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TMI Blog2023 (7) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. Non-fulfilment of such condition(s) will make the importer liable to pay differential duty along with interest, fine, penalty etc., as the case may be. It appears that the applicant has introduced concept of 'export' in relation to such imported equipment(s) in order to link it with Notification No. 45/2017-Cus which is not warranted but un-necessary as the same appears to have been done to confuse the issue for claiming exemption from payment of duties/taxes. In the instant case, goods have not been imported for warehousing in FTWZ but performance of a contract for specified purpose for which exemption from duties at the time of import has been claimed vide serial number 404 of Notification No. 50/2017-Cus., thereby goods transferred from FTWZ to DTA cannot be treated as re-imported goods, making the Notification No. 45/2017-Cus., inapplicable. It can be convincingly stated that under the SEZ Act, 2005 read with SEZ Rules, 2006, words 'import' and 'procure' have been assigned different meanings. It is also important to note that activity of bringing goods from a Unit or Developer in SEZ to DTA is not covered under the definition of the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. dated 30.06.2017 for such re-import of goods/equipment from a SEZ/FTWZ to DTA. 3. The applicant vide their application for advance rulings has inter-alia stated that, they are engaged in providing oil field services to oil gas exploration and production companies across India such as Oil Natural Gas Corporation and Cairn India; in pursuance to providing the oil field services, they will be importing equipment(s) at a concessional rate of customs duty under serial number 404 of the Notification No. 50/2017-Customs dated 30.06.2017; once the contract is completed and the equipment are not foreseeable to be required in near future, same are re-exported to the consignor; on completion of a project if the applicant foresee that the same equipment will be required for other contracts in India, the applicant sends the equipment to a Logistics Service Provider (LSP) located in a SEZ/ FTWZ for storage purposes; it is pertinent to note that the applicant will not avail any kind of duty incentives or benefits when this equipment is being sent from DTA to SEZ/FTWZ; at the stage of clearance of the equipment from SEZ/FTWZ to the new project in DTA, the applicant would claim exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred that exemption from duties, taxes and cess should be equally applicable to re-import of equipment from SEZ/FTWZ to DTA as envisaged under serial no. 5 of Notification No. 45/2017-Cus. The applicant has also stated that under various legal provisions, concept of duty exemption on re-import i.e. clearance from SEZ to DTA has been contemplated under the SEZ law, as well viz. rule 48 of Special Economic Zones Rules, 2006 dealing with procedure for sale in domestic tariff area, rule 49 of Special Economic Zones Rules, 2006 dealing with domestic tariff area removals, and stated that it is their understanding that once equipment have been brought in FTWZ without availing any drawback or exports incentives, are subsequently re-imported in the same form into the DTA, even under the SEZ laws the said transaction has to be treated as re-imports and accordingly they are not liable for discharging any customs duties or IGST in view of serial number 5 of the Notification No. 45/2017-Cus.; the understanding of the applicant also finds support from Circular No. 21/2019 dated 24th July 2019 issued by the Central Board of Indirect Taxes Customs which clarifies that even a movement of goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uling, the applicant has replied to the comments of the concerned Commissionerate wherein it is inter-alia stated that, the subject activity is ongoing and present application has been filed seeking ruling to allow the applicant for exporting the goods to LSP in FTWZ and reimporting the same into DTA by availing duty exemption under serial number 5 of Notification No. 45/2017-Cus. and they would like to highlight that the transaction is ongoing transaction (FTWZ to DTA), however the applicant has filed the application for future transaction for sending of the goods from FTWZ to DTA, the Specified Officer has inter-alia observed that reliance placed by the applicant on Circular No. 21/2019 dated 24 July, 2019, is incorrect as the circular was issued in a different context and the same has been read out of context by the applicant; the clarification is issued w.r.t. goods exported earlier for exhibition purpose or on consignment basis; however, in the instant case, the applicant is not intending to export the goods for exhibition or on consignment basis instead they intend to export the imported goods to LSP in FTWZ for