated under the SEZ law, as well viz. rule 48 of Special Economic Zones Rules, 2006 dealing with procedure for sale in domestic tariff area, rule 49 of Special Economic Zones Rules, 2006 dealing with domestic tariff area removals, and stated that it is their understanding that once equipment have been brought in FTWZ without availing any drawback or exports incentives, are subsequently re-imported in the same form into the DTA, even under the SEZ laws the said transaction has to be treated as re-imports and accordingly they are not liable for discharging any customs duties or IGST in view of serial no. 5 of the Notification 45/2017-Cus.; the understanding of the applicant also finds support from Circular No. 21/2019 dated 24 July 2019 issued by the Central Board of Indirect Taxes & Customs which clarifies that even a movement of goods from India to outside ....
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....ted with the compliance of condition of export for the purpose of re-export in terms of Customs notification and then re-import to DTA. 6. The applicant has also given additional submissions vide their letter dated 18.03.2023 stating inter-alia that the concerned Commissioner has given comments on the application for advance ruling however the applicant intend to highlight that the subject activity is not an ongoing activity but a proposed activity i.e., at present the applicant has not sent goods back from FTWZ to DTA; on a reading of rule 48(3), it is evidently clear that goods which are supplied from DTA and are admitted to SEZ if are subsequently supplied back to DTA without substantial processing or as such, such transaction of supply back of goods to DTA is considered as a re-import; it is pertinent that neither the Notification 45/2017-Cus. nor does the rule 48(3) contemplates the nature of transaction under which the goods should be procured in SEZ except the stipulation that there should not be any export entitlement availed when these goods were admitted into the SEZ; the objections issued by the Department have completely misconstrued the facts of the application vis-....
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....stoms duty as per specific provisions inserted only for payment of customs duty; LSP's are practically operating in FTWZ's; in common parlance, the LSPs are the Warehousing units in FTWZ who hold goods on behalf of the foreign or the Indian clients as indicated by the Specified Officer in the reply; the statement of the Specified Officer in the reply that holding goods by FTWZ units temporarily cannot be equated with the compliance of condition of export of SEZ for purpose of Re-export in terms of customs Notification and then to re-export to DTA is completely baseless; as highlighted earlier, there is no restriction placed by Notification 45/2017-Cus. as to the purpose for which goods are exported or re-imported; further, the specified officer has not been able to deny the fact that what is proposed to be re-imported from FTWZ to DTA under Notification 45/2017-Cus. are the same goods that were admitted into the FTWZ earlier without any export benefits claimed by the applicant when these goods were sent from DTA to FTWZ; the Specified officer has acceded to the fact that the applicant is entitled to remove the goods from FTWZ to DTA without payment of duty in accordance wit....
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....ort of goods in relation to HELP, NELP, petroleum exploration licenses, etc. in line with pre-GST regime whereby such benefit was also provided to the importers. Given the above, reference is drawn to Notification No. 50/2017-Cus. wherein benefit of concessional duty upon import of goods/equipment under S.No. 404 is given only to 'specified person'. The phrase 'specified person' has been defined in explanation to the S. No. 404 and it includes licensee, lessee, Contractor, or Sub-contractor. All these terms are also further defined in the Notification 50/2017-Cus. On the basis of foregoing, the term, 'Sub-contractor' is used and is denoted for the companies (such as applicant) engaged by such Contractors/ Licensee/ Lessee in relation to assistance for conducting petroleum operations. Since the applicant enters a contract with the 'Contractor' for petroleum operations, the applicant becomes a specified person i.e., sub-contractor for the purposes of Notification 50/2017-Cus. Further, Notification 50/2017-Cus. imposes conditions, accordingly, where the Sub-contractor imports goods under Notification 50/2017-Cus., benefit of concessional rate is availab....
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....e comments of the concerned Commissioner on the application for advance ruling and additional submissions of the applicant. I find that in order to avail exemption under the notification 45/2017-Cus., the importer will have to inter-alia establish, whether the goods are re-imported, whether the re-imported goods have been exported by a hundred percent export-oriented undertaking or a unit in a Free Trade Zone (Special Economic Zone). 10.2 I note from the submissions of the applicant that the condition of re-export of the equipment after their import availing exemption under Notification 50/2017-Cus. is a condition built in the contract of the importer with their Contractor and the applicants have themselves admitted that it is not a condition prescribed under Notification No. 50/2017-Cus. However, the applicant has attempted to make a case starting with export of such equipment(s) on which exemption vide Notification No. 50/2017-Cus has been availed. The Notification No. 50/2017-Cus. provides for compliance with conditions prescribed under the notification. Non-fulfilment of such condition(s) will make the importer liable to pay differential duty along with interest, fine, penal....
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....he Special Economic Zones Act, 2005, "Free Trade and Warehousing Zone " means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on. In order to bring more clarity on the issues involved, reference is drawn to Sub-rule (5) or Rule 18 of the Special Economic Zone Rules, 2006 which inter-alia provides that the Units in Free Trade Free Trade and Warehousing Zones or units in Free Trade and Warehousing one set up in other SEZ, shall be allowed to hold the goods on account of the foreign supplier for dispatches as per the owner's instructions and shall be allowed for trading with or without labelling, packing or repacking without any processing. In light of Sub-rule (5) of rule 18 of Special Economic Zones Rules, 2006, it is noticed that Units in FTWZ, hold the goods for dispatches (or Export) as per owner's instruction. Therefore, taking into consideration the facts/submissions vide the said application for advance rulings, it is observed that Units in FTWZ would be exporting to DTA, the goods, on which the applicant intend to avail exemption under Notification No. 45/2017-Cus. However, re-imported goods, which hav....