Special Economic Zones (Customs Procedures) ( Fourth Amendment) Regulations, 2004 - 062/04 - Customs - Non Tariff

Special Economic Zones (Customs Procedures) ( Fourth Amendment) Regulations, 2004 11 th May, 2004 Notification No. 62 /2004 - Customs (N.T.) In exercise of the powers conferred by sub-section (1) of section 157, read with sub-section (2) of section 76C of the Customs Act, 1962 (52of 1962), the Board hereby makes the following regulations further to amend the Special Economic Zones (Customs Procedures) Regulations, 2003, namely:- 1. (1) These regulations may be called the Special Economic Zones (Customs Procedures) ( Fourth Amendment) Regulations, 2004. (2) They shall come into force on the day of their publication in the Official Gazette. 2. In the Special Economic Zones (Customs Procedures) Regulations, 2003,- (A) in regulation 2,- (i) in clause (f), for the words " permitted by the Commissioner of Customs" the words " approved by the Board of Approvals" shall be substituted; (ii) after clause(n), the following clause shall be inserted , namely:- '(nn) " Unit Approval Committee", in respect of a special economic zone means a committee set up for the special economic zone as notified in the Official Gazette by the Central Government in the Ministry of Commerce and Industry' ; (B) in regulation 3, for sub-regulation (3), the following sub -regulation shall be substituted, namely: "(3) Each zone unit shall have separate establishment distinct and identifiable or distinct and partitioned, from other zone unit"; (C) for regulation 10, following regulation shall be substituted , namely:- '10. Procurement of goods by zone unit or developer from domestic tariff area.- (1) The zone unit or developer, as the case may be, may procure any goods from domestic tariff area for carrying out authorised operation subject to the following conditions, namely:- (i) the domestic tariff unit supplying the goods to the zone unit or developer, or the zone unit or developer on behalf of the domestic tariff area unit, as the case may be, shall file a bill of export giving therein complete description, model, make, specifications, nature of goods such as capital goods, raw materials, spares, consumables, with specially stamped endorsement as "special economic zone cargo" alongwith invoice, packing list and purchase order for noting and assessment of the bill of export in the zone; (ii) the bill of export shall be assessed by the customs officer in the zone; (iii) the assessed bill of export shall be submitted to the proper officer having jurisdiction over the domestic tariff area unit and the same shall be treated as permission for transfer of goods to the zone; (iv) the domestic tariff area unit supplying goods to the zone unit or the developer, as the case may be, shall be allowed to remove the goods on the cover of ARE-I and the assessed bill of export, giving therein complete description, model, make, serial number, specifications and other relevant particulars ; (v) the goods so brought to the zone may be allowed admission into the zone on the basis of assessed of bill of export and ARE-I and a copy of bill of export and ARE-I, with an endorsement that goods have been admitted in full into the zone, shall be forwarded to the Central Excise Superintendent having jurisdiction over the domestic tariff area unit within forty-five days, failing which the Superintendent shall raise demand of duty against the domestic tariff area unit; (vi) where domestic tariff area unit or zone unit, on behalf of such domestic tariff area unit, has filed a bill of export under claim of duty drawback or duty entitlement passbook scheme and the domestic tariff area unit does not intend to claim duty drawback or duty entitlement passbook scheme credit, a disclaimer to this effect may be given to the zone unit, and on the basis of such disclaimer given by the domestic tariff area unit, duty drawback or duty entitlement passbook scheme credit may be claimed by the zone unit; (vii) the proper officer in the zone shall assess the bill of export in the same manner as it is assessed in the case of export of goods under claim of duty drawback or duty entitlement passbook scheme credit or no claim, as the case may be, and instruction issued under respective export promotion scheme shall apply mutatis mutandis in respect of these goods ; and valuation of such goods shall be done in terms of section 14 of the Act; (viii) before allowing admission of such goods in to the zone, the goods shall be examined by the customs officer of the zone in respect of description, quantity, marks, model and other relevant particulars. given in the ARE-I and bill of export, invoice and packing list and also as per the examination norms laid down in respect of export goods and instruction issued by the Board in this behalf from time to time; (ix) the duty drawback or duty entitlement passbook scheme credit against such supply of goods by domestic tariff area unit to the zone unit or to the developer shall be admissible only when the payment for such supply of goods to the zone unit is received in freely convertible foreign currency; (x) a