Para 14.6 — Special Economic Zones (SEZs) are duty-free enclav

14.6 SPECIAL ECONOMIC ZONES 14.6.1 Special Economic Zone (SEZ) is a specifically delineated duty-free enclave within India which is deemed to be foreign territory for the purposes of trade operations, duties and tariffs. The whole of India (including the territorial waters and continental shelf) but excluding the areas of the Special Economic Zones is known as the Domestic Tariff Area (DTA)

14.6.2 The government provides many incentives for companies and businesses established in SEZs. Viz.:

 Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.  Exemption from Central Sales Tax, Service Tax and State sales tax. These have now subsumed into GST and supplies to SEZs are zero rated under IGST Act, 2017.  Other levies, if exempted by the respective State Governments.  Single window clearance for Central and State level approvals.  Supplies to SEZ are zero rated under IGST Act, 2017.

14.6.3 However, whenever any goods are removed from a Special Economic Zone to the DTA it is treated as an import and shall be chargeable to duties of customs which includes basic customs duty, IGST, antidumping, countervailing and safeguard duties (under the Customs Tariff Act, 1975), where applicable.

14.6.4 Hence, whenever the SEZ makes DTA sales, Customs and IGST collections are collected. These collections are both through online (electronic) mode and through physical collections. For physical collections/OTC mode of payments the challans are duly filled in and payment made through the banks authorised for collections of Customs in the area. The banks provide the receipt scroll for these along with the other customs collections at ports.

14.6.5 The electronic mode of collection is through the ICEGATE payment gateway. The challans are generated on the SEZ-online portal and when initiated for electronic mode of payment the same are sent to the ICEGATE (CEP) portal through which the tax payer can make his payments in the similar way as done for Central Excise and Service Tax payments.

DETAILED ACCOUNTING PROCEDURE RELATING TO ELECTRONIC CASH LEDGER OF CUSTOMS DUTY:

(i)(a). At the time of Deposit of amount by tax payer into the ECL MH 8658 Suspense Accounts 00.108 Public Sector Bank Suspense or 00.138 Other Nominated Banks (Private Sector Banks) Suspense Debit. To 8449 Other Deposits 00.124 Electronic Cash Ledger of Customs 01-Deposits under section 51 A of the Customs Act, 1962 Credit.

(b) on receipt of Credit notification from RBI MH 8675 Deposits with Reserve Bank 00.101 Central – Civil Debit. To MH 8658 Suspense Accounts 00.108 or Public Sector Bank Suspense 00.138 Other Nominated Banks (Private Sector Banks) Suspense

(ii)

(a) The Broadsheet of deposits in ECL will be maintained by the PAO and balances reconciled every quarter and at the close of the financial year

Opening Balance as on 1st April,20xx Deposits made during the 1st /2nd /3rd /4th quarter Utilization made during the 1st /2nd /3rd /4th quarter Closing Balance at the end of 1 st/2nd/3rd/4th quarter

(ii)

(b) The Broadsheet of MH 8449 shall be maintained electronically with individual importerwise breakup and shall be reconciled with the lump sum closing balance arrived at (as shown in ii

(a) above). A physical copy of the Broadsheet be duly authenticated by PAO.

Importer Exporter Code (IEC)/Name Opening Balance as on 1st April,20xx Deposits made during the 1 st /2nd /3rd /4th quarter Utilization of deposits during the 1 st /2nd /3rd /4th quarter Closing Balance at the end of 1 st/2nd/3rd/4th quarter

The challan level reconciliation through Debit Credit linkage will be shared by ICEGATE through APIs with the O/o Pr. CCA and this will be the key to taxpayer-wise reconciliation.

(ii) (c). Review of balances under each importer account will be analyzed at the end of the year to ensure that there are no negative balances and/or large amount of balances haven’t accumulated.

(ii)

(d) Reconciliation also needs to be done by PAO and Department regularly. iii. At the time of usage of ECL deposits to meet the liability under various heads of account

MH 8449 Other Deposits 00.124 Electronic Cash Ledger of Customs (New Minor Head) 01 ‘Deposits under section 51 A of the Customs Act, 1962’

To Concerned minor head under Major Head: MH 0037 Customs/ MH 0008 Integrated Goods and Services Tax (IGST)/ MH 0009 Goods and Services Tax Compensation Cess Cr.

iv. At the time of processing for Refunds out of Deposits made under Public Account

MH 8449 Other Deposits 00.124 Electronic Cash Ledger of Customs (New Minor Head) 01 ‘Deposits under section 51 A of the Customs Act, 1962’ Dr.

What This Means

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

• 1SEZs are duty-free enclaves; goods entering the DTA from SEZs are treated as imports attracting customs and IGST
• 2Supplies to SEZs are zero-rated under the IGST Act, 2017
• 3Electronic Cash Ledger (ECL) deposits are maintained under MH 8449 (Other Deposits) for customs duty payments
• 4PAO must maintain broadsheets of ECL deposits with importer-wise breakup and reconcile quarterly
• 5Negative balances and large accumulated balances in individual importer accounts must be reviewed at year-end

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.