Meaning of FTZ in CEA, 1944
FEBRUARY 26, 2015
By Suhrid Bhatnagar
THE title suggests that this article is a study of the meaning of Free Trade Zone in the Central Excise Act, 1944. Surprisingly, there is no meaning in the Act , as of now!
Let us have a look on the issue.
Section 5A of the Act, which provides for power to grant exemption from duty of excise, in the explanation to the proviso to subsection (1) says -
In this proviso, "free trade zone", "special economic zone" and "hundred per cent export-oriented undertaking" shall have the same meanings as in Explanation 2 to sub-section (1) of section 3.
However Explanation 2 to sub-section (1) of section 3 reads as under:
Explanation 2.- In this proviso, -
(i) Omitted.
(ii) "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act.;
(iii) "Special Economic Zone" has the meaning assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).
Therefore, it can be seen that Explanation 2 to sub-section (1) of section 3 does not provide the meaning of "free trade zone".
A further study reveals that the Courier Imports and Exports (Clearance) Regulations, 1998 also refers to meaning / definition of free trade zone in section 3 of the Central Excise Act, 1944. Let us have a look into such provisions in these Regulations also:
Clause (i) to second proviso to regulation 5(3) reads as under:
(i) goods in respect of which an exemption from the levy of duty applicable to hundred per cent export oriented undertakings or to units in a free trade zone, as defined under section 3 of the Central Excise Act, 1944 (1 of 1944), is claimed;
Clause (a) to proviso to regulation 6(3) reads as under:
(a) goods originated from Hundred per cent Export Oriented Undertaking or unit in a Free Trade Zone or Software Technology Park or Electronic Hardware Technology Park, as defined under Section 3 of the Central Excise Act, 1944 (1 of 1944);
In fact, the clause (i) of the said Explanation 2, which provided the meaning of "free trade zone", was omitted with effect from 11.05.2007 by section 115 of the Finance Act, 2007 (22 of 2007).
Section 115 of the Finance Act, 2007 read as under:
Amendment of section 3.
115. In section 3 of the Central Excise Act, 1944 (hereinafter referred to as the Central Excise Act), in sub-section (7), - (1 of 1944)
(i) in the proviso, clause (1) shall be omitted;
(ii) in Explanation 2, -
(a) clause (i) shall be omitted;
(b) for clause (iii), the following clause shall be substituted, namely: -
"(iii) "Special Economic Zone" has the meaning assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005.'.( 28 of 2005.)
Presently, only the Special Economic Zones Act, 2005 provides a meaning of Free Trade Zone.Section 2(n) reads -
(n) "Free Trade and Warehousing Zone" means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on;
(The views expressed are strictly personal.)
Editor - Netizens may also like to read the Budget Run-up 2012 article - No Pre-Deposit at First Stage of Appeal; One more Amnesty - Bring money back to where it belongs.
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