SPECIAL ECONOMIC ZONES RULES, 2006 (PART-II)
NOTIFICATION DT. 10/02/2006
Special Economic Zones Rules, 2006
42. Procedure for sub-contracting in Domestic Tariff Area or in a Unit in other Special Economic Zones or in Export Oriented Unit or in Electronic Hardware Technology Park unit or in Software Technology Park Unit or Biotechnology Park Unit or sub-contracting abroad.-
(1) A Unit may take goods, including finished goods requiring further processing or semi-finished or semi-processed goods, including studded jewellery or inputs to the subcontractor s premises (i) for sub- contracting any production process; or (ii) part of the production, without payment of duty, subject to following conditions, namely:-
(a) the Unit shall wherever possible apply for the permission at the time of project approval itself and based on such initial approval, the Specified Officer shall permit sub-contracting of part of production process(es) or part of the production;
(b) where the permission has not been taken at the time of project approval or a new permission is sought, the unit shall file an application containing the name and address of the sub- contractor(s), Central Excise registration number in the case of the Domestic Tariff Area subcontractor, if registered, and details of the processes to be carried out or quantum of production sought to be carried out at the sub-contractor s premises and self certified input output ratio for the said processes;
(c) after examination of details under sub clause (b), the Specified Officer may grant annual permission for sub-contracting any production process or sub-contracting part of the production, as the case may be;
(d) the Unit, removing raw materials, consumables excluding fuel and components, imported or domestically procured without any processing, for sub-contracting into the Domestic Tariff Area, shall furnish bank guarantee to Specified Officer to cover the duty foregone on such materials being taken out for subcontracting:
Provided that bank guarantee shall not be required by a unit whose turnover is rupees one crore or above or where the unit is in the Special Economic Zone for more than a period of two years with an unblemished track record;
(e) the Specified Officer or the Authorized Officer may make random checks either at the job worker"s premises or after receipt of goods from the job worker at the Special Economic Zone gate for the purpose of verification of goods which were sent and received:
Provided that where the precious metal in bullion form, having marking of fineness or purity or make or serial number is taken out of the Special Economic Zone for sub-contracting, appraisement of precious metals shall not be mandatory;
(f) a Unit shall remove the goods under serial numbered challans pre- authenticated by the owner or Managing Director or working partner or the company secretary or by any person duly authorized in this behalf by the company or firm, as the case may be and complete description of goods shall be provided on the challan;
(g) the authorized officer at the Special Economic Zone gate shall note down the identification marks of the goods for verification of the goods when received back after subcontracting:
Provided that where sensitive items are sent out for sub-contracting, based on the risk profile or past performance of the unit, sample may be drawn and retained by the Specified Officer, if required:
Provided that for gem and jewellery Units, there shall be no requirement for drawal of samples;
(h) the goods sent out for sub-contracting shall be returned to the Unit within one hundred and twenty days from the date of removal or within such period as may be extended by the Specified Officer for reasons to be recorded in writing for granting such extension;
(i) in case of failure by the Unit to bring back the goods after sub- contracting within the period under sub clause (h), action shall be taken by the Specified Officer to recover the duty on the goods taken out for sub- contracting.
(2) The Specified Officer may permit the Unit to export the finished goods directly from the sub-contractor s premises subject to following conditions, namely:-
(i) the sub-contractor is an Export Oriented Unit or an Electronic Hardware Technology Park Unit or Bio-technology Park Unit or a Special Economic Zone Unit or a Domestic Tariff Area Unit which is registered with the Central Excise Department;
(ii) export of finished goods from the sub-contractor s premises shall be allowed only by way of direct export and not through third party;
(iii) sample of goods exported from the sub-contractors premises shall be sent by the sub-contractor in sealed condition, to the Specified Officer for establishing identity of the goods exported with the sample drawn at the time of taking out of the goods to the sub-contractor;
(iv) shipping Bill for duty free goods shall be processed at the port of export as in the case of normal export and shipping bill shall be filed in the name of the Unit and sub-contractor;
(v) goods for such export shall be removed from the sub-contractor"s premises under bond:
Provided that in case of subcontracting abroad, the goods shall either be returned to the Unit or may be sold to buyers in that country or any third country.
(3) Waste, scrap or remnants generated during processes at the sub-contractor"s premises may either be returned to the Unit or may be cleared on payment of duty as if the said waste or scrap or remnants have been cleared by the Unit or may be destroyed at the sub-contractor s premises in the presence of jurisdictional Central Excise Officer if the sub-contractor is a Central Excise registrant:
Provided that in case of clearance of waste or scrap at sub-contractor s premises on payment of duty or destruction thereof the same shall be in accordance with the Standard Input Output Norms notified for the Duty Exemption Entitlement Scheme under the Foreign Trade Policy or as fixed by Approval Committee:
Provided that where the subcontractor s premises are located abroad, the scrap, waste or remnants generated at the sub-contractors premises may either be returned to the Unit or may be disposed off abroad;
(4) A Unit may sub-contract a part of production or production process in another Unit within the same Special Economic Zone subject to the following conditions, namely:-
(i) the movement of goods shall be under serially numbered challans and record of such movement of goods shall be maintained by the Unit;
(ii) raw material imported or procured by the Unit for manufacture of capital goods may be transferred to another unit for the purpose of manufacture or fabrication of capital goods for use by the Unit which had imported or procured the raw materials.
43. Sub-contracting for Domestic Tariff Area unit for export.- A Unit may, on the basis of annual permission from the Specified Officer, undertake subcontracting for export on behalf of a Domestic Tariff Area exporter, subject to following conditions, namely:-
(a) all the raw material including semi-finished goods and consumables including fuel shall be supplied by Domestic Tariff Area exporter;
(b) finished goods shall be exported directly by the Unit on behalf of the Domestic Tariff Area exporter:
Provided that in case of subcontracting on behalf of an Export Oriented Unit or an Electronic Hardware Technology Park unit or an Software Technology Park unit or Bio Technology Park unit, the finished goods may be exported either from the Unit or from the Export Oriented Unit or Electronic Hardware Technology Park unit or Software Technology Park unit or Bio-Technology Park unit;
(c) export document shall be jointly in the name of Domestic Tariff Area exporter and the Unit;
(d) the Domestic Tariff Area exporter shall be eligible for refund of duty paid on the inputs by way of brand rate of duty drawback.
