Supply of material to sez
This query is : Resolved
11 February 2012
WE ARE IN A IRON AND STEEL MANUFACTURING BUSINESS. ONE OF THE PARTY HAS APPROACHED US AND INFORMED US THAT THEY ARE IN SEZ AND NO EXCISE OR VAT IS APPLICABLE ON THEM. MY QUERRY IS:
1. WHAT PROCEDURE WE SHOULD FOLLOW IN ORDER TO ENSURE THAT THERE IS NO VIOLATION FROM TAX ANGLE?
2. WHAT ARE THE DOCUMENTATION REQUIRED FOR SUPPLY OF MATERIAL TO SEZ?
1. WHAT PROCEDURE WE SHOULD FOLLOW IN ORDER TO ENSURE THAT THERE IS NO VIOLATION FROM TAX ANGLE?
2. WHAT ARE THE DOCUMENTATION REQUIRED FOR SUPPLY OF MATERIAL TO SEZ?
20 February 2012
SEZ will issue CT-3 in your favor, and you have to follow the procedure of export under ARE-1/2/3 as applicable, and clear the goods without payment of duty
for vat they will issue form -I from department,
for vat they will issue form -I from department,
20 February 2012
I THINK CT-3 FORM IS REQUIRED FOR SUPPLY OF MATERIAL TO EOU AND NOT SEZ
20 February 2012
I THINK CT-3 FORM IS REQUIRED FOR SUPPLY OF MATERIAL TO EOU AND NOT SEZ
26 July 2025
Let's clarify the correct procedure and documentation for supplying materials to a **SEZ (Special Economic Zone)** unit from the perspective of excise duty and VAT.
---
### 1. **Understanding SEZ vs EOU**
* **SEZ (Special Economic Zone)** and **EOU (Export Oriented Unit)** are different schemes.
* **CT-3 Form** is issued by the Excise Department for **supplies to EOU/FTWZ** (not for SEZ).
* SEZ supplies are treated as **zero-rated supplies under GST** (post-GST) or **exports under Excise/VAT regime** (pre-GST).
---
### 2. **Procedure for supply of materials to SEZ**
* The supply to SEZ is considered as **export of goods**.
* You need to follow **export clearance procedures** at the Central Excise front.
* Clearance of goods without payment of excise duty is permitted for export (including to SEZ).
---
### 3. **Documentation required**
| Document | Purpose | Issued by / Action |
| ----------------------------------------- | -------------------------------------------------- | -------------------- |
| **ARE-1 / ARE-2 / ARE-3** | Shipping Bill / Export Declaration | Customs Authority |
| **Invoice** | Commercial invoice showing SEZ unit details | Supplier |
| **Declaration** | Letter stating goods supplied for export | Supplier |
| **CT-3 Form** | **Not applicable for SEZ supplies** (used for EOU) | NA |
| **Form ‘I’ or VAT Exemption Certificate** | VAT exemption on interstate sales to SEZ | SEZ unit or VAT Dept |
---
### 4. **VAT/State Tax on supply to SEZ**
* Supplies to SEZ units are treated as **zero-rated supplies**.
* Supplier can supply goods **without payment of VAT** upon submission of prescribed documents (like Form ‘I’ or a declaration).
* Proper documentation from SEZ unit confirming their status is essential.
---
### 5. **Summary**
| Aspect | SEZ Supply Procedure |
| ------------- | ------------------------------------------------------------- |
| Excise Duty | Export procedure using ARE-1/2/3, no duty payable |
| CT-3 Form | Not applicable for SEZ (used for EOU) |
| VAT | Zero-rated supply, submit Form ‘I’ or exemption certificate |
| Documentation | Invoice, Shipping Bill (ARE-1/2/3), Declaration from SEZ unit |
---
### **Recommendations:**
* Verify SEZ unit status and obtain their declaration.
* Follow export procedures under Central Excise.
* Keep proper documentation to avoid any tax disputes.
* For VAT, obtain Form ‘I’ or similar exemption certificates.
---
If you want, I can help draft a **declaration format for SEZ supplies** or a **checklist of documents** you should maintain.
Would that help?
---
### 1. **Understanding SEZ vs EOU**
* **SEZ (Special Economic Zone)** and **EOU (Export Oriented Unit)** are different schemes.
* **CT-3 Form** is issued by the Excise Department for **supplies to EOU/FTWZ** (not for SEZ).
* SEZ supplies are treated as **zero-rated supplies under GST** (post-GST) or **exports under Excise/VAT regime** (pre-GST).
---
### 2. **Procedure for supply of materials to SEZ**
* The supply to SEZ is considered as **export of goods**.
* You need to follow **export clearance procedures** at the Central Excise front.
* Clearance of goods without payment of excise duty is permitted for export (including to SEZ).
---
### 3. **Documentation required**
| Document | Purpose | Issued by / Action |
| ----------------------------------------- | -------------------------------------------------- | -------------------- |
| **ARE-1 / ARE-2 / ARE-3** | Shipping Bill / Export Declaration | Customs Authority |
| **Invoice** | Commercial invoice showing SEZ unit details | Supplier |
| **Declaration** | Letter stating goods supplied for export | Supplier |
| **CT-3 Form** | **Not applicable for SEZ supplies** (used for EOU) | NA |
| **Form ‘I’ or VAT Exemption Certificate** | VAT exemption on interstate sales to SEZ | SEZ unit or VAT Dept |
---
### 4. **VAT/State Tax on supply to SEZ**
* Supplies to SEZ units are treated as **zero-rated supplies**.
* Supplier can supply goods **without payment of VAT** upon submission of prescribed documents (like Form ‘I’ or a declaration).
* Proper documentation from SEZ unit confirming their status is essential.
---
### 5. **Summary**
| Aspect | SEZ Supply Procedure |
| ------------- | ------------------------------------------------------------- |
| Excise Duty | Export procedure using ARE-1/2/3, no duty payable |
| CT-3 Form | Not applicable for SEZ (used for EOU) |
| VAT | Zero-rated supply, submit Form ‘I’ or exemption certificate |
| Documentation | Invoice, Shipping Bill (ARE-1/2/3), Declaration from SEZ unit |
---
### **Recommendations:**
* Verify SEZ unit status and obtain their declaration.
* Follow export procedures under Central Excise.
* Keep proper documentation to avoid any tax disputes.
* For VAT, obtain Form ‘I’ or similar exemption certificates.
---
If you want, I can help draft a **declaration format for SEZ supplies** or a **checklist of documents** you should maintain.
Would that help?
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