One of our SEZ projects, which envisaged 4 million square feet processing area, ITES development and further 1 million square feet non-processing area retail mall, has been deferred for 10 months. The contractor to whom we had awarded the concrete structure is proceeding with the work. We want to know whether the SEZ notification will be revoked if we do not complete the mall (where office space is to be commissioned) and whether the contractor will get the benefits. We also want to know whether tax on design and management consultancy service will be waived.
There is no legal provision to de-notify SEZ. Section 10 of the SEZ Act, 2005 provides for suspension of the letter of approval to a SEZ developer in certain circumstances and transfer of the letter of approval to another person. However, you will be given an opportunity before any such action is taken.
The contractor is eligible for benefits, so long as the goods procured locally or imported are used for carrying out the authorized operations. As far as service tax exemption is concerned, the same will operate by way of refunds as provided in the notification No. 9/2009-ST dated 3rd March, 2009. The notification allows exemption (i.e. refund) of tax on all services which are provided in relation to the authorized operations in a SEZ and received by a SEZ developer, whether or not the said taxable services are provided inside the SEZ.
We refer to the amendment dated 19.3.2009 in the DFIA notification No. 40/2006 dated 1.5.2006. We manufacture non-dutiable products and so do not take Cenvat Credit, but claim rebate of excise duty paid on the inputs under notification No. 21/2004 dated 6.9.2004. In view of the amendments, can we assume that either of the benefits is available to us, i.e. either we import duty free goods under DFIA or we claim rebate of duty paid on inputs used in the manufacture of export goods?
As per the latest amendment you have referred to, you can export under DFIA scheme non-dutiable products manufactured from inputs on which you have claimed excise rebate, but when you import the replenishment, you should pay CVD on the same. The basic customs duty exemption on the replenished goods cannot be denied to you. Prior to this amendment you could not discharge export obligation under DFIA scheme by exporting goods (whether dutiable or non-dutiable) manufactured by using inputs on which excise rebate was claimed.
We have imported goods supplied free of charge by buyer without duty payment under notification No. 32/97-Cus. dated 31.3.997. Can we claim drawback at All Industry Rate notified for the export product as the CBEC Circulars no. 24/2001-Cus. dated 20.04.2001 and 19/2005-Cus. dated 21.03.2005 say that the rates have no relation to actual duty incidence on the inputs?
CBEC Circular No. 54/2002-Cus. dated 27.8.2002 is categorical that once you avail benefit of customs notification No. 32/97, you become disentitled to All Industry Rate of drawback.