44. Contract Farming.- A Unit engaged in production or processing of agriculture or horticulture products, may, on the basis of annual permission from the Specified Officer, remove to a farm in the Domestic Tariff Area, inputs, namely, seeds, fertilizers and chemicals for pre and post harvest treatment, micro nutrients, plant and growth regulators and other organic and inorganic substances used for plant nutrition, insecticides, fungicides, weedicides, herbicides and the following equipments, namely:-
(a) Filters;
(b) Dripliers, Driplines and Drip-fittings;
(c) Micro sprinklers and misters;
(d) Agriculture sprinklers;
(e) Fertilizer Tanks;
(f) Valves;
(g) Fertilizer pumps and chemical injections;
(h) Crates, drums and preservation media (Such as acetic acid and vinegar);
(i) Grading Tables;
(j) Green House equipment, accessories, heated rooting tables, propagation trays, seeding machines;
(k) Plants or parts there of, seeds, saplings, tubers, bulbs, rhizomes, root cuttings, all types of grafts, tissue culture material and other vegetatively propagated material utilized for sowing or planting;
(l) Growing media such as Peat Moss (including peat litres whether or not agglomerated), Pearlite/ verniculate, rockwool, coca peat, hydrocorn, foam based medium and other cultivation medium:
Provided that the removal of such items shall be subject to following conditions, namely: -
(i) supply of inputs by Unit to the contract farm(s) shall be subject to the input-output norms as may be approved by the Board;
(ii) there shall be contract farming agreement between the Unit and the Domestic Tariff Area farmer(s);
(iii) the Unit has been in existence for at least two years and is engaged in export of agriculture or horticulture products:
Provided that bank guarantee equivalent to the duty foregone on the capital goods or inputs proposed to be taken out shall be furnished to the Specified Officer if the Unit has not been in existence for two years;
45. Exports. -
(1) A Unit may export goods or services as per the terms and conditions of Letter of Approval including agro-products, partly processed goods, sub-assemblies and components except prohibited items under the Import Trade Control (Harmonized System) Classification of Export and Import Items and the Unit may also export by-products, rejects, waste scrap arising out of the manufacturing process.
(2) A Unit, other than a trading or Free Trade and Warehousing or service Unit, may export to Russian Federation in Indian Rupees against repayment of State Credit or Escrow Rupee Account of the buyer, subject to clearance from the Reserve Bank of India, required, if any.
(3) A Unit engaged in development of computer software may undertake export, including export of professional services, using data communication links or do physical exports, including through courier service.
(4) The Foreign Trade Policy restrictions on State Trading Enterprises shall not apply to Special Economic Zone manufacturing Units:
Provided that export of iron ore shall be subject to conditions as may be laid down by the Central Government from time to time.
(5) Minimum export price and requirements of export in consumer pack as provided for in the Foreign Trade Policy shall apply in case the raw materials are procured indigenously and exported without further processing or manufacturing activities.
(6) The export of textile items shall be governed by bilateral agreements, if any.
(7) A Unit may export free samples without any limit, including samples made in wax moulds or silver mould or non precious metal alloy or rubber moulds through all permissible modes of export.
46. Procedure for Export. -
(1) The procedure for export from Special Economic Zone through seaports or airports or Inland Container Depot or Container Freight Station or Land Customs Station or by Post or by Courier or by Personal Carriage, as the case may be, shall be as under: -
(a) the Unit shall file Shipping Bill, in quadruplicate, with the Authorized Officer of Customs in the Special Economic Zone together with relevant documents, namely, invoice, packing list and Currency Declaration Form (GR) (in duplicate):
Provided that there shall be exemption from declaration in the forms, GR or SDF or PP or SOFTEX as referred in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 notified vide Reserve Bank of India Notification No: FEMA 23/2000-RB dated 3rd May, 2000 as amended from time to time in respect of export value up to US$ twenty five thousand or for export value as may be notified by the Reserve Bank of India, from time to time;
(b) the Shipping Bill shall be registered, assigned a running serial number and assessed by the Authorized Officer in the manner and procedure as is followed in case of exports under free shipping bill without any requirement of the counter signature;
(c) the goods shall not be subjected to routine examination and Let Export Order shall be given on the basis of self certification by the Unit:
Provided that goods may be sealed after examination, as per the norms prescribed for free shipping bills, at the option of the Unit, by the Authorized Officer Provided further that if services are exported in non-physical form, the export value is to be furnished by the Unit on self certification basis as per the instructions of the Reserve Bank of India.
Explanation.- Self certification means the certification regarding sealing of container or package of goods under export given by the Unit and includes the certificate regarding contents and sealing of the container or package given by the owner or the working partner or the Managing Director or the Company Secretary of the said Unit or any person authorized in this behalf by the owner or company or working partner, as the case may be, on the copies of Shipping Bill stating that the package or container in respect of goods under export have been sealed in his presence;
(d) the goods may be examined at the port, airport Inland Container Depot or Container Freight Station or Land Customs Station only in case of specific intelligence or information after obtaining the written permission of Deputy or Assistant Commissioner of Customs having jurisdiction over the said port, airport, Inland Container Depot or Container Freight Station or Land Customs Station, as the case may be, in writing;
(e) the Unit may export through Inland Container Depot located in the Special Economic Zone, or through any port or airport or Inland Container Depot:
Provided that in case of export of large quantities of cargo where it may not be possible to ship the cargo from the Special Economic Zone in one consignment, the Specified Officer may allow the export of such cargo on execution of a Bond for the duty involved subject to the condition that the Unit shall submit the proof of export within ninety days of removal of such cargo under Bond, failing which applicable duty on the goods not exported shall be payable in terms of the Bond;
(2) The procedure for export of gems and jewellery shall be as under:-
(i) the shipping bill and the invoice alongwith packing list presented to the authorized officer shall contain the following:
(a) description of the items;
(b) weight and purity of gold or silver or platinum and the type of gems stone, such as, diamond, ruby, sapphire, cubic zircon and the like which has been used for studding and its weight in carats; and
(c) free on board price rate of the jewellery item and quantity in pieces and the total value;
(ii) the Unit may export jewellery on the basis of a notional rate certificate issued by the Nominated Agency and this rate will be based on the prevailing Gold or US Dollar rate and the US Dollar or Indian Rupees rate given in the notional rate certificate:
Provided that the certificate issued by the Nominated Agency shall not precede the date of shipment by more than three working days or as may be notified by Central Government;
(iii) the Unit obtaining gold or silver or platinum from the Nominated Agency on loan basis shall export gold or silver or platinum jewellery within the period prescribed for the same under the Foreign Trade Policy:
Provided that the unit can convert such loan into outright purchase by paying the outstanding loan amount plus interest provided they exercise this option within the period prescribed under the Foreign Trade Policy.
