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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Special Economic Zones

Sunrise Components Pvt Ltd, a Unit in an SEZ, imports machinery from Germany solely to carry on its authorised operations. Under the SEZ Act, 2005, what is the position on customs duty on this import?

The Unit is entitled to exemption from customs duty on goods imported into the SEZ for its authorised operations. The Act grants this exemption to every Developer and entrepreneur, so both Developers and Units benefit, subject to the conditions the Central Government prescribes.

  1. AThe Unit is entitled to exemption from customs duty on goods imported into the SEZ for authorised operationsCorrect
  2. BThe Unit must pay customs duty and later claim a refund on export
  3. CExemption applies only to the Developer and not to a Unit
  4. DExemption applies only if the machinery is brought from the Domestic Tariff Area

Explanation

Section 26(1)(a) entitles every Developer and entrepreneur to exemption from customs duty on goods imported into an SEZ or Unit to carry on authorised operations. Option C is wrong because the section covers both Developer and entrepreneur. Option D confuses imports with goods brought from the DTA, which is dealt with separately.

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