a)   

b)   

BOUNDARIES: "FALTA Special Economic Zone" IS SITUATED IN Mouza Bisra, J.L. No.1,P.S.: Diamond Harbour, in the District of 24 Parganas in the State of West Bengal at a distance of 45 Kms. from the port of Kolkata, enclosed by 3.3 metres high masonry wall with barbed wire extending up to 1.5 metres at the top extending over approximately 627 metres on the north, 989 metres on the south, 400 metres on the east and 610 metres on the west totaling 2626 metres approximately.

         Central Board of Customs & Excise has issued two Notifications (No.137/2000-Cus as amended by Notf. 64/2002 dt.24/06/2002 and 81/2002 dt.13/08/2002 & 92/2000-Cex as amended time to time) in supersession of notification No.79/2000-CUS and 41/2000-CE, both Dt. 26.05.2000.

       The SEZ scheme envisages a simple and transparent policy and procedure for the promotion of exports with minimum paper work. The scheme is detailed under para 7.1 to 7.24 of the EXIM Policy and paragraphs 7.1 to 7.20 of Handbook of Procedures(Vol.1). The most important feature of the scheme is that the SEZ area shall deemed to be a foreign territory for the purpose of duties and taxes. Therefore, goods supplied to SEZ from the Domestic Tariff Area (DTA) will be treated as deemed exports and goods brought from SEZ to DTA will be treated as imported goods. It may be seen from paragraph 7.9 of the EXIM Policy that in any SEZ goods may be imported/procured from DTA duty free for the purpose of manufacture of goods and services, production, processing, assembling, trading, repair, reconditioning/reengineering/packaging or in connection therewith and export thereof. The notifications referred to above have been issued to implement the above Policy provisions. The duty-free import facility is not applicable to prohibited goods under the EXIM Policy.

         The SEZ units may import and export through port, airport, land customs station, ICD, CFS, courier made (as per courier rules) and post parcel. The software development units may import and export through data communication and telecommunication links. So far as exports through data communication and telecommunication links is concerned, the procedure and practice being followed in case or EPZ/ST units may be adopted for SEZ units. As for imports of software through above modes, the units shall file the Bill of Entry within 24 hours of such import along with bank-attested invoice and other relevant documents for obtaining notional 'out of charge'. The documents such as invoice etc. in respect of such import shall be routed through banks. The Director of the STP/Development Commissioner of SEZ shall certify the value of such software. Further in case of such software imports instructions issued by RBI if any should be followed.

         In case of imports, the Bill of Entry with specially stamped endorsement as 'SEZ cargo' shall be filed with the Assistant Commissioner/Deputy Commissioner of Customs in the SEZ for assessment. For procurement of goods from domestic sources by SEZ units, the procedure and practice being followed in case of EPZ units may be adopted. In both cases, i.e. both in respect of imported and domestically procured cargo, the goods maybe assessed on the basis of documents furnished by the units. There will be no physical examination of goods and 'out of charge' may be given after verifying the marks and numbers on the packages only. When the goods imported are required to be sent to a SEZ, located at a station away from the place of import, the same may be allowed under normal transit procedure. The unit shall file the Bill of Entry with the Assistant Commissioner/Deputy Commissioner of Customs in-charge of the SEZ on the basis of transit documents.

IMPORT CLEARANCE PROCEDURE

         The importer shall present five copies of Home Consumption Bs/E with mark 'FALTA SEZ' on top of the Bs/E in the Custom House Import Noting Section. The Bs/E shall then be forwarded to noter of the SEZ. The noter shall note the Bs/E on the basis of Bill of Lading/Airway Bill in register and assign the date stamp on each copy of the B/E. The noting register should indicate the description of goods, value, weight, quantity, no of packages, country of consignment, name of CHA, Survey Report, identification no and date etc. The B/E shall then be forwarded to the proper officer designated by the Development Commissioner SEZ by the noter. The proper officer shall give an order on the back of the original copy of the B/E to allow removal of the goods from the point of import to the Falta Special Economic Zone. Sealing will be done with Custom seal in case of LCL cargo and mentioning of Agent's seal in case of FCL cargo. If agents seal is broken, Customs seal maybe used. The goods shall be allowed by the proper officer of the port of import for forwarding to SEZ. On arrival of the goods at SEZ, the Preventive Officer of SEZ will make necessary entry in the gate register and after verification of the marks and number of the packages and seal in case of LCL cargo/Bottle seal incase of FCL cargo shall allow warehousing after proper endorsement in the B/E. The B/E shall be presented to the proper officer designated by the Development Commissioner at the Zone for assessment as per Import documents. The proper officer shall assess it on the same day on the basis of documents submitted. After assessment the units are free to utilize the goods for production. One copy of assessed B/E (second copy) will be forwarded to the proper officer of the port of import as proof of warehousing at the SEZ and cancellation of IGM. The entry of the imported goods in SEZ shall be only through Customs Transit Area.

