Essar denies SEZ customs violation

Claiming that it had not violated any rule, Essar has said that its special economic zone (SEZ) at Hazira started to function as such only from March 20, 2007. This was the date when it filed the first bill of entry with the customs department.

The company says the issue is one of interpretation of SEZ rules, which have undergone a number of amendments since the SEZ Act was enacted in February 2006.

Essar group director Prashant Ruia said Essar Hazira did not treat itself as a SEZ from October 27, 2006, but instead functioned as a domestic tariff area unit.

"We have appraised the government of the facts, paid the duty and took the safe route of not treating ourselves as a SEZ from October. By not treating ourselves as a SEZ we did not avail of the number of benefits that are available under the policy. Just because we were cautious, we cannot be penalised."

Ruia said the Hazira SEZ got in-principle approval last October and the final approval came on January 11 this year. "We took two months to complete this formality and the customs department formally certified us a customs bonded area on March 20, 2007".

Ruia added that till recently there was a lack of clarity on the SEZ rules and therefore, the interpretation of the rules took time.

"After January 11, we took two months to complete various formalities. It has been our stance that we first complete formalities and only then function as an SEZ".

The company paid the customs duty claim a couple of weeks back, but its officials were subsequently arrested.