warehousing until start of the next contract. As reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there should not be any export entitlements availed when these goods were admitted into the SEZ, as regards comments of the concerned Commissionerate that 'holding of goods by FTWZ units temporarily cannot be equated with the compliance of condition of export of goods for the purpose of re-export in terms of Customs Notification and then to reexport to DTA.', it is stated that in terms of section 30 of SEZ Act, the goods removed from SEZ to DTA shall be chargeable to Customs duty as leviable on such goods when imported; LSP's are practically operating in FTWZs which in common parlance are the warehousing units in FTWZ; thus comments of the Specified Officer are completely baseless, more so when there is no condition placed by Notification 45/2017 as to the purpose for which goods are exported or re-imported, they are not governed by the second proviso to Notification No. 45/2017 which states, 'Provided further that nothing contained in this notification shall apply to reimported goods-(a) which had been exported by a hundred percent export-oriented undertaking or a unit in a Free Trade Zone as defined under section 3 of the Central Excise Act, 1944' on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, 2021, having gone through submissions and additional submissions of the applicant and having heard the applicant, I proceed to examine the question on merits. 9.1 I take note of the comments of the concerned Commissionerate on the application for advance ruling. I find that to avail exemption under the Notification No. 45/2017-Cus., the importer will have to inter-alia establish, whether the goods are re-imported, whether the re-imported goods have been exported by a hundred percent export-oriented undertaking or a unit in a Free Trade Zone (Special Economic Zone). 9.2 I note from the submissions of the applicant that condition of re-export of the equipment after their import availing exemption under Notification 50/2017-Cus. is a condition built in the contract of the importer with their Contractor and the applicants have themselves admitted that it is not a condition prescribed under Notification No. 50/2017-Cus. However, the applicant has attempted to make a case starting with export of such equipment(s) on which exemption vide Notification No. 50/2017-Cus. has been availed. The Notification No. 50/2017-Cus. provides for compliance with conditions prescribed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EZ Act, 2005 and hence no exemption from duties/taxes is admissible. 9.4 I also note that as per Sub-section (n) of Section 2 of the Special Economic Zones Act, 2005, Free Trade and Warehousing Zone means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on. In order to bring more clarity on the issues involved, reference is drawn to Sub-rule (5) of Rule 18 of the Special Economic Zone Rules, 2006 which inter-alia provides that the Units in Free Trade and Warehousing Zones or units in Free Trade and Warehousing Zone set up in other SEZ, shall be allowed to hold the goods on account of the foreign supplier for dispatches as per the owner's instructions and shall be allowed for trading with or without labelling, packing or repacking without any processing. In light of Sub-rule (5) of rule 18 of Special Economic Zones Rules, 2006, it is noticed that Units in FTWZ, hold the goods for dispatches (or Export) as per owner's instruction. Therefore, taking into consideration the facts/submissions vide the said application for advance rulings, it is observed that Units in FTWZ would be exporting to DTA, the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al re-import of goods from outside India. In light of the above, it can be convincingly stated that under the SEZ Act, 2005 read with SEZ Rules, 2006, words 'import' and 'procure' have been assigned different meanings. It is also important to note that activity of bringing goods from a Unit or Developer in SEZ to DTA is not covered under the definition of the term, 'import' under the SEZ Act, 2005, therefore such transfer from SEZ to DTA cannot be termed as 're-import'. Moreover, as per dictionary meaning of the word, 'procure ' is 'to obtain something' but when the goods are being warehoused in FTWZ, these are not procured by a Unit or Developer, therefore when transfer of goods from DTA to FTWZ or FTWZ to DTA is neither covered under the term 'procure' nor 'import', therefore such transfer/supply of goods cannot be treated as 'reimport ' for application of procedures and conditions as applicable in the case of normal re-import of goods from outside India. Moreover, applicant's contention to treat such movement of goods from FTWZ to DTA as re-import in terms of provisions under section 30 read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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