EXPORT CLEARANCE PROCEDURE

         In case of exports, assessment of Shipping Bills, will be done on the basis of document submitted and should be passed on the same day.

         There shall be no routine examination of the export consignment by SEZ Customs authorities and export may be allowed on the basis of self certification by the units. Likewise, there will not be any routine examination of the SEZ cargo at the gateway port. However, whether at the Zone or at gateway port or during transit of such cargo, the Customs authorities may examine the consignments when there is a specific information/intelligence. For this purpose, the orders of the Assistant Commissioner/Deputy Commissioner of Customs will have to be obtained.

         The exporter or their authorised representative shall present five(05) copies of Shipping Bill with the Falta SEZ Customs. The noter of the Falta SEZ Customs shall put date stamp and Shipping Bill No. by special number machine on each copy of the S/B and enter all the relevant particulars in a Register. The S/B will be then put up to the proper officer, who on the same date will assess the S/B on the basis of documents submitted by the party. There will be no physical examination of the goods. The goods will then be sealed and marked by the units themselves. FCL cargo will be loaded in the container by themselves and bottle-sealed by themselves. In case of FCL cargo each packages will be sealed and marked by the unit themselves. 'Preventive Officer' in the Customs Transit Area will check the arks and Nos/container and seal no. and it found in tact, will allow the goods to leave the Zone for export.

         The let export order will be issued by the officer designated by the AC/DC of Customs SEZ. The entire process of export documentation and clearance is on the basis of self-certification by the units of SEZ.

         The goods /container shall be handed over to appropriate authority at the point of shipment for export and the duplicate and 5th copy of the S/B will also be handed over to them. The Preventive Officer at the point of shipment/export after being satisfied that the seals of the goods/container are in order will allow shipment. Shipment of export cargo should not be withheld without intimating the Development Commissioner indicating the reasons thereof. When the shipment is affected the Preventive Officer at the point of exports shall certify on the duplicate and 5th copy of the S/B that the goods have been loaded into the vessel/Air Cargo under Mate Receipt/Bill of Lading No. Airway Bill No. etc. and forward the same to SEZ Customs. The units/their-authorised representative should ensure that the proof of export reaches Zone with 90 days. In case the proof of export is not submitted within the period above said duty would be demanded for the said goods from the units by the SEZ Customs as per rules. No officers of Customs will visit the units for any purpose whatsoever without the prior approval of the Development Commissioner /AC/DC of Customs SEZ. There will be no routine physical examination of the import-export cargo. However, on the basis of specific intelligence and with the express permission of the Development Commissioner / AC/DC of Customs SEZ goods can be examined physically.

         The Assistant Commissioner/Deputy Commissioner of Customs may permit the clearance of goods to DTA without payment of duty for job work/further processing on the basis of a bank guarantee furnished by the units other than status holders. The Bank guarantee will be discharged as and when the goods are received back after job work/processing. The goods so processed may be cleared from the job workers premises for export directly, provided the job worker is registered with Central Excise and the procedure as applicable to the EPZ is followed. In such cases, the Bank guarantee will be discharged after the proof of export is produced. Scrap/waste/remnants/rejects generated at the job worker's premises may be cleared there from on payment of applicable Customs duty or returned to the SEZ unit.

         The SEZ unit may also undertake job work for export on behalf of DTA units, provided the goods are exported directly from SEZ units. The export documents shall be in the name of the DTA unit. For such exports, the DTA units will be entitled for refund of duty paid on the inputs by way of brand rate of duty drawback. 

         The Assistant Commissioner/Deputy Commissioner of Customs may also permit removal of moulds, jigs, tool, fixtures, tackles, instruments, hangers, patterns and drawings without payment of duty to the premises of the sub-contractors subject to the condition that such goods are brought back to the unit on completion of the job work within the period specified in this behalf.