copy of the bill of export and ARE-I with endorsement of zone customs authorities on it to the effect that goods have been admitted in full in the zone shall be treated as proof of export; (xi) where the goods are intended to be procured by the zone unit or developer from a trader or merchant exporter, the procedure as stated hereinabove shall apply mutatis mutandis, including filing of bill of export except that the goods shall not be required to be brought to the zone under the cover of ARE-I and assessed copy of bill of export shall not be required to be submitted to the jurisdictional Central Excise authority for removal of goods, from the premises of the trader or merchant exporter. (2) Notwithstanding any thing contained in sub- regulation (1), where the goods are procured by a zone unit or developer from a domestic tariff area unit and where either the zone unit or the developer or the domestic tariff area unit do not claim duty drawback or duty entitlement pass book scheme credit or where such supplies from domestic tariff area unit to the zone unit or developer, as the case may be, are not against fulfillment of export obligation under any export promotion scheme or where no export benefits against such supplies are claimed either by the domestic unit supplying the goods or the zone unit or developer, as the case may be, then, the zone unit or the developer may procure any such goods from domestic tariff area for carrying out authorised operation subject to the following conditions, namely:- (i) zone unit or developer shall submit application to the proper officer of the zone for issuance of pre-authenticated Domestic Procurement Certificate and on the basis of such application, the proper officer of the zone or any other officer authorised by him in this regard shall issue to the zone unit or developer, as the case may be pre-authenticated Domestic Procurement Certificate in the Form specified in Annexure -I to these regulations; (ii) the Superintendent of Central Excise having jurisdiction over the domestic tariff area unit shall , on the basis of Domestic Procurement Certificate issued under clause (i), allow the domestic tariff area unit to remove the goods under the cover of ARE-I ; (iii) the ARE-I shall contain complete description of goods such as model, make, serial number, technical specifications; (iv) the goods allowed to be removed under clause (ii) may be allowed admission into the zone on the basis of ARE-I and a copy of ARE-I, with an endorsement that goods have been admitted in full into the zone, shall be forwarded to the Superintendent of Central Excise having jurisdiction over the domestic tariff area unit within a period of forty-five days from the date of removal of goods from the factory or warehouse in the domestic tariff area , failing which the proper officer in charge of zone unit shall raise demand of duty against such domestic tariff area unit; (v) before allowing admission of such goods in to the zone, the goods shall be examined by any officer of customs authorised in this behalf by the proper officer of the zone in respect of description, quantity, marks, model and other relevant particulars given in the ARE-I and invoice and packing list and also in accordance with the examination norms laid down in respect of export goods and instruction issued by the Board in this behalf from time to time; (3) Nothing contained in sub-regulations (1) and (2) shall apply in cases where the duty paid goods are procured from domestic tariff area and no duty concession or export incentives are being claimed against such supplies by the domestic supplier or the zone unit or the developer, as the case may be, and such goods shall be allowed admission into the zone on the basis of invoice issued by the supplier of the goods and concerned transport documents, if any. Explanation 1.- for the purpose of this regulation, ''export incentives'' includes drawback, duty entitlement passbook scheme, rebate, advance license or counting of proceeds as export earnings or counting of proceeds as fulfillment of export obligation under any scheme. Explanation 2.- For the purposes of this regulation, " ARE-I" means Form ARE-I referred to in notification No 40/2001-Central Excise (N.T), dated the 26 th June, 2001.' (D) in regulation 12, for the words " goods namely, capital goods or manufactured goods" the words " goods including capital goods or manufactured goods" shall be substituted .; (E) in regulation 15, in sub-regulation (1), in clause (i), the words " alongwith advance remittance certificate duly certified by the bank" shall be omitted; (F) in regulation 20, the words " subject to condition that no wastage or manufacturing loss against such exchange of jewellery shall be permissible;" shall be omitted; (G) for regulation 21, the following regulation shall be substituted , namely:- " 21. Removal of goods from a zone unit to an export oriented undertaking or software technology park unit or electronic hardware technology park unit .