We are traders of paper and Kraft liner board in Bangalore. We are registered with the excise department and importing (100 per cent duty paid) and selling within India, and doing a little export. Now we have received an order from a SEZ unit, which has advised us to charge excise duty (pro-rata) and later get a refund from the excise department. The SEZ unit will be issuing us a disclaimer certificate for not claiming excise duty at their end. Please advise on this and on the procedure also. Before starting, do we have to seek prior permission from our excise range? What are the documents to be received from the SEZ unit?
First, please note that excise duty is a duty on goods manufactured in India. Since your item is imported, there is no question of paying any excise duty at all. What you pay as an importer is additional duty of customs (CVD), which is equal to excise duty. You also pay four per cent additional duty (SAD) that countervails the sales tax/VAT. As a registered dealer, you can pass on these additional duties paid on imported goods to your buyers in DTA, who can take credit of the same. You do not pay excise duty but only pass on the additional duties. Now, excise law is not at all applicable in SEZ. So, your customer in SEZ cannot take Cenvat Credit and so, he may not be interested in paying you the additional duties.
As you may be aware, a SEZ is deemed to be a foreign territory. So, when you supply imported goods to a SEZ in the same form without any processing, you are re-exporting the imported goods. In that case, under Section 74 of the Customs Act, 1962, you are entitled to drawback at 98 per cent of the duties paid on the imported goods, if you have not used the goods. You have to follow the procedures prescribed in Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. Briefly, you have to file a drawback bill of export along with the import documents to the SEZ Customs and present the goods to them for examination and identification that the goods are the same as the goods imported under a particular bill of entry. You do not need permission from excise authorities for that and you do not need any document from the SEZ unit also. However, you must maintain proper records as a registered dealer and report the transaction in your excise returns.
We expect to get allotment for setting up a duty free shop at New Delhi international airport. Do we have to get a bonded warehouse licence? If so, how shall we apply?
Yes. You have to apply for licence under Section 58A of the Customs Act, 1962 in the form prescribed under CBEC Circular no. 26/2016-Cus dated June 9, 2016. The licensed premises are to be used for storage of bonded goods before they are removed to your duty free shop.