         Goods may be taken outside the Zone into the DTA temporarily without payment of duty for the purpose of test, repairs, replacement, calibration, refining, processing, display or any other process necessary for manufacture of final product and return thereof within the period specified in this regard on the basis general purpose B-17 Bond executed by the unit. Incase of failure of the unit to bring back the goods within the prescribed period, the unit shall be liable to pay applicable Customs duty on such goods.

         The Assistant Commissioner/Deputy Commissioner of Customs may permit on the basis of general-purpose bond clearance of goods to another SEZ/EOU/EPZ/EHTP/STP unit without payment of duty for repairs, processing, testing or display and return thereof within the period specified in this regard. Goods may also be sent to SEZ/EOU/EPZ/EHTP/STP units for the purposes of manufacture and export there from, subject to maintenance of proper accounts by both the receiving and supplying units. In case of failure of the unit to bring back the goods, the unit shall be liable to pay applicable Customs duty on such goods.

         The provisions /facilities referred to in paragraphs 4 to 6 above shall not apply to the gem and jewellery units in SEZ. However, these unit can receive plain gold, plain silver, plain platinum jewellery from DTA in exchange of gold/silver/platinum of same purity and quantity in weight as that of gold/silver/platinum jewellery as the case may be. The unit shall not be eligible for any wastage or manufacturing loss against exchange of such machine-made or hand-made plain jewellery. The DTA unit exchanging the gold/silver/platinum jewellery with the units in SEZ shall not be allowed any deemed export benefits. The units may also be permitted to takeout gold, silver or platinum for job work n the DTA. This is subject to the condition that they will bring back the jewellery finished or semi-finished including studded jewellery containing quantity and purity equal to the gold/silver/platinum so taken out within 30 days. However, no diamonds, precious stones and semi-precious stones shall be allowed to be taken out of the Zone for sub-contracting. As in the case of exchange of gold/silver/platinum for jewellery of equal quantity and purity, the DTA unit supplying jewellery against job work shall not be entitled for deemed export benefits and the said unit in the Zone shall not be eligible for wastage or manufacturing loss against such jewellery.
         
         Further, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may allow:

(i) to take out gold, silver or platinum for job work in the Domestic Tariff Area and to bring back the jewellery finished or semi-finished, including studded jewellery containing quantity and purity equal to the gold, silver or platinum taken out within the period of thirty days from the date of such taking out; Provided that no diamonds, precious stones or semi-precious stones shall be allowed to be taken out;

(ii) to receive plain gold or plain silver or plain platinum jewellery from any place in India against exchange of gold, silver or platinum of the same quantity in weight as that of contained in said gold, silver or platinum jewellery, as the case may be; Provided that in case of activities mentioned at (i) and (ii) above in this condition, the Domestic Tariff Area unit supplying such jewellery against exchange of gold, silver or platinum or after the job work shall not be entitled for "deemed export" benefits and the said unit in the Zone shall not be eligible for wastage or manufacturing loss against such jewellery.

(iii) to take out items of gem and jewellery temporarily into Domestic Tariff Area without payment of duty for the purpose of display and to be returned thereafter;

(iv) for personal carriage of gold jewellery or silver jewelllery or platinum jewellery or precious stones or semi-precious stones or beads and articles as samples upto US $ 1,00,000/- for export promotion tours and temporary display or sale abroad subject to the condition that the exporter would bring back such jewellery, precious stones or semi-precious stones or beads and articles or the sale proceeds within a period of forty-five days from the date of departure through normal banking channel;

(v) to export jewellery including branded jewellery for display and sale in the permitted shops set up abroad, or in the show room of its distributors or agents;

(vi) to remove parts and tools of machines temporarily into Domestic Tariff Area without payment of duty for the purpose of repairs and return thereof after such repairs;

(vii) to remove moulds, tools, patterns and drawing to the premises of the sub-contractors for job work without payment of duty and to be returned to the unit thereafter within the period specified in this behalf by the Assistant Commissioner or Deputy Commissioner/Jt.Commissioner of Central Excise or Customs as the case may be;

