1 SEZ ACT & GUIDELINES FOR IMPLEMENTATION. 2 Effect of SEZ Act 2005, SEZ Rules 2006 & Related Laws.
SEZ ACT & GUIDELINES FOR IMPLEMENTATION
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Transcript of SEZ ACT & GUIDELINES FOR IMPLEMENTATION
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SEZ ACT & GUIDELINES FOR SEZ ACT & GUIDELINES FOR IMPLEMENTATION IMPLEMENTATION
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Effect of Effect of
SEZ Act 2005, SEZ Rules 2006 SEZ Act 2005, SEZ Rules 2006 & &
Related LawsRelated Laws
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HISTORY OF SEZ IN INDIA
The first ever Export Processing Zone The first ever Export Processing Zone
(EPZ) in Asia was set up by (EPZ) in Asia was set up by
Government of India in Kandla in Government of India in Kandla in
1965.1965.
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SUCCESS STORY OF EPZ’s
Based on the success of Kandla EPZ, inthe beginning of eighties, seven more EPZs were set up in Bombay, Noida,Surat, Madras, Falta, Visakhapaptnam and Cochin..
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FORMATION OF SEZ’s
To invite larger foreign investments inIndia, these EPZs were converted into Special Economic Zones (SEZs) in the year 2000 under a new policy announced by the Government of India.
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AIM OF SEZ’s
The policy intended to make these SEZs an engine for economic growth supported by quality infrastructure
complemented by an attractive fiscal package with minimum possible regulations.
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SPECIAL ECONOMIC ZONES ACT, 2005 Promulgated on 23rd June, 2005
An Act to provide for the establishment, development and management of theSpecial Economic Zones for the promotion of exports and for matters connected herewith or incidental thereto. Enacted by Parliament in the Fifty-sixth Year of the Republic of India.
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OVERRIDING EFFECT
Section 51
The provisions of the SEZ Act shall have effect
not withstanding anything inconsistent herewith
contained in any instrument having effect byvirtue of any law other than this Act.
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SEZ RULES 2006
In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government promulgated the SEZ Rules, 2006 vide Gazette Notification No.GSR 54 (E) dated 10 February, 2006..
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SINGLE WINDOW CLEARANCE
Section 14
SEZ proposals approved by Board of Approval (BOA) at New Delhi.
SEZ Units approved by Approval Committeeheaded by Development Commissionerlocally.
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BOARD OF BOARD OF APPROVAL (BOA)Section 8Section 8
• Secretary/Additional Secretary – MOC• 2 Joint. Secretaries, GOI dealing with revenue• 1 Joint. Secretary, GOI dealing with Economy or
Finance• About 10 Joint Secretaries, GOI dealing with
Commerce, Industrial Policy, Science & Technology, Small Scale Industries / Agro & Rural Industries, Home Affairs, Defence, Environment & Forests, Law, Overseas Indian Affairs and Urban Development.
• Nominee of State Government• Nominee of DGFT• Development Commissioner concerned• Professor in any IIM• Deputy Secretary, MOC
1212
APPROVAL COMMITEE
Section 13Section 13
• Development Commissioner• 2 Officers of Central Government• 2 Officers of Central Government
dealing with Revenue• 1 Officer of Central Government
dealing with Economy/Finance• 2 Officers of the State Government• Nominee of the Developer
1313
ADMINISTRATION OF SEZ
Rule 20Rule 20
Every Special Economic Zone shall be under the administrative control of aDevelopment Commissioner.
1414
PROCESSING AREA
Section 6
Area for activities of manufacturing of goods, or rendering Services and area exclusively for trading or warehousing purposes.
1515
NON-PROCESSING AREA
Section 6 ( C )
Area for social purposes like Residential, Schools, Hotels, Hospitals as approved
byBOA.The BOA shall decide on thesize of such facilities and areas.
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EXEMPTIONS AND CONCESSIONS
Section 7 & 26
Developers and Units Exempted from Developers and Units Exempted from
Customs Duty, Excise Duty, CST & Customs Duty, Excise Duty, CST & Service Service
Tax. Tax.
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INCOME TAX EXEMPTION
Section 27 of SEZ & Section 10AA of IT Act
• 100% for first 5 years
• 50% for next 5 years
• 50% income on re-investment for next 5 years
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CONCESSIONS TO CONTRACTS IN SEZ
Rule 10, 26
All Exemptions and concessions are allowed
to Contractor appointed by a Developer or
Co-developer.
