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Handbook
for Procedures (Chapter 7)
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|
(as
on 1-04-2002)
|
| |
| »Policy
7.1 |
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|
(a)
The Policy pertaining to Special Economic Zones (SEZs)
is given in Chapter 7 of the Policy.
(b) Software units may undertake exports using
data communication links or in the form of physical
exports (which may be through courier service also),
including export of professional services.
|
| |
| »Export
and Importability of Goods 7.2 |
|
|
(a)
At the time of export of jewellery, the shipping bill
and the invoice presented to the Customs authorities
shall contain the description of the items, its weight,
purity of gold/ silver/platinum, type of Gem & Jewellery
stone (diamond, ruby, sapphire, cubic zircon etc.) used
for studding and studding weight in carats, FOB price
rate of the jewellery item, quantity in pieces and total
value.
(b) SEZ unit may import goods in terms of paragraph
7.2 of the Policy. In case of doubt as to whether the
item is required by the unit for its activities or in
connection therewith, the decision of the concerned
Development Commissioner shall be final.
(c) The import shall be subject to the following
conditions:
(i) The goods shall be imported into the premises of
the unit.
(ii) The normal procedure as prescribed under Customs/
Excise rules for SEZ will be followed and general bond
executed with Customs/Excise authority
(iii) Import of prohibited items in the ITC(HS) shall
not be allowed;
(iv) The goods, except capital goods and spares, shall
be utilised within the approval period of 5 years.
(v) Goods already imported/shipped/arrived before the
issue of Letter of Permission (LOP)/Letter of Indent
(LOI) are also eligible for duty free clearance under
the SEZ scheme provided customs duty has not been paid
and the goods have not been cleared from Customs.
(d) SEZ units obtaining gold/silver/platinum
from the nominated agencies on loan basis shall export
gold/silver/platinum jewellery within the stipulated
period from the date of release. This shall not however
apply to the outright purchase of precious metal from
the nominated agencies.
(e) The SEZ unit shall be permitted to export
the jewellery on the basis of a notional rate certificate
to be issued by the nominated agency. This rate will
be based on the prevailing Gold/USD rate and the USD/INR
rate on the date of the Shipment.
(f) The exporter shall have the flexibility to
fix the price and repay the gold loan within 180 days
from the date of export. The price shall be communicated
to the nominated agencies who will issue a certificate
showing the final confirmation of the rate to the bank
negotiating the document, to ensure export proceeds
are realized at this rate.
|
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| »Leasing
of Capital Goods 7.3 |
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|
(a)
Capital goods procured from indigenous sources on the
basis of lease agreement between the leasing company
and the SEZ unit will be eligible for Central Excise
exemption.
(b) The value of imported capital goods financed
through leasing companies or obtained free of cost and/or
loan basis shall also be taken into account for the
purpose of calculation of Net Foreign exchange Earning
(NFE).
|
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| »Net
Foreign exchange Earning (NFE)7.4 |
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|
NFE
under SEZ scheme shall be calculated according to the
following formula:
Positive Net Foreign exchange Earning (NFE) = A-B >0
Where A. is the FOB value of exports by the SEZ
unit; and B. is the sum total of the CIF value
of all imported inputs, the CIF value of all imported
capital goods, and the value of all payments made in
foreign exchange by way of commission, royalty, fees,
dividends, interest on external borrowings during the
first five year period or any other charges. "Inputs"
mean raw materials, intermediates, components, consumables,
parts and packing materials
Note:-
(i) If any goods are obtained from another SEZ/EOU/EPZ/
EHTP/ STP unit or procured from an international exhibitions
held in India the value of such goods shall be included
under B.
(ii) If any capital goods imported duty free is leased
from a leasing company, received free of cost and/or
on loan basis or transfer, the CIF value of the capital
goods shall be included or excluded, as the case may
be, pro-rata, under B for the period it remains with
each unit.
(iii) For annual calculation of NFE, the value of imported
capital goods and lumpsum payment of foreign technical
know-how fee shall be amortized as under;
1st -2nd Year : 5% each year
3rd-5th Year : 10 % each year
6th -8th Year : 20% each year
|
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| »Maintenance
of accounts and monitoring of units 7.5 |
|
|
(a).