(iv) in the case of export of jewellery on the basis of notional rate certificate issued by the Nominated Agency, the Unit may fix the price and repay the gold loan within the prescribed period for export as may be notified by the Central Government from time to time:
Provided that the price shall be communicated to the Nominated Agency for issue of a certificate showing the final confirmation of the rate to the bank negotiating the document.
(3) Procedure for export of software shall be as under:-
(i) a Unit may export software or processed data, including call center services via data link or internet or e-mail or through other electronic mode and the Software Export Declaration Form for such exports duly certified by Development Commissioner under the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000, shall be submitted, to the authorized dealer within the period specified under the Foreign Exchange Management Act 1999. (42 of 1999);
(ii) a Unit may provide consultancy services on site abroad subject to submission of details of the contract or purchase order and foreign exchange remitted and the persons deputed abroad to the Authorised Officer;
(iii) the consideration received by the Unit for providing on site consultancy services in convertible foreign exchange shall be counted for the purpose of calculating positive Net Foreign Exchange Earning under rule 53.
(4) The Unit may export goods by post subject to the procedure applicable to export through Foreign Post Office.
(5) Export through couriers shall be allowed only if the courier is an authorised courier, being registered with the Commissioner of Customs having jurisdiction over the gateway airport and the procedure specified in the Courier Export and Import (Clearance) Regulations, 1998 shall be followed:
Provided that Goods shall be allowed to be handed over to the courier by the custodian as per the procedure specified by the Specified Officer.
(6). A Unit may export goods to be carried by foreign bound passengers authorized by the Unit in this behalf as personal baggage, subject to the following conditions, namely:-
(i) the Unit shall submit the shipping bill, invoice and Currency Declaration Form (GR) with the authorised officer;
(ii) the Shipping Bill shall be assessed by the Authorised Officer in the same manner as is done in the case of exports under free shipping bill;
(iii) the goods shall be transferred from the Special Economic Zone to the airport under the cover of assessed shipping bill by the authorized agency approved by the Specified Officer or under escort of Authorized Officer;
(iv) the goods shall be deposited with the warehouse at the airport against a detention receipt issued by the Customs authorities at the airport;
(v) the consignment shall be handed over to the authorized passenger at the time of departure on submission of original detention receipt;
(vi) the Unit shall submit to the Specified Officer, the proof of export issued by the Customs authority at the airport within a period of fifteen days from the date of removal of the goods from the Special Economic Zone;
(vii) where the facility of custodian is available in the Special Economic Zone and the Airport, goods shall be transferred and delivered to the authorized passenger at the airport by the custodian.
(viii) personal carriage of spare parts by foreign bound passenger shall be allowed in case the spare parts are required for repairs of exported goods at customer site and following documents shall be submitted as proof of export, namely:-
(a) permission letter from the authorised officer for exports; and
(b) invoice with value.
(ix) personal Carriage of any goods for exports by authorized passenger on Document Against Acceptance or Cash On Delivery basis may be allowed provided the Unit submits following documents, namely:-
(a) copy of Shipping Bill; and
(b) the bank Certificate for realization of proceeds shall be submitted within thirty days of delivery of the goods.
(x) personal carriage of gems and jewellery items of the value not exceeding US$ two million or other goods not exceeding rupees five lakhs in value, for holding or participating in overseas exhibitions shall be permitted with the approval of the Development Commissioner and subject to the following conditions, namely.-
(i) the Unit shall declare personal carriage of such goods to the Customs authorities at the airport while leaving the country and obtain necessary endorsement ; and
(ii) Unit shall bring back goods or repatriate the sale proceeds within forty five days from the date of closure of exhibition through normal banking channels or within such days as may be notified by the Central Government;
(iii) for personal carriage of goods by foreign bound passenger, the following documents shall be submitted by a Unit as proof of exports, namely.-
(a) copy of shipping bill filed by the Unit;
(b) copy of the Currency Declaration Form filed by the Foreign buyer with the Customs at the time of his arrival;
(c) foreign exchange realisation or encashment certificate from the Bank;
(7) A Unit may display the goods in the showrooms set up at departure lounge in international Airports in India for sale to passengers leaving India subject to the conditions and procedures laid down by the Commissioner of Customs having jurisdiction of the Airport:
Provided that the items remaining unsold within a period of forty-five days shall be exported or returned to the Unit.
(8) A Unit may export goods, including gems and jewellery, for display or sale in the permitted shops set up abroad or in the show rooms of their distributors or agents:
Provided that the items not sold abroad within a period of one hundred and eighty days from the date of their export shall be imported within a period of forty-five days.
(9) A Unit may export goods, including gems and jewellery for display or participation in exhibitions abroad subject to following conditions, namely: -
(i) the Unit shall give advance intimation to the Development Commissioner to participate in the exhibition abroad or for taking goods abroad for display and sale;
(ii) shipping bill along with relevant documents shall be filed with the authorized officer in the same manner and following the same procedure as applicable to free shipping bill;
(iii) photographs of the items being taken out for exhibition, attested by the Unit, shall be furnished in case of gems and jewellery;
(iv) goods unsold in the exhibition or display tour shall be imported within forty-five days from the completion of the exhibition or within such days as may be notified by the Central Government;
(v) the Unit shall file Bill of Entry for import of unsold goods as required in case of imports and it shall be assessed in the same manner and subject to same procedure as applicable to imported goods;
(vi) the goods so imported shall be allowed admission into the Unit free of duty, subject to establishment of identity of the goods with reference to export documents:
Provided that the examination of goods in such cases shall be restricted to ten per cent. of the consignments at random;
(vii) the Unit shall submit proof of inward remittance in respect of goods sold in the exhibition.
