Govt Issues Notification On One-time Waiver of Customs Duty and Inspection Requirement

Govt Issues Notification On One-time Waiver of Customs Duty and Inspection Requirement

The Ministry of Commerce & Industry notified the one-time waiver of Customs Duty and inspection requirement in debonding of Information Technology (IT)/Information Technology Enabled Services (ITES) units in Special Economic Zones (SEZs) and exemption on the filing of Bill of Entry (BOE) for goods sold by IT/ITES in the SEZ unit which were initially procured on payment of duty and not used for authorized operations

It was recommended by the National Association of Software and Service Companies (NASSCOM) that according to the current debonding process, a physical inspection of duty-free goods is required to be done by the authorities for ascertaining the tax liability based on the remaining life of such equipment.

Considering the fact that the majority of employees are working from home and hence using the duty-free assets, the need for a physical inspection of duty-free assets would be burdensome on the operational and administrative units.

Given consideration to the fact of short shelf life and high depreciation value for IT assets, it is suggested that the Government of India should consider a one-time waiver of customs duty and inspection requirement aiming to expedite the process of surrendering SEZ benefits.

It was remarked by the government that as part of exiting from SEZ scheme under rule 74 of SEZ Rules, the SEZ Customs officers do the physical inspection of duty-free goods to ascertain tax liability depending upon the remaining life of such equipment.

It was further recommended that the existing IT/ITES SEZ Unit may opt for simple payment of duty without physical inspection subject to the condition that they produce all relevant imports and other documents of goods to establish their identity.

It was suggested by the NASSCOM that goods imported/procured by IT/ITES/SEZ unit are allowed to the Domestic Tariff Area sale (DTA) without payment of customs duty and filing BOE for homes consumption according to Rule 49 (4)(a) read with proviso to Rule 48 (3) of SEZ Rules, 2006.

The AO or SO are insisting to file BOE for home consumption with nil duty ever for DTA sale of goods which were initially procured on payment of applicable duties and not used for authorized operations. Issuance of instructions regarding the filing of BOE is not required for goods sold by SEZ units that were initially procured on payment of duty and not used for authorized operations.

It was remarked by the government that if an IT/ITES/SEZ units procured goods from DTA and supplied back to DTA under the provisions of Rule 48(3) of SEZ Rules, 2006, the movement of the goods may be done based on the invoice only and without filing BOE.

Whereas if an IT/ITES units import goods into SEZ after paying applicable duty and further clear it into DTA under Rule 49(4) (a) of SEZ rules, 2006 it would amount to import into DTA as per Customs Act, mandating in such cases the filing of BOE.