Customs Circular No. 88 dated 17^th December 2002

I am directed to invite your attention to Paragraphs 6.9 (e) and 7.8 (c) (iv) of the Exim Policy 2002-2007 in terms of which supply of goods in DTA by EOU/ EPZ/ SEZ units against special entitlements of duty free import of goods is to be counted towards fulfillment of NFEP/ EP in case of EOU/ EPZ units and NFE in case of SEZ units. In the Customs and Excise notifications governing EOU/EPZ Schemes, a suitable provision has been provided for allowing EOUs and units in EPZs to clear manufactured goods against such special entitlements without payment of duty. Similar facility has also been allowed to the trading units in SEZ. In this connection, it has been brought to the notice of the Board that the manufacturing units in SEZ are not being allowed to clear manufactured goods in DTA against special duty free entitlements without payment of duty on the ground that the notifications relating to SEZ do not provide for such duty free clearance facility.

2.     The matter has been examined by the Board. As mentioned above, in the notifications (Nos. 137/2000-Cus. and 52/2000-CE. both dated 19-10-2000) governing SEZ scheme, only trading SEZ units have been allowed the facility to supply goods against special duty free entitlements without payment of duty and the notifications do not mention manufacturing SEZ units. This gives an impression that this facility is not available to the manufacturing units in SEZ. However, this was never the intention of the Government. Further, there is no reason to deny this facility to SEZ manufacturing units, which is otherwise available to SEZ trading units and EOU/ EPZ units.

3.     In view of the of the position explained above, I am directed to convey that manufacturing units in SEZ may also be allowed to clear manufactured goods in DTA against special entitlement of duty free import of goods as per paragraph 7.8 (c) (iv) of the Exim Policy 2002-2007 without payment of duty. It is clarified that special entitlement of duty free import of goods covers only the goods specified under Serial No. 167 of the notification No. 21/2002-Cus, dated 1-3-2002. Therefore, only those goods specified under Sl. No. 167 of notification No 21/2002-Cus, dated 1-3-2002 should be allowed to be cleared against special entitlement of duty free import of goods, subject to fulfilment of conditions as specified in the said notification.

4.     Wide publicity may be given by issue of a Public Notice in this regard.

5.     Difficulties, if any, faced in the implementation of above instructions, may be brought to the notice of the Board at an early date. Kindly acknowledge receipt of this Circular.