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‘Supplies from DTA to SEZ attract export duty’

Please refer to the notification 29/2022-Cus dated May 21, 2022, imposing export duty on certain steel products. Will the export duty be applicable on goods sent from the DTA to an SEZ? If so, please give the relevant provisions.

Supplies from DTA to an SEZ will attract export duty in accordance with the fifth provision to Rule 27 of the SEZ Rules, 2006. It reads, “Provided also that supplies from Domestic Tariff Area to Special Economic Zones shall attract export duty, in case, export duty is feasible on items attracting export duty.” This provision was inserted in the said Rules through a Commerce Ministry notification dated September 19, 2018.

We had availed of RoDTEP benefits against our exports in 2021. Now, the goods are being re-imported, as the buyer has rejected the goods owing to quality complaints. We do not intend to repair and re-export the goods. Are we required to surrender the RoDTEP benefits, especially as notification 45/2017-Cus dated June 30, 2017, makes no mention of RoDTEP?

Duty credit allowed under the RoDTEP scheme is subject to realization of sale proceeds within the period allowed by the RBI. The detailed provisions are mentioned in conditions at para 2(4), 2(6) and 2(7) of the notification No. 76/2021-Cus. (NT). The Regulations, read with the said Notification, also provide for the situations and manner of suspensions or cancellation of duty credit or e-scrip, or recovery when duty credit allowed was in excess, or where export proceeds are not realized.

So, if you have not received the payment against the exports, you have to surrender the RoDTEP benefits. In case you have received the payment against exports but have to refund the same to the buyer, you have to surrender the export incentives in accordance with Para D.2 of the RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended), on Export of Goods and Services.

We have an EPCG authorization for many machines that will be imported at different times during the validity of the authorization. Do we need to submit an installation certificate after import and installation of all the machines, or as and when each machine is imported and installed?

Para 5.04(a) of the HBP says, “Authorisation holder shall produce, within six months from date of completion of import, to the concerned RA, a certificate from the jurisdictional Customs authority or an independent Chartered Engineer, at the option of the authorization holder, confirming installation of capital goods at factory/premises of authorization holder or his supporting manufacturer(s). The RA may allow one time extension of the said period for producing the certificate by a maximum period of 12 months with a composition fee of Rs5000”.

So, the time limit of 6+12 months starts after completion of imports of all the machines. However, Para 5.04(b) of the HBP says that in the case of import of spares, the installation certificate should be submitted within a period of three years from the date of import. So, for spares, the criterion is the date of import.

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