(viii) to send scrap, dust or sweepings of gold arising in the manufacturing process in its unit to the Government Mint or Private Mint for conversion into standard gold bars and to be returned to the said unit thereafter or to clear such scrap, dust or sweeping to the Domestic Tariff Area on payment of duty on the gold content in the said scrap, dust or sweepings. The procedure and practice being followed in case of EPZ units may be adopted, while allowing clearances of items mentioned at (i) to (viii) above;

In case of gem and jewellery units, dust or sweepings generated in the unit may be allowed to be forwarded to the Government Mint or Private Mint for conversion into standard gold bars and return thereof to the Zone subject to the observance of procedure laid down by the Customs. The said dust, scrap or sweeping may also be allowed clearance into DTA on payment of applicable Customs duty on the gold content in the said scrap, dust or sweepings, samples of the sweepings/dust shall be taken at the time of clearance sand sent to Mint for assessing. The assessment may be finalised when the reports are received from the Mint.

Inter-Unit Transfer

         Inter Unit transfer of goods amongst units in a SEZ shall not require any permission, but the supplying and receiving units shall maintain proper account of the transaction.

Duty remission on destruction of goods:

         A provision has been made in the notifications that duty would not be levied on capital goods, raw material, components waste or scrap etc. if these goods are destroyed after intimation and in the presence of the Customs authorities. The notification may be referred to for details. This provision will however not apply to gold, silver, platinum, diamond, precious stones and semi precious stones.

         The officer supervising destruction may ensure that goods are destroyed fully rendering them unfit for further use and give certificate to that effect. After destruction of capital goods, raw material, components, waste or scrap etc. if the remains have scrap value, the same may be cleared by the unit in DTA on payment of duty applicable to scrap.

DTA Sale:

         The Assistant/Deputy Commissioner of Customs may permit sale of finished goods including by-products and service and waste/scrap/remnants/rejects etc. in the DTA on payment of applicable Customs duty and in accordance with the Export-Import Policy in force. However, such finished goods including rejects waste and scrap materials are not excisable Customs duty equal in amount to that leviable on the inputs imported/indigenously procedure under the notifications and used for the purpose of manufacture of such finished goods, which would have been paid but for the exemption under said notifications, shall be payable at the time of clearance of such finished goods. In case of service sector SEZ units/Trading units the rendering of services in DTA may be allowed subject to the condition that the unit has achieved the positive NFE, cumulatively, at the time of rendering such service in DTA as specified in the Policy. This would mean that service units will not be eligible for making DTA sale if the NFE is not positive cumulatively at any point of time. Further, it may be noted that if any of such services are taxable under provisions of Chapter V of Finance Act, 1994, then rendering of such services in DTA shall be subject to payment of service tax as per the provisions of Finance Act, 1994.


         The units engaged in trading shall be allowed to clear the said goods in the DTA on payment of applicable Duty subject to achievement of Net Foreign Exchange Earning cumulatively provided that no Duty shall be levied on the said goods if such clearance is against Advance Licence or special Duty Free entitlement as per the provision of Export & Import Policy or to other SEZ or Export Oriented Undertaking or Export Processing Zone or Electronic Hardware Technology Park or Software Technology Park Units. The goods under DTA sale shall be brought in the Customs Transit Area for examination by Customs.

Disposal of obsolete goods: 

         The units may be allowed to dispose of obsolete or unusable capital goods, spares and other goods in the DTA on payment of applicable Customs duty. Such disposal shall, however, be subject to the conditions of Import Policy inforce. In case of capital goods, clearance maybe allowed on payment of applicable Customs duty on the depreciated value thereof and at the rate in force on the date of payment of such duty. In case of other goods (including empty cones, bobbins, containers suitable for repeated use) clearance shall be allowed on payment of applicable Customs duty on the value at the time of import and at rates in force on the date of payment of such duty. However, no duty shall be charged on clearance of used packing materials such as cardboard boxes polyethylene bags of a kind unsuitable for repeated use. Paragraph 5 of the notifications may be referred to for further details.

Valuation of Goods cleared into DTA:

         Under the SEZ scheme, the goods cleared from the Zone will be treated as imported goods. Therefore, incase of DTA clearances, though the duty charged will be Central Excise Duty, this Duty will be equal to the aggregate of all duties of Customs. In other words, the SEZ units will have to pay full Customs Duty (applied duty) on their DTA clearances. In view of this, in case of sale/clearance of goods referred to in the preceding paragraph the valuation will be made as per the provisions of the Customs Act, 1962 and the Customs Valuation Rules, 1988. The duty will be paid on the basis of assessment. The appraisement will be done as applicable to imported goods at the time of physical removal from the Zone. Licences, wherever applicable will have to be produced before clearing the goods in DTA.

