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Sez- excise duty implications

Rekha (MANAGER - FINANCE & ACCOUNTS) (1445 Points)

26 September 2012

Hi frnds,

My company supplies goods to an SEZ.

whether i need to collect duty from sez and in turn they claim refund or i need not collect duty at all under ARE-1?

PL CLARIFY. WHAT IS THE LATEST NOTIFICATION ON THIS?

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14 Replies

arun nayak (article clerk) (22 Points)
Replied 26 September 2012

Both the option holds good. any one u can use.

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CA.Ankur Khandelwal (Owner) (281 Points)
Replied 26 September 2012

DTA units selling goods to SEZ units are eligible for exemption from excise duty under Notification No. 58/2003 .

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 26 September 2012

Consignments from domestic area to customs bound special economic zones (SEZs) should be treated as exports, thus becoming eligible for duty rebates as applicable to offshore shipments. SEZ is exempt from Central Excise, therefore SEZ can't claim any refund so that you should supply with claim of rebate under Rule 18.

CA Lokesh Pokharna (CA (Ahmedabad Bhilwara Chittorgarh)) (4128 Points)
Replied 26 September 2012

Dear Sunil sir, exemption (Under 58/2003)

Notification No. 58/2003 .

Read more at: /forum/sez-excise-duty-implications-221860.asp#.UGLmL64qkrg

& rebate are same or differ???????????????

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 26 September 2012

Exemption is granted to SEZ from Central Excise, that means DTA unit can supply without payment of duty as per Notification No. 58/2003. So there is three option.

1) Supply to SEZ without payment of duty (prefer when there is no accumalated CENVAT Credit)

2) Supply to SEZ with payment of duty and recover the duty under Rule 18 as rebate.( Prefer if there is accumalated CENVAT Credit)

3) Supply to SEZ without payment of duty and claim rebate of central excise duty on input material used for manufacture of final product.

Notification No. 58/2003 and rebate are different.

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Natraj D Murthy (Manger Accounts) (23 Points)
Replied 27 September 2012

Hi,

Supplies to SEZ are exempted from payment of duty under CT3.

The procedure is to get the CT3 Bond from the purchaser who is located in SEZ and file the same with the range office of the supplier, and based on this, the goods could be cleared w/o payment of duty.

All clearances to SEZ/EOU/STPI/EHTP are treated as deemed export for the DTA unit.

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 28 September 2012

Supplies to SEZ is not convered under CT3, but Supply to EOU unit is covered under CT3. Supply to SEZ is treated as par with Export. Therefore all procedure related to export are related to SEZ.

Natraj D Murthy (Manger Accounts) (23 Points)
Replied 28 September 2012

Hi Sunil,

The term SEZ which stands for Special economic zones in which the various units like EOU/EHTP/STPI are located which mainly process goods and services for export.

Please correct me if wrong.

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 28 September 2012

Hi Natraj, EOU units can set up any place in India, and any existing or new units can be convert in to EOU. EOU units are bound by Central Excise Act but SEZ are exempted from Central Excise. SEZ units can be set up only in Notified area only.

Natraj D Murthy (Manger Accounts) (23 Points)
Replied 28 September 2012

Hi,

Thanks for the clarification.

All units started exclusively for the purpose of Export are exempted from Excise duty on local purchases and customs duty on imported purchases. (on the condition of achieving NEFP)

This is done by giving B-17 bondalong with requisite BG (5% of the bond value) for the duty forgone by the Customs department on imports (CG & RM).

But for the local purchases, to get exemption from levy of excise duty by the vendor, a CT3 bond is issued by the purchasing unit. (for both CG & RM)

Since in all these units for export (EOU,EHTP,STPI) there is no provision for refund of duty (either by way of rebate of duty under rule 18 or duty refund under rule 5) as the conditions laid down in these rule cannot be implemented.

However all the inputs purchased (CG & RM) need to be bonded under the seal of the C.Ex range office.

Please hilight me on any other provisions.

Tks

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Avneet kaur gandhi (Article) (21 Points)
Replied 01 October 2012

hi sunil sir,

Please tell me the use of AR-E1 and AR-E3 ? How do these differ in their use?

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 01 October 2012

ARE- 1 - Application for Removal Of Goods for Exports: This form is used for removal of goods directly from Factory or warehouse to Customs place. This form can use export under bond/LUT or with payment of duty and claim Rebate under Rule 18.

ARE-3 This form is used for re-warehousing. Can use for Stock movement for export purpose from Factory to Warehouse or warehous to warehouse on the basis of CT2.

Goods Supplied to EOU units also on the basis of ARE-3 under CT3.

CA Harish Negi (Never Say Die) (860 Points)
Replied 23 February 2013

Thanks Sunil

vaidyanath (Head F & A MFF Hazira) (138 Points)
Replied 24 November 2014

Dear sunil sir,

Can a maufacturer can procure raw materials without paying excise duty under notification no 43/2001 which are used in the final product for supply to an SEZ?