Finmin seeks clarity on Customs provision in SEZs

The woes of special economic zones (SEZ) just don’t seem to end. Fresh trouble has now broken out with the revenue department seeking clarity on provision in the SEZ Act that makes these zones deemed to be outside Customs territory. The matter has been referred to department of legal affairs for a detailed examination, sources said. The issue comes close on the heels of some states writing to the Centre about exemption on stamp duty provided in the SEZ Act. As per the provisions in the Act, since the territory is deemed to be outside the Customs, adjudication, appeal and enforcement provisions in the Customs Act will not apply. This means that if there is illegal import or export of any banned substance –– such as narcotics, explosives or tiger skins –– Customs department will be unable to tackle as it would not be authorised to open the containers. And this would be the case with not just personnel outside the zone but also inside the zone. This is because the provision that deals with smuggling of banned substances in the Customs Act will not be applicable in SEZs as the SEZ Act does not have specific provisions on enforcement. Besides, there is inherent contradiction in the section dealing with this provision. While the first part says zones are deemed to be territory outside Customs territory, part two says the zone will deemed to be a port, inland container depot or land Customs station under Section 7 of the Customs Act. Sources said only one of the two provisions can be operationalised. “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. (2) A Special Economic Zone shall, with effect from such date as central government may notify, be deemed to be a port, inland container depot, land station and land Customs stations, as the case may be, under Section 7 of the Customs Act, 1962: Provided that for the purposes of this section, the central government may notify different dates for different special economic zones,” the Act says. The legal affairs department will examine the operational aspect of this provision of the Act, after which guidelines can be formulated. By Ms.Bobby Aanand, Metropolitan Jury.

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