(10) A Unit may export goods and services, through a another Unit or merchant exporter or status holder or Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit subject to following conditions, namely.-
(i) goods or services shall be manufactured or developed in the Unit concerned;
(ii) requirements of positive Net Foreign Exchange Earning or any other conditions relating to authorized operations shall continue to be discharged by the Unit;
(iii) export orders so procured shall be executed within the provisions of these rules and the goods shall be directly transferred from the Unit to the airport or port of shipment;
(iv) fulfillment of positive Net Foreign Exchange Earning by the Unit shall be reckoned on the basis of the price at which the goods or services were supplied by the Unit to the status holder or merchant exporter or other Unit or Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit:
Provided that such export shall be counted towards fulfillment of obligations of the Unit only.
(11) The procedure for export through a merchant exporter or status holder shall be the following,.-
(i) goods shall be exported directly from the Special Economic Zone or through any other port where the merchant exporter files his shipping bill, in which case the goods shall move directly from the Special economic Zone to the said port of export on the basis of pink shipping bill as if these were movement of goods from one Warehouse to another;
(ii) export document shall contain the name of the merchant exporter or the status holder and the Unit;
(iii) merchant exporter or status holder, as the case may be, shall export goods under a free Shipping Bill and submit a disclaimer that no Drawback, Duty Exemption Pass Book credit or fulfillment of export obligation under any export promotion scheme under the Foreign Trade Policy shall be availed by him on the goods so exported.
(12) A Unit may transfer goods, including goods imported or procured from Domestic Tariff Area, to another Unit or Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio- technology Park Unit, subject to the following procedures, namely.-
(i) the receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Biotechnology Park Unit shall file Bill of Entry for warehousing, in quintuplicate along with invoice, procurement certificate issued by the Customs Officer incharge of the receiving Export Oriented Unit or Electronic Hardware Technology Park unit or Software Technology Park unit or Bio-technology Park unit and packing list with the Authorised Officer along with copy of the Letter of Approval and bonding licence:
Provided that in case the receiving Unit is a Special Economic Zone unit, Bill of Entry for home consumption shall be filed in place of Bill of Entry for warehousing
(ii) on the basis of such Bill of Entry assessed by the Authorised Officer, goods shall be allowed to be cleared to receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit or to a Unit in another Special Economic Zone ;
(iii) the receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit or Special Economic Zone Unit shall submit the rewarehousing certificate to the Authorised Officer having jurisdiction over the supplying Unit within forty-five days, failing which the Authorised Officer shall communicate this fact to the Officer of Customs or Excise having jurisdiction over the Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio- technology Park Unit or to the Specified Officer for demand of applicable duty from the receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio- technology Park Unit or Unit in another Special Economic Zone, as the case may be;
(iv) where supplying and receiving Units are located in the same Special Economic Zone, movement of goods including raw materials shall be allowed subject to maintenance of accounts by both receiving and supplying Units and no Bill of Entry shall be required to be filed.
(13) The Authorized Officer may permit a Unit to transfer goods to an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit or to a bonded warehouse, without payment of duty subject to following conditions, namely.-
(i) the Unit shall transfer the goods against Procurement Certificate issued by the Central Excise or Customs Officer in charge of receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit;
(ii) a warehousing Bill of Entry shall be filed by the Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit or by the supplying Special Economic Zone Unit on behalf of the receiving Export Oriented Unit or Software Technology Park Unit or Bio- technology Park Unit, as the case may be, with the Authorised officer;
(iii) export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit shall submit re-warehousing certificate duly signed by the Central Excise or Customs officer having jurisdiction over the receiving Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit within a period of forty five days from the date of clearance of the goods to the Authorised Officer;
(iv) where the Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio- Technology Park Unit fails to submit the re-warehousing certificate within the period of forty-five days of clearance of goods, the Authorised officer shall take up the matter with the Central Excise or Customs Officer of the receiving Unit to initiate recovery proceeding against such Export Oriented Unit or Software Technology Park Unit or Bio-Technology Park Unit, as the case may be;
(v) where goods admitted into a Unit from Domestic Tariff Area on which entitlement under Duty Exemption Pass Book Scheme had been availed are removed as such or after subjecting it to a process not amounting to manufacture to an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit directly or through a Unit in the same Special Economic Zone or another Special Economic Zone, the Customs duty equal to entitlement availed under the Duty Exemption Pass Book Scheme shall be paid.
CHAPTER V
CONDITIONS SUBJECT TO WHICH GOODS MAY BE REMOVED FROM A SPECIAL ECONOMIC ZONE TO THE DOMESTIC TARIFF AREA
47. Sales in Domestic Tariff Area.-
(1) A Unit may sell goods and services including rejects or wastes or scraps or remnants or broken diamonds or by- products arising during the manufacturing process or in connection therewith, in the Domestic Tariff Area on payment of Customs duties under section 30, subject to the following conditions, namely.-
(a) Domestic Tariff Area sale under sub-rule (1), of goods manufactured by a Unit shall be on submission of import licence, as applicable to the import of similar goods into India, under the provisions of the Foreign Trade Policy:
Provided that goods imported or procured from the Domestic Tariff Area and sold as such without being subjected to any manufacturing process shall be subject to the provisions of the Foreign Trade Policy as applicable to import of similar goods into India.
(b) Domestic Tariff Area sale under sub-rule (1) of rejects or scrap or waste or remnants arising during the manufacturing process or in connection there-with by the Unit shall not be subject to the provisions of the Import Trade Control (Harmonized System) of Classification of Export and Import Items:
Provided that the Central Government may notify restrictions, as it deems fit on all or any class of such goods mentioned under this clause.
(2) Scrap or dust or sweeping of gold or silver or platinum may be sent to Government of India Mint or Private Mint from a Unit and returned in standard bars in accordance with the procedure specified by Customs authorities or may be sold in the Domestic Tariff Area on payment of duty on the gold or silver or platinum content in the said scrap:
Provided that the value of samples of gold or silver or platinum sweepings or scrap or dust taken at the time of clearance and sent to the Government Mint or Private Mint for assaying and assessment shall be finalized on the basis of reports received from the Government Mint or Private Mint, as the case may be.
