TaxTMI 
TaxTMI 
SEZ Developer/Co developer Exit
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....EZ Developer/Co developer Exit<br> Query (Issue) Started By: - Abhijeet Mane Dated:- 6-3-2026 Last Reply Date:- 7-3-2026 Customs - Exim - SEZ<br>Got 1 Reply<br>Customs<br>We are a co developer in Puthuvypeen SEZ (Kochi) and exploring de notification. Dept. of Commerce (File No. F 2/15/2005 SEZ(Vol III)(Pt.), 10 Apr 2024) has clarified that Rule 49 depreciation applies to Developers at exit. Nee....
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....d expert views on: • Does Rule 49 depreciation apply only to "capital goods" or also to "infrastructure" (civil/common assets), since "capital goods" is defined separately in Rule 2(e) of SEZ Rules? • If infrastructure is not eligible, is the standard practice to repay full duty/GST benefits actually availed (no depreciation), supported by CE certification? (As seen in Ru....
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....le 11B clarifications.) • Any real cases of developer/co developer denotification and the methodology accepted by authorities for duty repayment? Reply By YAGAY andSUN: The Reply: In the context of denotification or exit of a Developer or Co-Developer from a Special Economic Zone, the relevant legal framework is contained in the Special Economic Zones Rules, 2006, particularly Ru....
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....le 49 read with the definition of "capital goods" under Rule 2(e). Rule 49 provides that where capital goods are removed from an SEZ to the Domestic Tariff Area, duty shall be payable on the depreciated value of such capital goods calculated from the date of commencement of use. The rule is therefore limited in scope and applies only to capital goods. Since "capital goods" under Rule 2(e) primaril....
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....y covers plant, machinery, equipment and similar movable assets required for authorised operations, the depreciation mechanism under Rule 49 is generally interpreted as applicable only to plant and machinery or other movable capital assets, and not to immovable civil infrastructure forming part of SEZ development. Where the assets involved consist of civil infrastructure or common facilities; s....
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....uch as buildings, utilities, roads or other immovable structures, the prevailing interpretation is that such assets do not qualify as "capital goods" and therefore do not benefit from the depreciation mechanism under Rule 49. In such cases, the commonly adopted approach is that the Developer or Co-Developer is required to repay the fiscal benefits actually availed (including customs duty, excise d....
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....uty or GST exemptions) at the time of denotification or exit. The computation is typically based on the actual benefits availed in respect of the relevant infrastructure, rather than on depreciated value. In practice, during SEZ denotification or conversion processes, authorities generally accept a methodology whereby depreciation is applied only to plant and machinery in terms of Rule 49, whil....
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....e benefits attributable to civil infrastructure are repaid in full. The repayment calculations are usually supported by project records and certifications such as a Chartered Engineer's certificate, identifying the assets and quantifying the duty or tax benefits availed. Where denotification relates only to a portion of the SEZ, the benefits are often allocated proportionately based on built-u....
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....p area or project cost, subject to verification by the Development Commissioner and jurisdictional authorities.<br> Discussion Forum - Knowledge Sharing ....