- (1) The proper officer may permit a zone unit to transfer goods to an export oriented undertaking or software technology park unit or electronic hardware technology park unit, as the case may be, without payment of duty for the purpose of manufacture and export, or for export or for use within the unit subject to the following conditions, namely:- (i) the zone unit shall make such transfer against the procurement certificate issued by the proper officer in charge of receiving export oriented undertaking or software technology park unit or electronic hardware technology park unit, as the case may be; (ii) a warehousing bill of entry shall be filed by the export oriented unit or software technology park unit or electronic hardware 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 electronic hardware technology park unit, as the case may be, with the officer of the customs authorised in this behalf by the proper officer the zone; (iii) export oriented undertaking or software technology park unit or electronic hardware technology park unit shall submit re-warehousing certificate duly signed by the proper officer, having jurisdiction over the receiving export oriented undertaking or software technology park or electronic hardware technology park unit within a period of forty five days from the date of clearance, to the officer of the customs authorised in this behalf by the proper officer of the zone; (iv) where export oriented undertaking or software technology park unit or electronic hardware technology park unit fails to submit the re-warehousing certificate within a period of forty-five days from the day of clearance of goods, officer of the customs concerned in the zone shall take up the matter with the jurisdictional proper officer of the receiving unit, to initiate recovery proceeding against such export oriented undertaking, software technology park unit or electronic hardware technology park unit, as the case may be; (v) where goods admitted into zone unit from domestic tariff area, on which benefit under duty exemption pass book scheme or duty draw back has been availed, are removed as such or after subjecting it to a process not amounting to manufacture, to an export oriented undertaking or software technology park unit or electronic hardware technology park unit directly by the zone unit or through any unit in the same zone or another zone, the duty equal to benefit availed under duty exemption pass book scheme or duty drawback shall be liable to be paid." (H) in regulation 22,- (i) in sub-regulation (4), for the word, bracket and figure " clause(4)" the word, bracket and figure " sub-regulation (3)" shall be substituted; (ii) for sub- regulation (6), the following sub-regulation shall be substituted, namely:- ' (6) Where the goods so procured from domestic tariff area by the zone 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 zone 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. Explanation.- For the purpose of this regulation "export benefits" includes drawback, duty entitlement passbook scheme, rebate, advance license or counting of proceeds as export earnings or counting of proceeds as fulfillment of export obligation under any scheme.' ; (I) in regulation 24, for sub-regulation (5), the following sub-regulation shall be substituted, namely:- " (5) Subject to such condition as the proper officer of the zone may specify and subject to such procedure, as may be laid down by the proper officer of the zone from time to time, the zone unit shall be allowed to take limited quantities of goods manufactured or produced into domestic tariff area without payment of duty for the purpose of display, market promotion, export promotion, exhibition and return thereof within the period of time as specified by such proper officer of the zone: Provided that in case of failure of the zone unit to bring back the goods in the zone within the period as specified in this behalf by the proper officer, the zone unit shall pay the duty applicable on such goods under the provisions of clause (b) of section 76F of the Act." ; (J) in regulation 25,- (a) in sub-regulation (1),- (i) in clause (iii), for the word " substantial" the word " entire" shall be substituted; (ii) in clause (vii) , for the proviso, the following proviso shall be substituted, namely:- " Provided that no such bank guarantee shall be required in case of status holder zone unit having an unblemished track record or a unit which has not come to the adverse notice of Customs authorities at least for a period of last two years ;" ; (iii) in clause (viii), for the second proviso, the following proviso shall be substituted, namely:- " Provided further that no such bank guarantee shall be furnished by the status holder zone unit having an unblemished track record or a unit which has not come to the adverse notice of Customs authorities at least for a period of last two years ;" ; (b) in sub-regulation (2), for clause (iii) the following clause shall be substituted, namely:- " (iii) the facility of sub-contracting of production shall be allowed subject to the condition that the product is also being manufactured by the zone unit in the zone ; " ; (c) for sub -regulation (3), the following sub-regulation shall be