(3) Surplus power generated in a Special Economic Zone s Developer"s Power Plant in the SEZ or Unit s captive power plant or diesel generating set may be transferred to Domestic Tariff Area on payment of duty on consumables and raw materials used for generation of power subject to the following conditions, namely:-
(a) proposal for sale of surplus power received by the Development Commissioner shall be examined in consultation with the State Electricity Board, wherever considered necessary:
Provided that consultation with State Electricity Board shall not be required for sale of power within the same Special Economic Zone;
(b) norms for production of a unit of power shall be approved by the Approval Committee;
(c) sale of surplus power to other Unit or Developer in the same or other Special Economic Zone or to Export Oriented Unit or to Electronic Hardware Technology Park Unit or to Software Technology Park Unit or Bio-technology Park Unit, shall be without payment of duty;
(d) for sale of surplus power in Domestic Tariff Area, the Unit shall obtain permission from the Specified Officer and the State Government authority concerned;
(e) duty on sale of surplus power to the Domestic Tariff Area shall be as provided for in this rule.
(4) Valuation and assessment of the goods cleared into Domestic Tariff Area shall be made in accordance with Customs Act and rules made there under.
48. Procedure for Sale in Domestic Tariff Area.- (1) Domestic Tariff Area buyer shall file Bill of Entry for home consumption giving therein complete description of the goods and/or services namely, make and model number and serial number and specification along with invoice and packing list with the Authorised Officers:
Provided that the Bill of Entry for home consumption may also be filed by a Unit on the basis of authorization from a Domestic Tariff Area buyer.
(2) Valuation of the goods and/or services cleared into Domestic Tariff Area shall be determined in accordance with provisions of Customs Act and rules made there- under as applicable to goods when imported into India:
Provided that where the goods are supplied in Domestic Tariff Area by a contract manufacturing Unit on the instructions of an Overseas entity, the Bill of Entry shall be filed by the Domestic Tariff Area buyer on the basis of transaction value recorded on the commercial invoice issued by the Overseas entity.
(3) Where goods procured from Domestic Tariff Area by a Unit are supplied back to the Domestic Tariff Area, as it is or without substantial processing, such goods shall be treated as re-imported goods and shall be subject to such procedure and conditions as applicable in the case of normal re-import of goods from outside India:
Provided that in the case where such goods are supplied back to the Domestic Tariff Area, as it is, and where the import duty on such goods is Nil and while procurement of such goods no export benefits were allowed against such goods, the Unit may be allowed to supply back such goods to Domestic Tariff Area on the basis of invoice only and filing of Bill of Entry in such cases shall not be required.
49. Domestic Tariff Area removals - abatement of duties in certain cases.-
(1) A Unit may remove capital goods to Domestic Tariff Area after use in Special Economic Zone on payment of duty as under:-
(a) duty shall be levied on such goods on the depreciated value thereof and at the rate in force on the date of removal of the goods;
(b) depreciation in value shall be allowed for the period from the date of commencement of production or where such capital goods have been received in the Unit after such commencement of production from the date such goods have been put to use for production till the date of presentation of Bill of Entry for home consumption;
(c) depreciation shall be allowed in straight line method as specified below, namely-
(i) for computer and computer peripherals for every quarter in the first year at the rate of ten per cent. for every quarter in the second year at the rate of eight per cent. for every quarter in the third year at the rate of five per cent. for every quarter in the fourth and fifth year at the rate of one per cent.;
(ii) for capital goods other then computer and computer peripherals for every quarter in the first year at the rate of four per cent. for every quarter in the second year at the rate of three per cent. for every quarter in the third year at the rate of three per cent. for every quarter in the fourth and fifth year at the rate of two and half per cent. and thereafter for every quarter at the rate of two per cent.
Explanation.- For the purpose of computing depreciation for any part of a quarter, the rate applicable to such quarter in full shall be considered;
(2) Goods supplied by a Unit to Domestic Tariff Area on payment of duty may be brought back to the Unit for the purpose of repair within a period of six months from the date of clearance, or within such period as may be extended by the Specified Officer or within the warranty period whichever is later, on payment of duty on the value of repairs subject to the condition that the identity of goods is established to the satisfaction of the Specified Officer;
(3) Goods on which any export entitlements were availed at the time of procurement of goods may be supplied back to the Domestic Tariff Area on payment of duty equivalent to the export entitlements availed subject to the condition that the identity of goods being supplied back to the Domestic Tariff Area is established to the satisfaction of the Specified Officer:
Provided that where no export entitlements are availed, such goods may be supplied back to the Domestic Tariff Area without payment of duty.
(4) A Unit may remove following goods from the Special Economic Zone to Domestic Tariff Area without payment of duty: -
(a) goods imported and admitted into the Special Economic Zone after payment of applicable duty and such goods are cleared into Domestic Tariff Area, without any processing, subject to the condition that the identity of goods is established to the satisfaction of the Specified Officer;
(b) used packing materials except metal containers;
(c) Computer and computer peripherals, including printer, plotter, scanner, monitor, key board and storage units (whether imported or procured from Domestic Tariff Area) donated with the approval of the Specified Officer to the recognized non-commercial educational institutions or registered charitable hospitals or public libraries or public funded research and development establishments or organizations of Government of India or Government of a State or Union Territory, after two years of admission of goods and use by a Unit.
50. Temporary Removals to Domestic Tariff Area.-
(1) The Unit may temporarily remove following goods to Domestic Tariff Area without payment of duty, namely: -
(a) capital goods and parts thereof for repairs and return thereof;
(b) goods for display, export promotion, exhibition and return thereof;
(c) goods for job work, test, repair, refining and calibration and return thereof;
(d) laptop or notebook computers or video projection systems for use by authorized employees of a Unit or developer;
(e) any other goods with the prior approval of the Authorized Officer.
(2) A Unit may transfer goods to Domestic Tariff Area or abroad for repair or replacement or testing or calibration, quality testing and research and development purposes under intimation to the Specified Officer and on maintenance of records for movement of such goods.
(3) A Unit may transfer goods for quality testing or research and development purposes, to any recognized laboratory or institution, without payment of duty, on giving an undertaking to the authorized officer for the return of such goods:
Provided that if such goods have been consumed or destroyed in the process of testing or at the time of research and development, a certificate from the laboratory or institution to that effect shall be furnished to the Specified Officer by the Unit.
