EPCES CIRCULAR NO. 35 DATED 16-11-2006

<p align="center"><font color="#800000" face="Georgia"><b>EPCES CIRCULAR NO. 35
DATED 16-11-2006<br>
Sub : Ministry of Commerce &amp; Industry issues Instruction No. 7/2006 dated
14/11/2006 allowing setting up of new trading units in the SEZs </b></font></p>
<p><font face="Georgia">Department of Commerce, Ministry of Commerce &amp; Industry
has issued Instruction No. 7/2006 dated 14/11/2006, a copy enclosed, which has
now permitted setting up of a new trading unit in the SEZ. Accordingly, the
Department of Commerce’s earlier Instruction No. 5/2006 dated 31/5/2006 stands
withdrawn.</font></p>
<p><font face="Georgia">Ministry of Commerce &amp; Industry has earlier issued 3
instructions and one amendment on the subject. The complete position in respect
of a trading activity in the SEZ is given as follows:-</font></p>
<blockquote>
    <p><font face="Georgia">1. Ministry of Commerce &amp; Industry had issued
    Instruction No. 1/2006 dated 24/3/2006 giving the direction that a trading
    unit in the SEZ shall not be permitted to procure goods from the domestic
    tariff area (DTA) for trading.</font></p>
    <p><font face="Georgia">2. Ministry of Commerce &amp; Industry issued
    Instruction No. 4/2006 dated 24/5/2006, in which Instruction No. 1/2006 was
    reviewed and the trading units were allowed to source goods from the DTA.</font></p>
    <p><font face="Georgia">3. Ministry of Commerce &amp; Industry issued
    Instruction No. 5/2006 dated 31/5/2006 wherein directions were issued that
    proposals for setting up of new trading units in the SEZs may be kept on
    hold, until further orders. </font></p>
    <p><font face="Georgia">4. Ministry of Commerce &amp; Industry issued
    Notification dated 10/8/06 wherein Rule 76 of the SEZ Rules, 2006, was
    amended and an explanation was inserted as follows:-</font></p>
    <blockquote>
        <p><font face="Georgia">“Explanation.- The expression “Trading”, for the
        purposes of the Second Schedule of the Act, shall mean import for the
        purposes of re-export.”.</font></p>
    </blockquote>
    <p><font face="Georgia">5. Ministry of Commerce &amp; Industry has issued
    Instruction No. 7/2006 dated 14/11/2006, wherein earlier Instruction No.
    5/2006 dated 31/5/2006 has been withdrawn and accordingly the setting up of
    the new trading units in the SEZs has<br>
    been allowed. However, the income tax benefit to such trading units will be
    available only in accordance with amendments carried out in Rule 76 of the
    SEZ Rules, 2006, as explained above, on 10/8/2006.Cumulative efect of all
    the above stated instructions is that a trading activity is allowed in the
    SEZ for both, the existing units as well as for the new trading units, which
    may be set up. These trading units are allowed to procure goods from the DTA
    as well. However, income tax benefit, as given in the IInd Schedule of the
    SEZ Act, 2005, shall be available only for import for the purpose of
    re-export.</font></p>
</blockquote>
<p><font face="Georgia">This is for your kind information please.</font></p>