SEZ unit shall maintain proper account, in format convenient
to it including computerized account, financial year-wise
and make available on-line to the Development Commissioner/
Customs information in the format prescribed at Appendix
14-D and till such time on-line connectivity is established
submit the same quarterly to the Development Commissioner/
Customs
(b). Failure to ensure positive NFE or to abide
by any of the terms and conditions of the LOP/LOI/IL
shall render the unit liable to penal action under the
provisions of the Foreign Trade (Development & Regulation)
Act, 1992 and the Rules and Orders made thereunder without
prejudice to action under any other law/rules and cancellation
or revocation of LOP/LOI/IL.
(c). The unit shall be able to account for the
entire quantity of each category of homogenous goods
imported/procured duty free, by way of exports, sales/supplies
in DTA or transfer to other SEZ/EOU/EPZ/EHTP/STP units
and balance in stock. However, at no point of time the
units shall be required to co-relate every import consignment
with its exports, transfer to other SEZ/ EOU/ EPZ/EHTP/STP
units, sales in the DTA and balance in stock. Any matter
for clarification as to whether goods are homogenous
or not shall be decided by the Committee as provided
for in paragraph 7.5 of the Policy
|
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| »Legal
Undertaking 7.6 |
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|
The
approved SEZ unit shall be required to execute a legal
undertaking with the Development Commissioner concerned
in the form given in Appendix-14 D of the Handbook (Vol.I).
|
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| »Approvals
and Applications including LOP/LOI.Renewal of Approval
7.7 |
|
|
(a)
For setting up a unit in an SEZ, three copies of the
application in the form given in Appendix-14 A of the
Handbook (Vol. I) may be submitted to the Development
Commissioner (DC) of the SEZ concerned.
(b) Proposals for setting up units in SEZ other
than those requiring industrial licence may be granted
approval by the Development Commissioner within 15 days
as per the procedure indicated in Appendix 14 B
(c) Proposals for setting up units in SEZ requiring
industrial licence and conversion of EOU into SEZ unit
may be granted approval by the Development Commissioner
after clearance of the proposal by the SEZ Board of
Approval and Department of Industrial Policy and Promotion
within 45 days
(d) Letter of Permission (LOP)/Letter of Intent
(LOI) issued to SEZ units by the Development Commissioner
shall be valid for a period of 3 years only and would
be construed as a licence for all purposes, including
for procurement of raw material and consumables either
directly or through state trading enterprises.
(e) Each LOP/LOI shall have separate ear-marked
premises and shall specify the items of manufacture/service
activity, annual capacity, projected annual export for
the first five years in dollar terms, Net Foreign Exchange
Earnings (NFE), limitations, if any, regarding sale
of finished goods, by-products and rejects in the DTA
and such other matter as may be necessary and also impose
such conditions as may be required
(f) In case of any change in approved activity
or undertaking any new activity by SEZ units, the Development
Commissioner shall issue amended LOP within six days
on receiving intimation from the unit.
(g) Standard format for LOP/LOI for SEZ units
is given in Appendix 14 C of the Handbook (Vol.I).
(h) On completion of five years approval period,
it shall be open to the unit to continue under the scheme
or opt out of the scheme. Where the unit opts to continue,
the DC concerned may extend the approval.
|
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| »DTA
Sales 7.8 |
|
| SEZ
units may sell goods including by products and services
in the DTA on payment of applicable duties |
| |
| »Entitlement
for Supplies from the DTA 7.9 |
|
|
(a).
An application for reimbursement of Central Sale Tax
(CST) and grant of entitlements in terms of paragraph
7.9 of the Policy may be made to the DC of the SEZ concerned.
The procedure to be followed and the form of the application
for reimbursement of CST is given in Appendix 14-G of
the Handbook (Vol. I).
(b). The procedure for submission of application
for grant of Replenishment Licence for cut and polished
diamonds, precious and semi-precious stones, synthetic
stones and processed pearls as contained in chapter
4 of the Handbook (Vol.I) shall be applicable. However,
the application shall be made to the Development Commissioner
of the SEZ concerned. Such supplies to SEZ are not treated
as deemed exports for the purpose of any of the deemed
export benefits.
|
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| »Export
through status holder/Merchant exporter or other EOU/
EPZ/ EHTP/ STP unit
7.10 |
|
|
Permission
to export goods through status holder/merchant exporter
or other SEZ/EOU/EPZ/ SEZ/ EHTP/STP units in terms of
paragraph 7.10 of the Policy extends only to the marketing
of the goods by the status holder/merchant exporter
or other SEZ/ EOU/ EPZ/ EHTP/STP unit. The manufacture
of the goods shall be done in the SEZ unit concerned.
