SEZs come under Foreign Trade Act

The units and developers of special economic zones for exports will be subjected to the same penal laws as exporters and importers elsewhere in the country are, a government notification has said.

Clarifying the issue of applicability of penal provisions in SEZs, the government said the the SEZ would come under the the Foreign Trade (Development and Regulation) Act.

The Foreign Trade Act provides for punishment for violation of the foreign trade rules. Besides exporters and importers, it also covers export-oriented units.

The notification to extend the ambit of the Foreign Trade Act to units in SEZs by operationalising Sections 20, 21 and 22 (regarding agency to inspect, enforcement officer and investigation, inspection and search or seizure in SEZs) of the SEZ Act was issued by the government on January 13.

Through another notification, the government has also authorised the development commissioner of the each SEZ to be the enforcement officer in respect of the notified offences committed in that zone.

The violations include delaying payments of fiscal penalties, evading taxes and duties. A total of 579 SEZs have been approved in the country and 335 of them have been notified.

Of them, 101 are operational.

For domestic sales from these special zones, which enjoy tax holidays and other benefits, manufacturers have to pay customs duty.