We intend to set up a unit in a Special Economic Zone (SEZ). We want to know whether we need to furnish any bank guarantees like we do for Export Oriented Units (EOU). Secondly, what is the amount for which we need to furnish bonds and who will monitor these?
As per Rule 22 of the SEZ Rules, 2006, an SEZ unit has to furnish only a bond-cum-legal undertaking equal to the amount of effective duties leviable on import or procurement from the Domestic Tariff Area (DTA) of the projected requirement of capital goods, raw materials, spares, consumables, intermediates, components, parts, packing materials for three months as applicable, but which will not be levied on account of admission of such goods into the unit. No bank guarantee is required at that stage.
But, a unit sending goods out for job work to DTA must furnish a bank guarantee to Customs to cover the duty foregone on such materials being taken out for sub-contracting. However, a bank guarantee is not required by a unit whose turnover is Rs one crore or above, or where the unit has been in the SEZ for more than a period of two years, with an unblemished track record. The primary responsibility of ensuring that the bond amount is adequate lies on the SEZ unit. If the bond amount is inadequate, then the unit can submit a bond-cum-legal undertaking for the additional amount.
We have imported capital goods under the Export Promotion Capital Goods (EPCG) scheme for use in our factory and submitted the installation certificate. Can we sell the capital goods after fulfilling the export obligation?
As per Para 5.4 of the Foreign Trade Policy (FTP), ‘import of capital goods shall be subject to Actual User condition till export obligation is completed.’ Therefore, you can transfer or sell the capital goods after fulfilling the export obligation. However, in case of capital goods (excepting tools) relating to handicrafts, handlooms, cottage, tiny sector, agriculture, aqua-culture (including fisheries), animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture, a transfer will not be allowed for a period of five years from the date of import, even in cases where the export obligation has been fulfilled. Transfer of capital goods to group companies, within five years from the date of import, would however be permitted after fulfilment of the export obligation, under intimation to the licensing authority and jurisdictional Central Excise Authority.
We have been loading the return fare for excise duty payment as per CBEC Circular no. 634/34/2002-CX dated 1st July 2002. Our consultant says that this need not be done. Please clarify the correct position.
CBEC has withdrawn the clarification given in Point no. 2 (b) of the above circular, through its Circular no. 923/13/2010-CX., dated 19-5-2010 (issued from file no. 6/3/2010-CX.1), in the wake of Tribunal judgments in the cases of DCW Ltd. [2007 (217) ELT 541 (Tri.-Mad.)], Haldia Petrochemicals Ltd. [2009 (233) ELT 344 (Tri.-Kolkata)] and Gujarat Flourichemicals Ltd. [2009 (248) ELT 885 (Tri.-Ahmedabad.)]
Business Standard invites readers’ SME queries related to excise, VAT and exim policy. You can write to us at smechat@bsmail.in