Achievement of positive NFE and any other conditions
relating to the imports and exports as prescribed shall
continue to be discharged by the SEZ unit concerned.
Such export shall fulfill the following conditions:
a) The export orders so procured shall be executed
within the parameters of SEZ Scheme and the goods shall
be directly transferred from the Customs bonded unit
to the port of shipment.
b) Fulfillment of positive NFE by SEZ unit in
regard to such exports shall be reckoned on the basis
of the price at which the goods are supplied by SEZ
units to the status holder/merchant exporter or other
EOU/ EPZ/SEZ/ EHTP/ STP unit.
c) All export entitlements, including recognition
as status holder would accrue to the exporter in whose
name foreign exchange earnings are realized.
|
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| »Other
Entitlements
7.11 |
|
|
(a)
Units set up in SEZs will be charged rent for lease
of industrial plots and standard design factory buildings/
sheds as per rates fixed from time to time.
(b) Corporate tax: SEZ units engaged in manufacturing
and services will be eligible for entitlements in respect
of payment of income tax as per the provisions of Income
Tax Act.
(c) FOB Value of export of an SEZ unit can be
clubbed with FOB value of export of its parent company
in the DTA, or vice versa, for the purpose of according
Export House, Trading House, Star Trading House or Super
Star Trading House status ;
(d) Foreign Investment: Foreign Equity up to
100% is permissible for all manufacturing activities
in Special Economic Zones (SEZs), except for the following
activities:
i) arms and ammunition, explosives and allied items
of defence equipment, defence aircraft and warships;
ii) atomic substances;
iii) narcotics and psychotropic substances and hazardous
chemicals;
iv) distillation and brewing of alcoholic drinks; and
v) cigarettes/cigars and manufactured tobacco substitutes.
(e) Sectoral norms as notified by the Government
shall apply to foreign investment in services and trading
activities.
(f) SEZ units may retain 100% of their export
proceeds in their EEFC account.
(g) Export value of goods and software by SEZ
units may be realized and repatriated to India within
12 months from the date of export or within the time
extended by Reserve Bank of India.
(h) Software units may, in addition, also be
allowed to use the computer system for training purpose
(including commercial training) subject to the condition
that no computer terminal shall be installed outside
the Zone premises for the purpose.
(i) Procurement of raw materials and export of
finished products shall be exempt from Central levies.
(j) Exemption from industrial licensing for manufacture
of items reserved for SSI sector.
(k) State Trading Enterprises Policy shall not
apply to SEZ manufacturing units. Export of iron ore
shall however be subject to the decision of the Government
from time to time. Requirements of other conditions
like minimum export price/export in consumer pack as
per Exim Policy shall apply in case the raw materials
are indigenous. Export of textile items shall be covered
by bilateral agreements, if any. Wood based units shall
comply with the direction of Hon'ble Supreme Court contained
in its order dated 12.12.1996 in Writ (civil) No, 202
of 1995- T.N.Godavarman Thirrumulkpad v/s Union of India
and others with WP(Civil) no 171 of 1996 in regard to
use of timber/other wood.
(l) SEZ unit may install one fax machine at a
place of its choice, outside the Zone, subject to intimation
of its location to the concerned Customs/Central Excise
authorities.
(m) SEZ units may, temporarily take out of the
Zone duty free laptop computers and video projection
systems for working upon by persons authorised by unit.
(n) SEZ units may install personal computers
not exceeding two in number imported/ procured duty
free in the registered/administrative office subject
to the guidelines issued by Department of Revenue in
this behalf.
(o) For IT and IT enabled services, persons authorized
by the software units may access the facility installed
in the SEZ unit through communication links.
|
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| »Sub-
Contracting 7.12 |
|
|
a)
Goods shall be allowed to sent out in the DTA for sub-contracting
of production process only after initial processing.
b) Finished goods may be brought back to the
unit for export or may be exported directly from the
job worker's premises provided such premises are registered
with the Central Excise authorities. Export of such
products from the job worker's premises shall not be
allowed through third parties as provided for under
paragraph 7.12 of the Policy.
c) In case of sub-contracting of production in
the DTA in terms of paragraph 7.12 of the Policy, a
sample of the export product being sub-contracted shall
be sent in advance to the jurisdictional Excise authorities
of the sub-contractor in the DTA.
d) In case of SEZ units undertaking job work
for export on behalf of DTA unit in terms paragraph
7.12 (d) of the Policy, the finished goods shall be
exported directly from the SEZ unit and export documents
shall be in the name of DTA unit.
e) SEZ units may be permitted to remove moulds,
jigs, tools, fixtures, tackles, instruments, hangers
and patterns and drawings to the premises of sub-contractors
subject to the conditions that these shall be brought
back to the bonded premises of SEZ units on completion
of the job work within a stipulated period.
|
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| »Debonding
and Depreciation norms for Capital goods
7.13 |
|
|
a)
Broad conditions governing debonding of SEZ units
are indicated at Appendix-14-J of the Handbook (Vol.