substituted, namely:- " (3) Subject to permission of the proper officer, the zone unit shall be allowed to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers, patterns and drawings to the job-worker's premises in the domestic tariff area without payment of duty and shall be allowed to keep such moulds, jigs, tools, fixtures, tackles, instruments, hangers, patterns and drawings in the job-worker's premises till the sub-contracting arrangement with job worker is in existence, subject to the following conditions, namely:- (i) the zone unit shall produce to the proper officer a verification report quarterly obtained from the jurisdictional Superintendent of Central Excise having jurisdiction over the of job-worker's unit to the effect that such moulds, jigs, tools, fixtures, tackles, instruments, hangers, patterns and drawings are lying in the job-worker's premises and are being used for production of goods for export on account of zone unit; (ii) the zone unit shall bring back such goods to the unit immediately on expiry of such jobwork contract; and (iii) such moulds, jigs, tools, fixtures, tackles, instruments, hangers, patterns and drawings shall be returned to the zone unit within a period of one year from the date of such removal where the job-worker's unit is not registered with Central Excise Department. " ; (d) for sub-regulation (6) the following sub-regulation shall be substituted, namely:- "(6). The waste or scrap or remnants generated during such processes at the job-worker's premises shall either be returned to the zone unit or shall be cleared on payment of duty as if the said waste or scrap or remnants have been cleared by the zone unit or may, where the job worker is a Central Excise Registrant , be destroyed at the job worker's premises and such destruction shall be carried out under supervision of a central excise officer having jurisdiction over the job worker's unit and proof of such destruction duly certified by such Central Excise officer shall be submitted to the officer of the customs who is in charge of the zone." (K) in regulation 28, for sub-regulation (2), the following sub-regulation shall be substituted, namely:- "(2) Where any goods procured from domestic tariff area under claim of duty drawback or duty entitlement passbook scheme credit or under any export promotion scheme are destroyed due to natural calamities , the zone unit shall be required to pay duty drawback or duty entitlement passbook scheme credit claimed on such goods: provided that in case where the zone unit has procured the goods from domestic tariff area against payment of foreign exchange, the zone unit shall not be liable to pay back duty drawback or duty entitlement passbook scheme credit or any export incentive claimed on such goods" ; (L) in the regulation 29,- (i) for sub -regulation (4), the following sub-regulation shall be substituted, namely:- "(4) The bond amount shall be equal to the twenty five per cent. of the duty leviable on the imported and indigenous capital goods plus duty forgone on raw materials to be held in stock for three months by the zone unit."; (ii) for sub-regulation (7), the following sub-regulation shall be substituted, namely:- " (7) Notwithstanding anything contained in sub-regulation (5), where the zone unit have a turnover of rupees one crore or above, or where the zone unit is in existence for more than a period of three years with an unblemished track record, such unit shall not be required to furnish surety or security."; (iii) for sub -regulation (9), the following sub-regulation shall be substituted, namely:- "(9) The bond shall be a running bond and shall be debited for an amount equal to duty forgone on the goods imported or procured by the zone unit, and credited for an amount equal to duty forgone on the raw materials used in the manufacture of finished products where such manufactured goods are either exported or cleared into domestic tariff area on payment of duty or for such imported or procured goods when exported as such or cleared into domestic tariff area on payment of duty as per the provisions of the Act or rules and regulations, made there under and such debiting and crediting of bond shall be done once at the end of every three months." ; (M) for regulation 30, the following regulation shall be substituted, namely:- " 30. Monitoring of performance.- Performance of the zone unit shall be monitored by the Unit Approval Committee in which the Commissioner of Customs having jurisdiction over the zone or his nominee shall be a member." (N) for regulation 33, the following regulation shall be substituted, namely:- "33. Import and procurement of goods by developer.