Maintenance of Accounts:

         A SEZ unit shall maintain proper account in the format convenient to it and financial year wise of all foreign exchange inflow byway of exports and other receipts, all foreign exchange out flow on account of imports, payment of dividend, royalty, fees etc. consumption and utilization of the materials and sale in the DTA. The unit shall submit regularly quarterly statement to the Development Commissioner and the Customs in this regard in the format prescribed at Appendix 14D of the Handbook of Procedures. In case of gem and jewellery, a monthly statement shall be submitted as prescribed to the said Appendix 14D to the Development Commissioner and the Customs. Monitoring of activities of SEZ units:

         Paragraph 7.5 of the EXIM Policy has been amended to provide that all activities of the SEZ units, unless otherwise specified, will be through self-certification procedure and shall be monitored by the Committee comprising Development Commissioner and Customs. The Committee shall be headed by the Development Commissioner. It will also see that wastage/manufacturing loss on gold/silver/platinum jewellery and articles are within the overall percentage prescribed in Appendix 14L of Handbook (Vol.1). In case of higher wastage/manufacturing loss, the Committee shall satisfy itself of the reasonable ness of the same.

Penal action in case of default:

         The Commissioner of Customs may kindly ensure that the Customs officials posted in SEZs, do not visit the units for verification of records or even otherwise in routine. However, in case of specific information/intelligence which prima facie, show that there is fraud, collusion/mis-declaration, suppression of information etc. having a bearing on the export performance of the unit or where there is specific information regarding clandestine/unauthorized removal of goods into DTA etc., the Customs officials may visit the units for verification of records, goods etc. so as to initiate proceedings under Customs Act, 1962 with the approval of AC/DC/JC of Customs. The Assistant Commissioner/Deputy Commissioner/Joint Commissioner may keep a watch on the export performance of the units and in the event of non-achievement of positive NFEP within the stipulated period, action may be taken against the units for recovery of the duty and interest. Notification No.137/2000-Cus, dated 19.10.2000 as amended and Notification No.52/2000-CE dated 19.10.2000 as amended maybe referred to for further details. So far as utilization of imported/indigenously procured goods is concerned, the notifications provide that the same shall be utilized within the period of five years. In case of failure to utilize the imported/indigenously procured goods within the period of five years, the unit shall be liable to pay duty on the said unutilized goods along with the interest at the rate of 15% per annum from the date of importation of procurement of the said unutilized goods till the date of payment of such duty.

Transitional arrangements:

         An existing EPZ unit can opt for SEZ scheme. On conversion, its previous obligations as an EPZ unit shall be subsumed by its obligations under the SEZ scheme. The raw materials, components, consumables and finished goods lying in stock with the unit at the time of conversion shall be taken as its opening balance under the SEZ scheme. All unutilized DTA sale entitlements of the unit shall cease to exist from the date of conversion as notified by the Ministry of Commerce & Industry.

         In case an existing EPZ unit decides not to work under the SEZ scheme, it will have to either debond itself on payment of applicable duties on unutilized raw materials, depreciated value of capital goods and other goods imported/procured locally duty free by such unit or convert itself into an EOD. In both cases the unit will have to physically move out of SEZ.

BOND

         The SEZ units may be allowed to operate under a single all-purpose bond as per P/N 47/98. As you are aware at present the bond amount (under B-17 bond) is equal to 25% of the duty foregone on the sanctioned requirement of capital goods plus the duty foregone on raw materials required for three months. Surety or security equivalent to 5% of the bond amount in the form of bank guarantee is required to be given. It has been decided that the SEZ units having a turnover of Rs.1 crore or more in the preceding financial year may be exempted from the requirement of furnishing security/surety. This facility would not be available to the units against whom offence cases have been proved in a court of law. In case of new units they will be required to give surety or security till they achieve the turnover of Rs.1 crore. Till the new bond is prescribed, the existing bonding procedure may continue.

The terms and condition of all existing notification (Customs and Central Excise) related to SEZ should be followed strictly.

All the Trade Associations are hereby requested to disseminate the theme of this Public Notice among their members.