I).
b) The depreciation norms for capital goods,
including computers, computer peripherals and electronics,
shall be subject to an overall limit of 90% as notified
by the Department of Revenue.
c) Depreciation for computers and computer peripherals
for all SEZ units and for capitals goods of IT hardware/electronic
units shall be as follows:
10 % for every quarter in the first year,
8 % for every quarter in the 2nd year,
7 % for every quarter in the 3rd year.
d) For capital goods, other than above, the depreciation
rate shall be as follows:
4 % for every quarter in the first year.
3 % for every quarter in the second and third year
2.5 % for every quarter in the fourth year and thereafter
e) Debonding of capital goods imported as second
hand shall not be allowed under EPCG scheme. Moreover,
no debonding on payment of applicable duties shall be
allowed in respect of second hand capital goods imported
on or after 1.4.99, for a period of at least 3 years
from the date of imports.
|
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| »Export
through Exhibitions / Export
Promotion Tours /Export of Branded Jewellery /sale through
Show rooms abroad/international airports. 7.14 |
|
|
(a)
SEZ unit shall produce to the Customs authorities
the letter in original or its certified copy containing
approval of the Development Commissioner for holding
exhibitions/export promotion tour. For Gems and jewellery
exhibition/export of branded jewelery, a self certified
photograph of the products shall also be submitted.
In case of re-import, such items, on arrival shall be
verified along with the export documents before clearance.
(b) The exports through exhibitions/export promotion
tours/export of branded jewellery shall be subject to
the conditions that items not sold abroad shall be re-imported
within 60 days of the close of the exhibition. However,
in case the exporter is participating in more than one
exhibition within 45 days of close of the first exhibition,
then the 60 days shall be counted from the date of close
of the last exhibition. In case of personal carriage
of gems and jewellery for holding/participating in overseas
exhibitions, the value of such gems and jewellery shall
not exceed US $ 2 million.
(c) Personal carriage of gold/silver/platinum
jewellery, precious, semi-precious stones, beads and
articles as samples upto US $ 1,00,000 for export promotion
tours and temporary display/sale abroad is also permitted
with the approval of Development Commissioner subject
to the condition that the SEZ unit shall bring back
the jewellery/goods or repatriate the sale proceeds
within 45 days from the date of departure through normal
banking channel. In case of personal carriage for export
promotion tours, the unit shall declare personal carriage
of such samples to the Customs while leaving the country
and obtain necessary endorsement on the Export Certificate
issued by the Customs.
(d) In case of export of jewellery through permitted
shops set up abroad or in the showrooms of their distributors/agents
items not sold abroad within 180 days shall be re-imported
within 45 days
(e) In case of sale of jewellery to foreign tourists
through permitted showrooms/retails outlets at the International
Airports in accordance with the procedure laid down
by the Customs authorities, jewellery items unsold after
a period of 60 days be exported or returned to the respective
SEZ units
|
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| »Personal
carriage of gems and jewellery Export / Import Parcels
7.15
|
|
|
(a)
The procedure for personal carriage of exports parcels
shall be as prescribed by Customs. The export proceeds
shall, however, be realised through normal banking channel.
(b) In case of Personal carriage of jewellery
by foreign bound passenger, the following documents
shall be submitted by SEZ units as proof of exports
(i) Copy of the shipping bill filed by the SEZ units
;
(ii) A copy of the Currency Declaration Form filed by
the Foreign buyer with the Customs at the time of his
arrival; and
(iii) Foreign Exchange Realisation/ Encashment Certificate
from the Bank
(c) In addition to this, Personal Carriage by
foreign bound passenger on Document Against Acceptance
(DA)/Cash On Delivery (COD) basis is also allowed. The
SEZ units will have to furnish the following documents
as proof of export.
(i) Copy of Shipping Bill.
