No exemption of SAD on goods cleared from SEZ/FTWZ to DTA for self consumption

[Bimal jain]

Dear Professional Colleague,

No exemption of SAD on goods cleared from SEZ/FTWZ to DTA for self consumption

The Central Board of Excise & Customs (“the Board”) has issued Circular No. 44/2013-Customs dated December 30, 2013 (“the Circular”) to provide clarification on whether the benefit of exemption of Special Additional Duty (“SAD”) would be available when goods are cleared from Special Economic Zone/ Free Trade Warehousing Zone (“SEZ/FTWZ”) to a Domestic Tariff Area unit (“DTA”) for self-consumption i.e. in the nature of stock transfer from SEZ/FTWZ.

It may be noted that Notification No. 45/2005-Customs dated May 16, 2005 (“the Notification”) exempts SAD on the goods cleared from SEZ/FTWZ and brought into DTA. However, no exemption is available if such goods are exempt from payment of sales tax when sold in DTA.

The Board has clarified vide the Circular that benefit of exemption of SAD will not be available in terms of the Notification in cases where the SEZ/FTWZ unit has cleared goods to the DTA unit for self-consumption i.e. otherwise than for sale. Therefore, in such cases, SAD will be leviable.

Open Issue:

If the goods transferred from SEZ/FTWZ to the DTA unit, are further utilized for manufacture and the manufactured final products are sold on payment of appropriate sales tax then exemption from SAD in terms of the Notification should continue but the clarification provided in the Circular will start unwanted dispute & litigation.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards.
 
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: bimaljain at the rate of hotmail.com

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