New Delhi : 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 10 May had levied export duty of 5 -15% 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.
”We have sent representations to the Ministry of Finance and the Commerce Ministry seeking a clarification,“ said Singhal, adding “they have been assured of a favourable decision soon”.
He pointed out that the government had exempted SEZs when ban on cement was announced.
In case, the Finance Ministry’s interpretation is different, we want an amendment to be issued, Singhal said.
The export cess should be applicable only to goods that are exported. The levy should not be applicable to goods consumed within an SEZ by a unit or a developer, he added.
It may be pointed that the Finance Ministry and the Commerce Ministry have taken opposite stand over several issues relating to SEZs, especially tax exemptions provided to SEZ developers and units.
An Empowered Group of Ministers headed by External Affairs Minister Pranab Mukherjee is looking into the many issues relating to SEZs including taxing the units.