Can a Special Economic Zone (SEZ) unit having a separate Letter of Permission (LOP) for its manufacturing and trading operations under a common Sales Tax Registration/Tax Identification number and also common Importer Exporter Code (IEC) number set off the Value Added Tax (VAT) refund due on domestic procurement for manufacturing operations against VAT liability due on domestic sales operations of its trading division?
Since there is a single VAT dealer registration, you can use the VAT Credit from the manufacturing activity to pay VAT on trading goods.
Can we make a stock transfer from our Export Oriented Unit (EOU) to the Domestic Tariff Area (DTA), and can we use the DTA sale entitlement for payment of concessional duty? Also, will this be treated as a related party transaction?
As per CBEC Circular no. 38/2003-Cus dated 06.05.2003, it would be illogical to contend that the concession is available if the goods are transferred from an EOU on sale to an independent DTA unit but it would not be available when removed on stock transfer to another DTA division/unit of the same company. Therefore, you can stock transfer the goods from the EOU to the DTA and claim the concessional duty rate within the DTA sale entitlement on the value that you declare.
You need to clear the goods under excise invoice as per the excise law and prepare the usual forms for stock transfer under the local sales tax law. The duty payable is excise duty, but the valuation has to be done in accordance with Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007. It is a related party transaction and the declared value will come up for closer scrutiny. However, this will be done by the excise officials having jurisdiction over the EOU and not by the Special Valuation Branch (SVB) of the Customs.
We import certain items from our parent company and have a ‘no loading’ order from the SVB for those items. Our parent company also sells some other items to unrelated parties in India. Are we required to inform the SVB about this?
No. Those transactions do not concern you, as you do not import those items, and they do not concern the SVB either, as they are transactions between unrelated parties.
We are executing certain EPC contracts for fertiliser projects. If the government approves deemed export benefits for such projects set up during current plan period, will we get the benefits for supplies already effected?
It is up to the government to decide whether to grant such benefits for supplies to projects set up in the current plan period which are already under execution and, if so, whether supplies already made should also get the benefits. At present the benefits are restricted for supplies to fertiliser plants set up or expanded/revamped/retrofitted/modernised during the Ninth Plan period and to fertiliser plants which started in the Eighth/Ninth Plan period and spilled over to the Tenth Plan period.
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