Citizens’ Research Collective on SEZ

New Delhi, May 20, 2008: Finance Ministry is considering to exempt special economic zones from payment of export duty on steel after the issue has been raised by the Commerce Ministry and developers, including Reliance and Essar.

“We have received representations for exempting SEZ units from export duty on steel. The issue is with the tax division and a decision is expected shortly,” a Finance Ministry source said.

The Central Board of Excise and Customs on May 10 had levied export duty of 5-15 per cent on various iron and steel products. The notification is also applicable to supplies from the domestic tariff area (DTA) to SEZs, which has hit the SEZ units, especially the manufacturers of engineering goods and auto components.

“SEZ units are already exempted from ban on cement. Since they are meant for generating additional economic activity in the country, the taxes should not be imposed on them as it would hit exports and jobs,” Export Promotion Council for EOUs and SEZs Director General L B Singhal said.

Several SEZ units manufacturing goods such as auto components have protested the government’s move and approached the Ministry of Finance and the Commerce Ministry on the issue.

Earlier, Finance Ministry officials argued that since the SEZs are “virtually” foreign territories so they should also pay the export duty.

At a meeting convened by Commerce Secretary G K Pillai, the Commerce Ministry and developers pointed out that supplies to SEZ units and developers for consumption within the zones should not be interpreted as exports.

Source: Financial Express