1919
EXEMPTIONS FOR SOCIAL INFRASTRUCTURE IN NON-
PROCESSING AREA
Rule 11 (10) Proviso
All Exemptions available for infrastructurefor social purposes in the Special Economic Zone, as may be approved by the Board Zone,as may be approved by the Board
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MINIMUM AREA Section 3(8) – Rule 5
• Multi-product zone – 1000 Hectares• Exclusive for services – 100 Hectares• Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram,
Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union territory – 200 Hectares.
• Specific sector or in a port or airport – 100 Hectares • Electronics hardware/software, Information Technology ES –
10 Hectares (minimum built up processing area of one lakh square meters
• Bio-technology, non-conventional energy, including solar energy equipments/cell, or gem and jewellery sectors – 10 Hectares
• Free Trade and Warehousing – 40 Hectares (with a built up area of not less than one lakh sq.m.)
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EQUITY IN THE ENTITY
Rule 5 (4)
The Developer or Co-Developer shall have at
least 26% of the equity in the entityproposing to create business, residential
orrecreational facilities in an SEZ in case
such development is proposed to be carried outthrough a separate entity or an SPV being
acompany formed and registeredunder the Companies Act, 1956.
2222
CLEARANCE BY STATE
Rule 5 (6)Rule 5 (6)
The State Government shall, whilerecommending a proposal for setting up ofan SEZ to the Board indicate whether theproposed area falls under reserved orecologically fragile area as may be
specified by
the concerned authority.
2323
DETAILS OF LAND AREA
Rule 7
The Developer shall furnish details of the
land with proof of legal right and possession
and a certificate from the State Government
or the authorized agency that the said area
is free from all encumbrances.
2424
SEZ NOTIFICATION OF THE SEZ
Rule 8Rule 8
On acceptance of the terms and conditions
of the Letter of Approval by the Developer
the Central Government shall notify the area
as a Special Economic Zone..
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DETAILS FOR AUTHORISED OPERATION
Section 4 (2) – Rule 9Section 4 (2) – Rule 9
The Developer shall submit to the Board(BOA) the details of operations proposed
tobe undertaken in the SEZ at the time ofseeking approval for setting up of SEZ orthereafter.
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PERMISSION FOR PROCUREMENT OF ITEMS UNDER TAX
Rule 10, 12
• After getting approval for authorised operation from the BOA, the Developer shall make a list of items required duly certified by a Chartered Engineer and submit to the Approval Committee for approval.
• The Developer shall execute a Bond-cum-Legal
Undertaking in Form-D with the DC..
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ACCOUNTING OF GOODS
Rule 12
• The Developer shall submit a half-yearly certificate for the period ending 31st March and 30th September of every financial year regarding utilization of goods from an independent Chartered Engineer, other than the one who has given a certificate for the purpose of sub-rule (2), to Development Commissioner and Specified Officer.
• The Developer shall remove goods from the SEZ to the Domestic Tariff Area only with the permission of the Specified Officer and on payment of duty applicable on such goods.
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NON UTILISATION OF GOODS
Rule 25Rule 25
Where an Entrepreneur or Developer doesnot utilize the goods or services on whichexemptions have been availed, theEntrepreneur or the Developer, shall
refundan amount equal to the benefits ofexemptions and concessions availed under various Acts/Rules.
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TRANSFER OF GOODS
Rule 13 & 38
A Developer may export or transfer capitalgoods and spares including constructionequipment that have become obsolete orsurplus to another Developer, or Unit after obtaining the approval of the SpecifiedOfficer.
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PROCUREMENT FROM DTA
Rule 30Rule 30
The DTA (Domestic Tariff Area) supplier supplyinggoods to a Unit or Developer shall clear the goodsunder ARE-I referred to in notification number40/2001- Central Excise (NT) dated the 26th June,2001 in quintuplicate bearing running serial number beginning from the first day of the financial year.
3131
SALES UNDER CST ACT
Rule 32 (Proviso)Rule 32 (Proviso)
Dealer selling goods in the course of interstate trade or commerce to a registered
dealerunder the Central Sale Tax Act, 1956 shallfurnish a declaration in Form – I
prescribedunder the Central Sales Tax (Registration
andTurnover) Rules, 1957.