51. Procedure for temporary removals in Domestic Tariff Area.-
(1) Removal of goods for the activities covered under sub-rule (1) to (3) of rule 50 shall be undertaken by the Unit on the cover of serially-numbered preauthenticated challans, authenticated by the Managing Director or owner or working partner or the Company Secretary or by any person duly authorized in this behalf by the Company or owner or working partner;
(2) Before making use of pre-authenticated serial numbered challans, the serial numbers of the same shall be intimated to authorized officer.
(3) Identification marks, namely, make and model and serial number and specification of the goods received back after such test or repair or calibration or re- engineering or re-conditioning should match with those mentioned in the pre- authenticated challan issued by the authorized representative of the Unit and signed by the Authorized Officer at the time of taking out such goods into Domestic Tariff Area;
(4) The goods shall be brought back to the Special Economic Zone within one hundred and twenty days from the date of taking the goods out of the Special Economic Zone or within such extended period as may be permitted by the Specified Officer;
(5) If a Unit fails to bring back the goods into Special Economic Zone within the period specified in sub-rule (4), the duty applicable on such goods shall be paid by the Unit:
(6) Subject to the provisions in sub-rule (1), the Unit may remove goods, including capital goods, to another unit in the same or in another Special Economic Zone, or to Export Oriented Unit or to Electronic Hardware Technology Park Unit or to Software Technology Park Unit or Bio-technology Park Unit or to a domestic tariff area unit for test or repairs or calibration or reengineering or re- conditioning and return:
Provided that transfer of goods within the same Special Economic Zone shall be undertaken on maintenance of records by the supplying and receiving units.
(7) A Unit may take out lap top computers and video projection system(s) out of the Special Economic Zone temporarily for use by the authorized employees of such unit subject to following procedure, namely: -
(a) Unit shall account for the laptop computers or video projection system(s);
(b) Unit shall issue a certificate authorizing the employee by name and giving the full specification, namely, serial number and model number and make of the laptop computers and video projection system intended to be taken outside the processing area temporarily and a copy of the certificate shall be endorsed to Specified Officer and acknowledgement received by the Unit;
(c) Unit shall maintain a record of such certificate of authorization issued under clause (b) for temporary removal of laptop computer or video projection system.
52. Other Entitlements.- (1) Supplier of precious and semi-precious stones and synthetic stones and processed pearls from Domestic Tariff Area to Units shall be eligible for grant of Replenishment Licence as provided under the Foreign Trade Policy and Handbook:
Provided that the application for the Replenishment Licence shall be made to the Development Commissioner.
(2) Free on Board value of export of the Unit can be clubbed with Free on Board value of export of entrepreneur in the Domestic Tariff Area or vice versa for the purpose of according status holder certificate.
(3) A Unit may retain hundred per cent. of their export proceeds in their Foreign Currency account.
(4) Software units may 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 Special Economic Zone premises for this purpose.
(5) A Unit may install one fax machine imported or procured duty free at a place of its choice, outside the Special Economic Zone, subject to intimation of its location to the Specified Officer.
(6) The Unit may install personal computers not exceeding two in number imported or procured duty free in the registered or administrative office and the Unit may also install equipments like modem etc. required for the purpose of electronic connectivity.
(7) For information technology and information technology enabled services, persons authorized by the software units may access the facility installed in the Unit through communication links.
CHAPTER - VI
FOREIGN EXCHANGE EARNING REQUIREMENTS AND MONITORING
53. Net Foreign Exchange Earnings.- The Unit shall achieve Positive Net Foreign Exchange to be calculated cumulatively for a period of five years from the commencement of production according to the following formula, namely:-
Positive Net Foreign Exchange = A B >0
where:
A: is Free on Board value of exports, including exports to Nepal and Bhutan against freely convertible currency, by the Unit and the value of following supplies of their products, namely: -
(a) supply of goods against Advance Licence or Duty Free Replenishment Certificate under the Duty Exemption or Remission Scheme or Diamond Imprest Licence under the Foreign Trade Policy;
(b) supply of capital goods to holders of licence under the Export Promotion Capital Goods scheme under the Foreign Trade Policy;
(c) supply of goods to projects financed by multilateral or bilateral agencies or funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies or funds, where the legal agreements provide for tender evaluation without including the customs duty;
(d) supply of capital goods, including those in unassembled or disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of production and spares to the extent of ten per cent. of the free on rail value to fertilizer plants;
(e) supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty;
(f) supply of goods to the power projects and refineries not covered in (e) above;
(g) supply to projects funded by United Nations Agencies;
(h) supply of goods to nuclear power projects through competitive bidding as opposed to International Competitive Bidding;
(i) supply made to bonded warehouses set up under the Foreign Trade Policy or under section 65 of the Customs Act and free trade and warehousing zones, where payment is received in foreign exchange;
(j) supply against special entitlements of duty free import of goods under the Foreign Trade Policy;
(k) export of services by services units including services rendered within Special Economic Zone or services rendered in the Domestic Tariff Area and paid for in free foreign exchange or such services rendered in Indian Rupees which are otherwise considered as having been paid for in free foreign exchange by the Reserve Bank of India;
(l) supply of Information Technology Agreement items and notified zero duty telecom or electronic items, namely, Color Display Tubes for monitors and Deflection components for colour monitors or any other items as may be notified by the Central Government;
(m) supply to other units and Developers in the same or other Special Economic Zone or Export Oriented Unit or Electronic Hardware Technology Park or Software Technology Park Units or Bio-technology Park Unit provided that such goods and services are permissible for import or procurement by such units and Developers;
(n) supply of goods to Domestic Tariff Area against payment in foreign exchange from the Exchange Earners Foreign Currency account of the Domestic Tariff Area buyer or Free Foreign Exchange received from overseas;
(o) supply of goods against free foreign exchange by a Free Trade and Warehousing Zone Unit;
Explanation: For the proposes of this sub-rule, the supplies under clause (m) shall be against procurement certificate, as applicable and the supplies under clauses (d) to (h) and (j) shall be as per the terms and conditions of the respective duty exemption notified by the Central Government, in the Ministry of Finance; and
B: consist of sum of the following:-
(a) sum total of the Cost Insurance and Freight value of all imported inputs used for authorized operations during the relevant period and the Cost Insurance and Freight value of all imported capital goods including goods purchased on high seas basis even though paid for in Indian Rupees and the value of all payments made in foreign exchange by way of export commission, royalty, fees, dividends, interest on external commercial borrowings during the first five year period or any other charges;
(b) value of goods obtained from other Unit or Export Oriented Unit or Electronic Hardware Technology Park or Software Technology Park Unit or Bio-technology Park Unit or from bonded warehouses or procured from international exhibitions held in India or precious metals procured from nominated agencies;
(c) the Cost Insurance Freight value of the goods and services, including pro- rata Cost Insurance Freight of capital goods, imported duty free or leased from a leasing company or received free of cost and or on loan basis or on transfer for the period they remain with Unit;
Explanation: - for the purposes of this sub-rule "Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials.