- (1) The developer shall be allowed to import or procure the goods from domestic tariff area without payment of duty for the purpose of development, operation and maintenance of the zone, subject to following conditions, namely :- (i) the activity of the developer shall be approved by the Board of Approvals; (ii) the developer shall submit a list of machinery, equipments and the construction material required for development, operation and maintenance of the zone, duly certified by a chartered engineer ; (iii) the developer shall make an application to the concerned Development Commissioner for approval of the list of goods alongwith the certificate of the chartered engineer referred to clause (ii) , proposed to be imported or procured duty free for the purposes of the activity as approved by the Board of Approvals; (iv) the developer shall submit to the Development Commissioner the proof of the ownership of concerned land, encumbrances certificate relating thereto, or in case the land is acquired on lease at least for a period of twenty years in his favour, the proof of such lease; (v) on the basis of approval of the Development Commissioner, the proper officer having jurisdiction over the zone may allow the developer to import or procure goods with out payment of duty; (vi) the goods shall be stored in the premises appointed or licensed as public warehouse or private warehouse under section 57 or section 58 of the Act; (vii) the developer shall maintain proper account of import or procurement, consumption and utilisation of the goods and submit quarterly return to the proper officer having jurisdiction over the zone in such form, as may be specified by such proper officer ; (viii) the developer shall execute a bond in Form II as annexed in the Special Economic Zone Rules, 2003 with the proper officer having jurisdiction over the zone , binding himself to utilise the goods within a period of six months or such period, as may be extended by such proper officer , and if the developer fails to do so, then the developer shall pay on demand an amount equal to the duty as leviable on the said goods alongwith interest at the rate of fifteen per cent. per annum on the said duty from the date of import or procurement of said goods ; (ix) the developer shall not remove the goods from the zone except with the permission of the proper officer having jurisdiction over the said zone and on payment of duty applicable on such goods; (x) no goods, other than which are required for the purposes of construction, development, operation, maintenance of the zone or for providing utilities in the zone, shall be allowed admission in the zone without payment of duty; (xi) the developer shall produce, a certificate of utilisation of the goods from an independent chartered engineer other than who has given a certificate for the purpose of clause(ii), to the proper officer having jurisdiction over the zone on every six months of importation or procurement of the goods ; (xii) the procedure for import or procurement of goods as applicable to the zone unit shall apply mutatis mutandis in case of developer of the zone except that in case of developer, the goods imported or procured from domestic tariff area shall be allowed to be moved or utilised for the purposes of authorised operations in the non-processing area of the zone. Explanation.- For the purposes of this regulation, it is clarified that all approvals or permissions or extensions for utilisation to be given by or other functions to be discharged by the proper officer under this regulation shall be exercised by the Deputy Commissioner of Customs or Deputy Commissioner of Central Excise or Assistant Commissioner of Customs or Assistant Commissioner of Central Excise , as the case may be , posted under the Commissioner of Customs or Commissioner of Central Excise, as the case may be, having jurisdiction over the zone during only l such time when a regular Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, is not posted in the zone."; (O) the following Annexure shall be inserted at the end , namely:- "Annexure-I Form Domestic Procurement Certificate Certificate for removal of goods under bond This is to certify that- (1) Mr/ M/s-------------------( Name and address) is / are a bonafide unit in the special economic zone holding Letter of Permission No------ valid upto------- (2) That he / they has executed a bond No---- date------ for Rs ---------with the Assistant Commissioner or Deputy Commissioner of Customs of the special economic zone and as such may be permitted to receive --------(quantity) of ------------------------------------( excisable goods )(please mention the complete description of the goods such as make, model number, serial number, specification of the goods) from the unit at----------( name and address of the supplying unit at domestic tariff area) to his/ their unit ----------- at----------------- (3) That the specimen signatures of his/ their authorized agent, namely, shri------------------------ are furnished below and is duly attested Specimen signature of the owner or his authorised agent Attested Sd/- Signature with seal of the Superintendent/ Appraise of Customs of the Special Economic Zone". V.Kezo Under Secretary to the Government of India F. No. 314/24/2001-FTT (Pt-V) Note: The principal notification No. 53/2003-Customs (N.T.), dated the 22nd July, 2003, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide G.S.R. 571 (E), dated the 22 nd July, 2003 and was last amended by notification No.59/2004-CUSTOMS (N.T.), dated the 30 th April, 2004 [G.S.R.295 (E), dated the 30 th April, 2004].