Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
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Circular No.44/2013 - Customs
New Delhi, the 30th December, 2013
To,
Chief Commissioners of Customs (All),
Chief Commissioners of Central Excise and Customs (All),
Director General, Directorate General of Revenue Intelligence,
Commissioners of Customs (All),
Commissioners of Central Excise and Customs (All).
Madam/Sir,
Subject: Exemption from Special Additional Duty of Customs (SAD) on goods
cleared from the SEZ / FTWZ into the DTA – Clarification – Regarding.
It has been brought to the notice of the Board that varying practices are being
followed by the field formations regarding exemption from SAD on goods cleared
from SEZs / Free Trade Warehousing Zones (FTWZ) into the DTA under
notification
No.45/2005-Customs, dated 16.05.2005. The issue raised is whether the benefit of
exemption from SAD under this notification would be available when a DTA unit
imports goods and routes it through SEZ / FTWZ for self-consumption i.e. in the
nature of stock transfer from SEZ / FTWZ.
- The matter has been examined by the Ministry.
Notification No.
45/2005-Customs, dated 16.05.2005 exempts from SAD goods cleared from SEZ / FTWZ
and brought into DTA. The notification clearly states that the exemption shall
not be available if such goods, when sold in DTA, are exempt from payment of
sales tax / VAT. Prior to the issue of notification, it was brought to the
notice of the Ministry that in some States sales tax is exempted in respect of
DTA clearances by SEZ units. Further, in certain cases, such as stock transfer
of goods from an SEZ unit to its unit in the DTA, no sales tax is levied. Hence,
a condition was imposed that the exemption from SAD would be available only if
such goods, when sold in the DTA, are not exempted from VAT/ sales tax. The
intention was to avoid double taxation.
- In the case of clearances which are in the nature of stock transfer from SEZ
/ FTWZ unit to the DTA unit for self-consumption i.e. otherwise than for sale as
such, no sales tax / VAT is leviable on such a transaction. As no sales tax /
VAT is leviable on the said transaction, SAD is payable.
- In view of the above, it is clarified that the benefit of SAD exemption on
goods cleared from the SEZ / FTWZ unit into DTA unit on stock transfer basis for
self-consumption i.e. otherwise than for sale as such, is not available under
notification No.45/2005-Customs, dated 16.05.2005. In such cases, SAD would be leviable.
- Trade Notice/Public Notice may be issued to the field formations and
taxpayers.
- Difficulties faced, if any, in implementation of this Circular may be brought
to the notice of the Board.
(P.K. Mohanty)
Joint Secretary (TRU)
F. No. DGEP/SEZ/32/2011
F. No.354/261/2013-TRU