Circular No.2/2004-Customs
8th January ,2004

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  to the  supplies  effected by DTA Units  to  Special  Economic  Zones-reg.

    Vide  section  126 of  the  Finance Act,2002, Chapter XA was proposed   to be inserted  into the Customs  Act, 1962.  This  chapter  details  the special  provisions  relating  to  Special  Economic Zones.  The  proposed Section 76-A under  Chapter XA of  the  Customs Act  provides  that the  Central Government  may by  notification  in the  Official  Gazette specify Special  Economic  Zones comprising  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.

2.  Section 76-I of  the  said  Chapter  XA provides  that  any goods admitted  to  Special Economic  Zone  from the  Domestic Tariff  Area  (DTA),  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, was amended on 3.3.2003 to treat supplies  made to  the  SEZ  by the DTA  units  as  physical  exports and  making them eligible  for   duty  drawback.  Circular No.24/2003-Customs, dated  1.4.2003, was issued  for  providing  detailed  guidelines  in this  regard.

 3. It  has,  however, come to fore  that  Chapter XA of  the  Customs  Act  was  supposed to come  into existence  from a  date to be notified.  So far  the  said  date  has  not  been notified. Consequently, these  proposed provisions remain  ineffective  for the time being.  Accordingly,  the  amended  provision  of  Duty  Drawback  Rules  in this  regard  too  cannot  take  effect till such  time.

Hence,  the  instructions contained  in  Circular No.24/2003-Customs,  dated  1.4.2003, concerning payment  of duty drawback  to the  supplies  from DTA Unit  to the  SEZ Unit, shall also become operative  from the  date  when Chapter XA of  the  Customs  Act, 1962 comes into effect.

4.  Suitable public notices for information of the trade and standing orders for guidance of the staff may kindly be issued accordingly.    

5.  The receipt of this Circular may kindly be acknowledged.

S.S.  Renjhen
Joint  Secretary to the  Government of  India
Telefax No.23341079

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