(d) for annual calculation of Net Foreign Exchange, value of imported capital goods and lump sum payment of foreign technical know-how fee shall be amortized at the rate of ten per cent. every year from the first year to tenth year.
54. Monitoring of performance.- (1) Performance of the Unit shall be monitored by the Approval Committee as per the guidelines given in Annexure appended to these rules.
(2) In case the Approval Committee come to the conclusion that a Unit has not achieved positive Net Foreign Exchange Earning or failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking, without prejudice to the action that may be taken under any other law for the time being in force, the said Unit shall be liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act, 1992
CHAPTER VII
APPEAL
55. Form of Appeal.- Any person aggrieved by an order passed by the Approval Committee under section 15 or against cancellation of Letter of Permission under section 16, may prefer an appeal to the Board in the Form J.
56. Time within which appeal is to be preferred.- (1) An appeal shall be preferred by the aggrieved person within a period of thirty days from the date of communication to him of the order of the Approval Committee under rule 18;
(2) When the appeal is preferred after the expiry of the period of thirty days specified in sub- rule (1), it shall be accompanied by an application supported by an affidavit setting forth the facts on which the appellant relies to satisfy the Board that he has sufficient cause for not preferring the appeal within the said period of thirty days:
Provided that if the Board is satisfied that the appellant had sufficient cause for not preferring the appeal within the aforesaid period, it may for reasons to be recorded in writing, admit the appeal after the expiry of the aforesaid period but before the expiry of forty-five days from the date of communication to him of the order of the Approval Committee.
57. Payment of fees .- (1) Every appeal shall be accompanied by a fee of rupees two thousand and five hundred;
(2) The amount of fees shall be deposited by way of a Demand Draft, drawn in favour of Pay and Accounts Officer, Department of Commerce, New Delhi.
58. Contents of appeal. - Every appeal filed under rule 55 shall be written in English or Hindi and shall set forth concisely under distinct heads the grounds of appeal and such grounds shall be numbered consecutively.
59. What to accompany form.- Every appeal shall be filed in the Form J in duplicate and shall be accompanied by two copies (at least one of which shall be certified copy) of the order of the Approval Committee appealed against and other documents to support the grounds of objection mentioned in the appeal:
Explanation:- For the purpose of this rule "certified copy" includes the copy which was originally supplied to the appellant as well as a photostat copy thereof duly authenticated by the appellant or his authorised representative as a true copy.
60. Filing of affidavits. - Where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit.
61. Rights of Appellant to appear before the Board.- Every appellant may appear before the Board in person or authorize one or more chartered accountants or company secretaries or cost accounts or legal practitioners or any of his or its officers to present his or its case before the Board.
Explanation: for the purpose of this rule,-
(a) chartered accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 and who has obtained a certificate of practice under subsection (1) of section 6 of that Act;
(b) company secretary means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
(c) cost accountant means a cost accountant as defined in clause (b) of sub- section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
(d) legal practitioner means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.
62. Authorisation to be filed.- An authorised representative appearing for the appellant at the hearing of an appeal shall file an authorization from the appellant to the Board before the commencement of the hearing.
63. Procedure for filing appeal.- (1) An appeal shall be preferred by the appellant or his authorised representative and be sent to the Board of Approval (Deputy Secretary, Ministry of Commerce and Industry, Department of Commerce, Udyog Bhavan, New Delhi 110011);
(2) An appeal sent by post under sub-rule (1) shall be deemed to have been preferred to the Board on the day on which it is received in the office of the Member Secretary to the Board at Delhi.
64. Furnishing of information and documents. - (1) The Board may, before considering the appeal, require the appellant or the Approval Committee or both to furnish such further information and documents, as it considers necessary.
(2) Parties concerned shall furnish such information and documents within thirty days of such order.
65. Date and place of hearing of appeal to be communicated.- The Board shall communicate, before considering the appeal, to the appellant the date and place of the hearing of the appeal.
66. Hearing of appeal.- (1) On the day fixed or on any other day to which the hearing may be adjourned, the appellant shall be heard in support of the appeal. The Board shall, then, if necessary, hear the Approval Committee or its authorised representative against the appeal and in such case the appellant shall be entitled to reply.
(2) In case the appellant does not appear in person or through an authorised representative when the appeal is called for hearing, the Board may dispose of the appeal on merits:
Provided that where an appeal has been disposed of as provided above and the appellant appears afterwards and satisfies the Board that there was sufficient cause for his non-appearance, when the appeal was called for hearing, the Board shall make an order setting aside the ex parte order and restore the appeal.
67. Orders by the Board.- The Board shall, -
(a) after considering the appeal preferred to it under rule 55;
(b) after considering further documentary evidence referred to in rule 64, and
(c) after giving hearing under rule 66;
pass such orders or give such directions as may be necessary or expedient to give effect to, or in relation to, its orders.
68. Order to be signed and dated.- The Order of the Board shall be in writing and shall be signed and dated.
69. Order to be communicated to the party.- The Board shall, after the order is signed, cause it to be communicated to the appellant and to the Approval Committee.
CHAPTER VIII
MISCELLANEOUS
70. Identity Cards.- (1) The entry of persons to the processing area of the Special Economic Zone shall be regulated by the Development Commissioner through issue of identity cards.
(2) The identity card shall be valid upto a period of five years and shall be issued, in the format given in Form K, to the entrepreneurs and regular employees of the Units:
Provided that when any employee who has been issued an identity card ceases to be in employment of the Unit or Developer, the said identity card shall be surrendered forthwith and shall be deemed to be invalid from such date;
(3) Temporary identity card may be issued by the Development Commissioner to the casual visitors and contractors and a proper record of such entries shall be maintained at the Special Economic Zone Gate;
71. Foreign Exchange Remittances.- Export value of goods, software and services may be realized and repatriated as per instructions of the Reserve Bank of India issued from time to time.
