Background

Vide Notification No. 06/2015-CE (NT) dated March 01, 2015, the term ‘export goods’ has been defined as under:

“(1A) “export goods” means any goods which are to be taken out of India to a place outside India.”[1]

Similarly, vide Notification No. 08/2015-CE (NT) dated March 01, 2015, the existing explanation under Rule 18 of the Central Excise Rules, 2002 has been substituted. The relevant extract is produced below for your ease:

Existing	Amended
Explanation. – “Export” includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.	Explanation. – For the purposes of this rule, “export”, with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.

The expression ‘taking goods out of India to a place outside India’ fabricated an ambiguity and post these amendments, apprehensions have been expressed by the trade as to whether the following benefits would be available after the aforesaid amendments[2]:

• Benefit of rebate of duty on goods cleared from DTA to SEZ.
• Refund of accumulated CENVAT credit when goods are cleared from DTA to SEZ.

Clarification given by CBEC         

The CBEC vide Circular No. 1001/8/2015-CX dated April 28, 2015 has clarified that any licit clearances of goods to an SEZ from DTA will continue to be Export and therefore be entitled to the benefit of rebate under Rule 18 of the Excise Rules, 2002 and refund of accumulated Cenvat credit under Rule 5 of the Credit Rules, 2004 as the case may be. The relevant text of the said circular is extracted as under:

    “…

3. It can thus be seen that according to the SEZ Act, supply of goods from DTA to the SEZ constitutes export.  Further, as per section 51 of the SEZ Act, the provisions of the SEZ Act shall have over riding effect over provisions of any other law in case of any inconsistency. Section 53[3] of the SEZ Act makes an SEZ a territory outside the customs territory of India.  It is in line of these provisions that rule 30 (1) of the SEZ rules, 2006 provides that the DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1. 

4. It was in view of these provisions that the DGEP vide circulars No. 29/2006-customs dated 27/12/2006 and No. 6/2010 dated 19/03/2010 clarified that rebate under rule 18 of the Central Excise Rules, 2002 is admissible for supply of goods made from DTA to SEZ.  The position as explained in there circulars does not change after amendments made vide Notification No. 6/2015-CE (NT) and 8/2015-CE (NT) both dated 01.03.2015, since the definition of export, already given in rule 18 of Central Excise Rules, 2002 has only been made more explicit by incorporating the definition of export as given in the Customs Act, 1962.  Since SEZ is deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export and therefore be entitled to the benefit of rebate under rule 18 of CER, 2002 and of refund of accumulated CENVAT credit under rule 5 of CCR, 2004, as the case may be

        …”.

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[1] The same definition of ‘export goods’ already given in the Customs Act, 1962 [Section 2(19)]

[2] Before the said amendment refund was allowed in case of deemed export (kindly refer the relevant para of the Foreign Trade Policy)

[3]   Section 53 (1) of the SEZ Act mentions that “A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations”.