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DESTRUCTION OF GOODSRule 39Rule 39
With written prior permission from theSpecified Officer, obsolete goods includingcapital goods procured or manufactured orwaste or scrap or remnants can be
destructedwithin the SEZ.
Obtaining environmental clearance if anyrequired for such destruction shall be theresponsibility of the Unit.
3333
SUB CONTRACTING OF WORKS
Rule 41Rule 41
Part of production or any production
process can be undertaken outside SEZ
with prior permission of the Specified
Officer.
3434
SALES IN DTASALES IN DTA
Rule 47
Goods, rejects, wastes, scraps, remnants,
broken diamonds or byproducts arisingduring the manufacturing process or inconnection therewith, Can be sold onpayment of applicable duties under section 30, subject to prescribedconditions.
3535
TEMPORARY REMOVAL OF GOODS
Rule 50Capital goods, parts can be temporarily removed without payment of duty for job work, test, repair, refining and calibration and return thereof &Laptop, notebook computers, video projection systems for use by Authorized employees can also be taken out of the zone on return basis with the prior approval of the Specified Officer.
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PROCEDURE FOR TEMPORARY REMOVALS
Rule 51Rule 51
Removal of goods for the activities covered under
sub-rule (1) to (3) of rule 50 shall be undertaken by
the Unit on the cover of serially-numbered pre-
authenticated challans, authenticated by theManaging Director or owner or working
partner or the Company Secretary or by any person
duly authorized in this behalf by the Company or
owner or working partner.
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MONITORING OF UTILIZATION
Rule 15Rule 15
The utilization of the goods imported orProcured from the Domestic Tariff Area
bythe Developer shall be monitored by theApproval Committee.
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TRANSFER OF LETTER OF APPROVAL OF DEVELOPER
Rule 16
The Letter of Approval of a Developer can be
transferred to another Developer followingthe procedure under Section in case theBoard finds any Developer has defaulted
the terms and conditions.
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ESTABLISHMENT OF SEZ UNITRule 17Rule 17
A consolidated application (Form-F) seekingpermission for setting up of a Unit and otherclearances, including those indicated below,shall be made to the Development Commissioner, in Form-F, in five copies, witha copy to the Developer.
The Approval Committee may approve theproposal within15 days.
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DETAILS REQUIRED FOR SEZ UNIT
• Setting up of unit in a Special Economic Zone;• Annual permission for sub-contracting;• Allotment of Importer-Exporter Code number;• Allotment of land/industrial sheds in the Special Economic
Zone;• Water connection;• Registration-cum-Membership Certificate;• Small Scale Industries Registration;• Registration with Central Pollution Control Board;• Power connection;• Building approval plan;• Sales tax registration;• Approval from inspectorate of factories;• Pollution control clearance, wherever required;• Any other approval as may be required from the State
Government.
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ALLOTMENT OF LAND OR BUILT UP SPACE
Rule 11 (5)
The land or built up space in the processing areashall be given on lease only to the entrepreneursholding a valid Letter of Approval issued underrule 19 and the lease period shall be co-terminus with the validity of the Letter of Approval.
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LEASE OF LAND / SPACE
Rule 11 (5) Provision Rule 11 (5) Provision
The Developer can give land or built upspace on lease in the processing area,
forcreating facilities such as canteen,
publictelephone booths, first aid centres,
crecheand such other facilities as may be
requiredfor the exclusive use of the Unit.
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ALLOTMENT OF LAND BY DEVELOPER
Rule 11 (8)Rule 11 (8)
The Developer may allot land in the processing area on lease basis to a
persondesiring to create infrastructure facilities
foruse by the prospective Units.
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NO SALE OF LAND BY DEVELOPER
Rule 11 (9)Rule 11 (9)
The Developer shall not sell the land in a
Special Economic Zone.
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ALLOTMENT OF LAND BY DEVELOPER IN NON- PROCESSING AREA
Rule 11 (10)Rule 11 (10)
The Developer may allot the land in the non-processing area for business and socialpurposes such as educational institutions,hospitals, hotels, recreation andEntertainment facilities, residential andbusiness complexes as approved by the BOA.