72. Revival of sick units.- (1) A unit which has been declared sick by the appropriate authority shall submit a revival package through Development Commissioner to Board for consideration and the Board shall consider the extension in the period for fulfillment of Positive Net Foreign Exchange for a further period up to a maximum of five years at the prevalent norms.
(2) On extension of the period, unutilized raw material and imported or domestically procured capital goods shall be allowed to be carried forward at their original value and the Bond-cum-Legal Undertaking executed by the unit shall be revised accordingly.
(3) In case a new entity is willing to takeover all the assets and liabilities of a sick Unit, transfer of such assets and liabilities as provided under sub-rule (1) shall be considered by the Board.
(4) Where a Unit is granted extension of period for fulfillment of Positive Net Foreign Exchange Earning under sub-rule (1), the space would continue to be in its possession.
(5) Where a Unit is taken over by another unit, the liability shall pass on to the new unit which is taking over the sick unit.
73. For the period when the Specified Officer is not posted in a Special Economic Zone, an officer of customs, not below the rank of a Gazetted Officer of Customs, authorized by Development Commissioner shall discharge duties and functions of the Specified Officer.
74. Exit of Units.- (1) The Unit may opt out of Special Economic Zone with the approval of the Development Commissioner and such exit shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock:
Provided that if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation), Act, 1992.
(2) The following conditions shall apply on the exit of the Unit, namely.-
(i) Penalty imposed by the competent authority would be paid and in case an appeal against an order-imposing penalty is pending, exit shall be considered if the unit has obtained a stay order from competent authority and has furnished a Bank Guarantee for the penalty adjudicated by the appropriate authority unless the appellate authority makes a specific order exempting the Unit from this requirement;
(ii) In case the Unit has failed to fulfill the terms and conditions of the Letter of Approval and penal proceedings are to be taken up or are in process, a legal undertaking for payment of penalties, that may be imposed, shall be executed with the Development Commissioner;;
(iii) The Unit shall continue to be treated a unit till the date of final exit.
(3) In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gem and other materials available for manufacture of jewellery shall be handed over to an agency nominated by the Central Government at a price to be determined by that agency.
(4) Development Commissioner may permit a Unit, as one time option, to exit from Special Economic Zone on payment of duty on capital goods under the prevailing Export Promotion Capital Goods Scheme under the Foreign Trade Policy subject to the Unit satisfying the eligibility criteria under that Scheme.
(5) Depreciation norms for capital goods shall be as given in sub-rule (1) of rule 49.
75. Self Declaration.- Unless otherwise specified in these rules all inward or outward movement of goods into or from the Zone by the Unit or Developer shall be based on self declaration made and no routine examination of these goods shall be made unless specific orders of the Development Commissioner or the Specified Officer are obtained.
76. The services for the purposes of
[OLDsub-clause
] clause (z) of section 2 shall be the following, namely: -
Trading, warehousing, research and development services, computer software services, including information enabled services such as back-office operations, call centers, content development or animation, data processing, engineering and design, graphic information system services, human resources services, insurance claim processing, legal data bases, medical transcription, payroll, remote maintenance, revenue accounting, support centers and web-site services, off-shore banking services, professional services (excluding legal services and accounting) rental/leasing services without operators, other business services, courier services, audiovisual services, construction and related services, distribution services (excluding retail services), educational services, environmental services, financial services, hospital services, other human health services, tourism and travel related services, recreational, cultural and sporting services, entertainment services, transport services, services auxiliary to all modes of transport, pipelines transport.
Explanation - The expression "Trading", for the purposes of the Second Schedule of the Act, shall mean import for the purposes of re-export.
77. Procedure for withdrawal or cancellation of exemptions, concessions, drawbacks or any other benefits to a Unit.-
(1) Where the Letter of Approval has been cancelled under section 16, the Unit shall furnish to the Development Commissioner, within thirty days of the cancellation of the Letter of Approval, the details of the exemptions, drawbacks, concessions and any other benefit in respect of the Capital Goods, finished goods, raw materials and consumables lying in stock, relatable to the Unit and the Development Commissioner shall direct the Specified Officer to determine the amount to be remitted to the Government by the Unit in the form of Customs Duty.
(2) The Specified Officer shall, based on the details provided by the Unit shall assess and communicate the quantum of amount to be remitted by the unit for clearing the said goods in the Domestic Tariff Area, which shall be remitted within a period of three months from the date of communication:
Provided, however, that this period of three months may be extended for a further period not exceeding three months, by the Development Commissioner for valid reasons to be recorded in writing:
Provided further that the amount to be remitted shall not exceed the exemptions drawbacks and concessions availed of by the Unit on such goods and/or the Customs Duty payable on such finished goods when imported into India.
(3) Notwithstanding the provisions of sub-rule (1) and (2) the Unit shall export or transfer the said goods, against duty-free licence, without remitting the exemptions, drawbacks, concessions or any other benefits availed in respect of such goods:
Provided that in respect of Capital Goods, transferred against Export Promotion Capital Goods Scheme licence, the Unit shall remit the duties as may be applicable under the provisions of the Export Promotion Capital Goods Scheme.
(4) Where in the case of an entrepreneur whose Letter of Approval has been cancelled and who fails to comply with the conditions of removal of all goods within the prescribed period as provided in sub-rule (2), the Development Commissioner shall take over possession of such goods excluding hypothecated goods and dispose off the same through public auction subject to the condition that the sale proceeds of such auction shall be deposited in a designated account and apportionment of such proceeds shall take place in the manner as approved by the Central Government.
(5) An entrepreneur whose Letter of Approval has been cancelled and has failed to meet positive net foreign exchange earning as required under rule 52, it shall be liable for payment of penalty as may be imposed by the adjudicating authority in accordance with the provisions of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992).
Provided that raw materials, components, consumables and spares procured from Domestic Tariff Area held in stock at the time of cancellation of Letter of Approval, on which any export entitlements were availed, shall be removed to the Domestic Tariff Area on payment of additional duty equivalent to the export entitlements availed:
Provided further that goods on which no export entitlements or duty exemption were availed on their procurement from Domestic Tariff Area, shall be removed to Domestic Tariff Area, without payment of duty.
(This rule has been amended vide NOTIFICATION DATE 10/08/2006)
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