Approvals, performance obligations, clearance into the domestic market, records, and exit. Advisory on the conditions before they bind, and representation when the zone authorities raise them.
The letter of approval sets the activity, the capacity and the conditions the unit will be measured against for years. Getting it drawn correctly, and amended when the business changes, prevents most of what follows.
The unit has to be a positive net foreign exchange earner across a five year block and it reports annually. A weak year is not a breach on its own, but an unexplained one becomes a proceeding.
Goods moving from the zone into the domestic tariff area are treated as an import and attract duty accordingly. What is dutiable, at what value, and on what rate is where the disputes sit.
Zone procedure is document driven. Almost every dispute we see in this area is a record that was not made at the time rather than a position that was wrong.
Exit is where the accumulated position is settled. Duty on the remaining capital goods and inputs, the depreciation claimed, and the obligations still open are all examined at once.
Proceedings come from two directions, the Development Commissioner on performance and the zone Customs on duty. Keeping one consistent position across both is the practical skill in this area.
| What | The requirement | Provision |
|---|---|---|
| Commence operations | Within one year of the letter of approval, extendable by the Development Commissioner | Rule 19(4), SEZ Rules 2006 |
| Net foreign exchange | Positive cumulatively across a block of five years from the start of production | Rule 53, SEZ Rules 2006 |
| Annual performance report | Filed with the Development Commissioner, certified, by the thirtieth of June | Rule 22(3), SEZ Rules 2006 |
| Clearance into the domestic market | Duty as leviable on the goods when imported into India | Section 30, SEZ Act 2005 |
| Records | Maintained in the form the rules prescribe and produced on demand | Rule 22, SEZ Rules 2006 |
Gujarat carries several zones, at Kandla, Surat, Dahej and Gandhinagar, each with its own Development Commissioner and its own practice. The limitation calculator covers the SEZ periods.
Zone procedure assumes contemporaneous documentation. A movement that was genuine but undocumented is treated the same as one that was not, and reconstructing it afterwards is far harder than it should be.
Net foreign exchange is cumulative across the block, so a poor year inside a strong block is not a breach. A very large number of shortfall notices are answered by simply computing the block correctly.
Businesses evolve faster than their letters of approval. Where the activity has moved beyond what was approved, the fix is an amendment applied for in time, not an explanation offered later.
At exit, the duty on capital goods turns on the depreciation allowed and the period held. That computation is worth doing carefully before the application goes in, not after.
Clearance from a zone into the domestic market is treated as an import. That single principle drives the duty, the valuation and most of the disputes, and it surprises businesses that think of the movement as a domestic sale.
The Development Commissioner looks at performance and the zone Customs looks at duty. They read each other's records. A position taken to explain a shortfall is quoted in the duty proceeding, so it has to be one position.
The framework for zones has been under review for some years and proposals have been floated to replace or amend it. Nothing here assumes a change that has not been notified. Where a proposal matters to a decision you are taking, we will tell you it is a proposal.
Not on its own. The test is cumulative across the five year block. What matters is the block position and whether the shortfall can be explained and recovered inside it. Many notices on this point are answered by computing the block correctly and showing the trajectory.
The clearance is treated as an import of the goods into India, so duty is worked out on that footing. The questions that follow are the value, the rate and the classification on removal, and whether any exemption applies to the goods in that form.
Yes, and the answer is an amendment or broad banding applied for before the position is questioned. An activity outside the approval is the kind of thing that surfaces during an audit or at exit, when it is much harder to regularise.
Compute the duty on the capital goods and inputs still held, with the depreciation, and identify every obligation still open. Exit settles all of them at once, and going in without that number is how businesses end up negotiating from a position they have not modelled.
A first conversation costs you nothing but the hour, and it is where we tell you honestly whether the matter needs us at all.