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FOREIGN COMPANIES
Rule 19 (7)Rule 19 (7)
Foreign companies can also set up manufacturing
units as their branch operations in the SpecialEconomic Zones in accordance with the
provisionsof Foreign Exchange Management Regulations,2000 of RBI.
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TRANSFER OF GOODS
Rule 38
The goods or services admitted into SpecialEconomic Zone without payment of dutymay be transferred or given on loan to a
Unitor Developer within the same Special Economic Zone or in another SpecialEconomic Zone or to an EOU or to a unit inEHTP unit without payment of duty.
4848
NET FOREIGN EXCHANGE EARNINGS
Rule 53
The Unit shall achieve Positive Net Foreign
Exchange to be calculated cumulatively for a
period of five years from the commencement
of production.
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MONITORING OF PERFORMANCE
Rule 54
Performance of the Unit shall be monitoredby the Approval Committee.In case the Approval Committee come to theconclusion that a Unit has not achievedpositive NFE Earning or failed to abide byany of the terms and conditions of the Letterof Approval or Bond-cum-Legal Undertaking,the said Unit shall be liable for penal actionunder the provisions of the Foreign Trade(Development and Regulation) Act, 1992.
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SELF DECLARATIONRule 75
Unless otherwise specified in these rules allinward or outward movement of goods intoor from the Zone by the Unit or Developershall be based on self declaration made andno routine examination of these goods shallbe made unless specific orders of theDevelopment Commissioner or thespecified Officer are obtained.
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EXIT FROM SEZ
Rule 74
The Unit may opt out of SEZ subject to payment of applicable duties on the imported or indigenouscapital goods, raw materials, components,consumables, spares and finished goods in stock.
Provided that if the unit has not achieved positiveNFE, the exit shall be subject to penalty that may beimposed under the FTDR, Act, 1992.
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ADDITIONAL AREA IN THE SEZ
Section 4 & 5Section 4 & 5
Additional area in the SEZ will be included on following conditions:
• Generation of additional economic activity• Promotion of exports of goods and
services• Promotion of investment• Additional employment opportunities• Development infrastructure facilities• maintenance of sovereignty and integrity
of India.
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CHANGE OF THE ENTREPRENEUR
Rule 19
Change of Entrepreneur permitted if theincoming Entrepreneur undertakes to
takeover the assets and liabilities of the
existingunit.
5454
CANCELLATION OF APPROVAL
Section 10
The Approval Committee may, at any time,if it has any reason or cause to believe thatthe entrepreneur has persistentlycontravened any of the terms andconditions or its obligations subject towhich the letter of approval was grantedto the entrepreneur, cancel the letter of approval.
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SINGLE ENFORCEMENTSINGLE ENFORCEMENT AGENCY AGENCY
Section 20, 21, 22
The Single Agency or Officer, as nominated by Central
Government , may, with prior intimation to theDevelopment Commissioner concerned, carry
out theinvestigation or search or seizure in the SpecialEconomic Zone or in a Unit if such agency or
officerhas reasons to believe (reasons to be recorded
inwriting) that a notified offence has been
committedor is likely to be committed in the Special Economic Zone:
5656
OFFENCES BY COMPANIES
Section 25
Where an offence has been committed by acompany, every person, who at the time theoffence was committed was in charge of, andwas responsible to, the company for the
conductof the business of the company, as well as the company, shall be deemed to be guilty of theoffence and shall be liable to be proceededagainst and punished accordingly
5757
EXEMPTIONS FROM
GOVT OF KERALA • Stamp Duty• Registration Tax• Sales Tax (KVAT)• Entry Tax• Self Certification (Labour Laws)• Building and Profession Tax• Stability Certificate for Buildings• Development Commissioner declared
as Conciliation Officer under Industrial Disputes Act.
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BOA
LOA
ACCEPTANCE
SEZ NOTIFICATION
AUTHORISEDOPERATION
AC APPROVAL
BLUT
ST REGNI.E. CODE
FORM - A
FORM – ISEZ / ST
5959
POLOA & AO LIST
ARE-1 (4) / FORM - I WITH ITEMS
CUSTOMS CLEARANCE
ARE-1 CERTIFICATION
ARE-1 RETURN
CONSUMPTION STATEMENT
OBTAIN PI
CUSTOMS / STRETURN