Duty-free SEZs are posing problems for Customs | mumbai | Hindustan Times
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Duty-free SEZs are posing problems for Customs

Customs officials are facing a dilemma in making cases at Special Economic Zones (SEZ), which the department considers a hot area for smuggling activities.

mumbai Updated: Sep 26, 2010 01:49 IST
Manish Pachouly

Customs officials are facing a dilemma in making cases at Special Economic Zones (SEZ), which the department considers a hot area for smuggling activities.

A government notification issued on January 13 has deterred customs authorities from entering the SEZs and conduct raids on importers involved in smuggling.

The department keeps a watch on the SEZs, because the state has declared such areas duty-free. Therefore, SEZs are highly misused especially in the jewellery trade. It is legal to import jewellery duty-free for further processing only on the condition that it is re-exported after work is done.

However, some errant importers divert the jewellery to the local markets and fake jewellery is exported.

The notification issued by the commerce ministry has made it compulsory for the customs department to seek permission from the development commissioner posted at the SEZ to make a case.

The notification has given the development commissioner the designation of “enforcement officer” for the purpose of offences committed in the SEZ.

“We do not share any information even with our closest counterparts or family while making a case and before taking action against the concerned group,” a senior customs official said requesting anonymity.

He said seeking the development commissioner's permission means the officials working on a case would have to reveal details of the case in advance.

The official said this is why since January, the department has not conducted any raids inside the SEZ premises.

The officials are facing another problem because of the notification. If officials conduct raids inside the SEZ (with the commissioner’s permission), they have to register cases only under the Foreign Trade (Development and Regulation) Act (FTDR Act) and not under the Customs Act that deals with smuggling, and is more stringent.

“That is because the notification has specified the acts punishable only under the FTDR Act as notified offences in the SEZ,” the official said. He said this means when making cases inside the SEZ only the FTDR Act would apply.No senior customs authority was willing to comment on the issue.

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