CAG reports Rs 246.72 crore loss from SEZ policy

New Delhi, Mar 12 (UNI) After facing a nationwide agitation from farmers, the special economic zones (SEZs) scheme has come under the scrutiny of the Comptroller and Auditor General (CAG) with its latest report revealing a revenue loss of Rs 246.72 crore due to the government policy.

The review of the policy and procedures governing the management and functioning of SEZ units by CAG, has thrown up major weaknesses.

''The SEZs provided with import duty exemption, have been flouting the provision by selling goods in the domestic market,'' the report of CAG presented in the Parliament has said.

CAG has found a revenue loss of Rs 246.72 crore, while an additional Rs 1,724.67 crore was foregone or could not be recovered in the absence of enabling provisions, the report added.

There was no restriction on 'deemed exports' being reckoned as exports, enabling the units to attain positive net foreign exchange earnings (NFE) predominantly through deemed exports rather than actual exports, the report pointed out.

''The government may consider restricting reckoning of deemed exports for the purpose of calculating NFE by an appropriate scale,'' the report recommended.

The units under the domestic tariff area (DTA), which are outside the SEZ area, were put under disadvantageous position as no provision had been made to recover duty foregone on inputs procured by the SEZ units and used in the manufacture of products, which were cleared at 'nil' rate of duty in the DTA.

''The government needs to address this disparity to ensure a level playing field for the units in the DTA as well as in the SEZ,'' the report said.

The report has a total revenue implication of Rs 2909.70 crore highlighted in the three streams of indirect taxes (central excise, service tax and customs) revealing systems as well as compliance deficiencies.

UNI BJR MP KN1709