(ii) Bank Certificate of Export and Realisation
(d) The procedure for personal carriage of import
parcels will be the same as for import of goods by airfreight
except that the parcels shall be brought to the Customs
by the SEZ unit/ foreign national for examination and
release.
Instructions issued by the Customs authorities in this
regard should be followed mutatis mutandis.
|
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| »Export
by Post/Courier
7.16 |
|
In
case of export through Foreign Post Office or by courier,
at the time of exports, the SEZ unit shall submit the
following documents:
(i) Shipping Bill or invoice presented at the Foreign
Post Office.
(ii) Three copies of invoice. |
| |
| »Disposal
of Scrap/ waste
7.17 |
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|
Scrap/dust/sweeping
of gold/silver/platinum may be sent to the Government
of India Mint/Private Mint from the SEZ units and returned
to them in standard bars in accordance with the procedure
prescribed by the Customs authorities or may be permitted
to be sold in the DTA on payment of applicable Customs
duty, on the basis of gold/silver/platinum content,
as may be notified by Customs authorities.
|
| |
| »Replacement
and Repair of goods 7.18 |
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|
(a)
The units may re-import, after repairs abroad, machinery/equipment
exported by them for specific purpose on the basis of
maintenance of records. Any foreign exchange payment
for this purpose will also be allowed.
(b) SEZ units may, on the basis of records maintained
by them and on prior intimation to Customs Authorities:
(i) Transfer goods to DTA for repair/replacement, testing
or calibration and return.
(ii) Transfer goods for quality testing/R & D purpose
to any recognised laboratory/ institution up to a maximum
of Rs. 2 lakhs per annum for items appearing in the
negative list of imports and Rs.5 lakhs per annum for
other items, without payment of duty, on giving suitable
undertaking to the customs for return of the goods.
However, if the goods have been consumed/destroyed in
the process of testing etc. a certificate from the laboratory/institution
to this effect shall be furnished to the Customs.
|
| |
| »Management
of SEZ/ Power of DC 7.19 |
|
|
(a)
Registering authority for SEZ units, shall be the Development
Commissioner of the SEZ concerned. A separate Registration-cum-Membership
Certificate shall not be required in their cases as
provided for in paragraph 2.44 of the Policy.
(b) Importer-Exporter code number for SEZ units
shall be allotted by the Development Commissioner concerned
If an industrial enterprise is operating both as a domestic
unit as well as an SEZ unit, it shall have two distinct
identities with separate accounts, including separate
bank accounts. It is, however, not necessary for it
to be a separate legal entity, but it should be possible
to distinguish the imports and exports or supplies effected
by the SEZ units from those made by the other units
of the enterprise.
(c) Apart from the original power delegated under
the policy and the Handbook of Procedure (Vol. I), the
Development Commissioners of SEZ have been delegated
with the following powers in respect of SEZ units.
(i) Approve all matters relating to post approval operation
of the unit including import/procurement of additional
capital goods, increase in value of capital goods on
account of foreign exchange rate fluctuations, enhancement
of production capacity, broad banding/diversification,
change in name of the company or the implementing agency
and change from a company to another provided the new
implementing agency /company undertakes to take over
the assets and abilities of the existing unit and merger
of two or more SEZ units.
(ii) Exercising of powers of adjudication under Section
13 read with Section 11 of Foreign Trade (Development
& Regulation) Act, 1992 in respect of SEZ units.
(iii) Get the premises vacated under the Public Premises
Eviction Act in case the rent on the plot/built up premises
allotted to the units is in arrears or if the plot/shed
is not utilised for the purpose for which the same has
been allotted.
(iv) Valuation of exports declared on SOFTEX form by
the units located in Special Economic Zones.
(v) Issuing eligibility certificates for grant of employment
visa to low level foreign technicians to be engaged
by SEZ units.
(vi) Approve applications for setting up of units in
SEZ other than proposals for setting up of unit in the
services sector (except software and IT enabled services,
trading or any other service activity as may be delegated
by the BOA), provided that the item of manufacture does
not require an industrial licence under the Industries
(Development & Regulation) Act, 1951.
(vii) Green Card will be issued by the DC concerned
to SEZ units automatically after execution of Legal
Undertaking.
|
| |
| »Setting
up of SEZ in Private/Joint/State Sector 7.20 |
|
| Guidelines
for setting up of Special Economic Zones in the public/
private/ joint Sector or by the State Government is given
in Appendix-
16-I of Handbook Vol-(I) |
| |
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