The development follows after it was found that goods from an SEZ in Mumbai were sold in the domestic market without paying the 4 per cent special additional duty (SAD) after an exemption clause was misinterpreted, the Customs sources said.

"As the whole issue has emerged from a notification of the Central Board of Excise and Customs (CBEC), there is an urgent need to amend that," a Commerce Ministry official said.
"The Commerce Ministry has already asked the Finance Ministry for its amendment," he added.
Customs sources have alleged that misinterpretation of the exemption in the Arshiya Free Trade Warehousing Zone (FTWZ), situated at Panvel in New Mumbai, which comes under the special economic zone Act, has led to losses of Rs 200 crore to the central exchequer in the last fiscal alone.
"We are an infrastructure providing company and we have got nothing to do with it. Even our clients are not at fault," Ajay Mittal, Chairman and Managing Director of Arshiya
FTWZ, said when sought his comments.
The FTWZ policy was announced by the Centre to create trade-related infrastructure to facilitate import and export of goods and services with freedom to carry out transactions in free currency. It is covered under the SEZ Act.
Since the rules governing FTWZs have not been formalised, the vacuum has led to emergence of grey areas at these places, which are also susceptible to tax evasion, said the sources.
Some of the goods manufactured at SEZs, which have been set up to promote exports, are allowed to be sold locally or in domestic tariff areas.
Such goods, including those from FTWZs, that were sold locally, had been subject to 4 per cent SAD and levies such as value added tax or sales tax.
The SAD was introduced in 1998 to put certain imported items on par with locally made goods, on which local taxes were levied. Imported goods were subject to 4 per cent SAD on their value, apart from other applicable Customs duties.


Latest News  from Business News Desk