Circular No. 6/2005-Cus
3rd February, 2005

F.No.602/2 /2002-DBK
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

Sub: Admissibility of Duty Drawback in Respect of Supplies Effected by DTA Units to Special Economic Zones – reg.

Attention is invited to Board’s Circular No.24/2003-Customs, dated 1.4.2003 and Circular No.2/2004-Customs dated 8.1.2004, regarding admissibility of duty drawback in respect of the supplies effected by Domestic Tariff Area (DTA) Units to Special Economic Zones. Chapter X-A of the Customs Act, 1962 inserted by section 126 of the Finance Act,2002 has come into force with effect from 11.5.2004. Section 76A in Chapter X-A provides that the Central Government may, by notification in the Official Gazette, specify Special Economic Zones comprising specifically delineated areas where any goods admitted shall be regarded, in so far as duties of Customs are concerned, as being outside the Customs Territory of India. Further, Section 76-I of the said Chapter X-A provides that any goods admitted to a Special Economic Zone from the Domestic Tariff Area (DTA) for the purposes authorised under the said Chapter shall be eligible for drawback under Section 75, as if such goods are export goods. Accordingly, rule 2 (c) of the Customs and Central Excise Duties Drawback Rules, 1995, has been amended to treat supplies made to the SEZ by the DTA units as physical exports and making them eligible for duty drawback.

2. Circular No.24/2003-Customs, dated 1.4.2003, that had been issued for providing detailed guidelines in this regard was withdrawn vide Customs Circular No.2/2004-Customs dated 8.1.2004, as the date of effect of Chapter X-A of the Customs Act, 1962 had not been notified. However, the said provisions have now come into force with effect from 11.5.2004. Consequently, all supplies made from the DTA to SEZ shall be admissible for duty drawback similar to the goods being exported outside India from various Ports, ICDs, CFS and Land Customs Stations. Detailed procedure in this regard has been prescribed in Regulation 10 of SEZ Regulations, 2003. Even though the procedure was prescribed in the Regulation w.e.f. 11.5.2004, it has been brought to the notice of the Board that drawback is not being granted on supplies made from DTA to SEZs.

3. The matter has been considered and it has been decided that with the operationalisation of the provisions of Chapter X-A of the Customs Act, 1962 w.e.f. 11.5.2004, drawback is to be granted for the supplies made from the DTA to the SEZ. The Dy./Asstt. Commissioner of Customs posted on deputation at the SEZ being the Dy../Asstt. Commissioner of Customs at the Customs Station of export shall be the authority for granting these drawback claims. Similar to regular drawback claims the triplicate copy of the assessed Bill of Export shall be treated as the drawback claim and processed in the Customs Section of the SEZ. The jurisdictional Commissioner of Customs in consultation with the Pay & Accounts Officer shall make arrangements for issue of authorisation and drawback cheque books (wherever EDI facilities are not available for directly crediting the said amount to the Bank Accounts of the exporters) with immediate effect. It should be ensured that the claims are processed and amounts disbursed within the time limit prescribed by CBEC. In case of EDI Ports, the drawback amounts should be sanctioned within 3 working days and in case of such locations where the Shipping Bills are manually processed, drawback amount should be sanctioned within 5 working days.

4.Suitable Public Notices for information of the trade and Standing Orders for guidance of the staff may kindly be issued accordingly. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board.

5. Receipt of this Circular may kindly be acknowledged.

Yours faithfully,
(P.K. Mohanty)
Joint Secretary to the Government of India
Telefax No.23341079

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