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    APR of a Manufacturing SEZ

    1. Introduction
    • As per Rule 22 of the Special Economic Zone Rules, 2006 (“Rules”), the SEZ unit has to prepare a report showing SEZ unit post commencement of production and submit the same to the Development Commissioner who shall place the same before the Approval Committee for consideration. The preparation of Annual Performance Report (APR) has to be done independently by each SEZ unit located in SEZ area. An APR, which has to be duly certified by an independent Chartered Accountant [[i]], has to be filed with the Development Commissioner of the subject unit, who shall place the same before the Approval Committee for consideration [[ii]]. The Approval Committee does annual review of the performance of every unit and the compliance with the conditions of approval on the basis of the APR.
    1. Due date of filing / submission of the APR

    The APR must be duly Certified by a Chartered Accountant and must be submitted to the particular SEZ Additional development commissioner within 180 days from the end of the Financial Year (“FY”) in which commercial production of the unit has been initiated and every year thereafter. The form for the same is, Form-I (format enclosed as Annexure – A). The form has been prescribed by the Rules issued under the SEZ Act. 

    • Purpose of APR

    The basic purpose of the APR is to identify the annual performance of the SEZ unit using the net foreign exchange earnings in a specified period by the SEZ unit.

    1. Net Foreign Exchange Earnings:

    The Net Foreign Exchange Earnings (“NFE”) earned by a SEZ unit has to be computed using the following formula:

    Net foreign Exchange earnings = Inflow of foreign exchange (A) – Outflow of Foreign exchange(B) 

    1. Units which would fall within the purview of monitoring

    The units which would fall within the purview of monitoring (by the Approval Committee) are as follows:

    vIncaseaunit has not completed 5 years from the date of commencement of production, it will be monitored for the completed years;

    vAnnualmonitoring in the case of old units which have completed more than 5 years will be undertaken only for such years which fall in the subsequent block of 5 years.

    vItispertinent to note that units which have not completed one year of operation from the date of commencement of production will not be monitored. 

    1. Criteria for annual monitoring

    Units with negative NFE in the 1st and 2nd year of commercial operations shall be placed under the Watch List to assess their performance.

    If a unit continues to have a negative NFE by the end of 3rd year, a Show Cause Notice will be issued by Additional Development commissioner. 

    If the negative performance continues till the end of 5th year, the Development Commissioner shall initiate penal action under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the rules made there under. 

    VII. Penal provisions 

    As stated above, if the negative performance continues till the end of 5th year, the Development Commissioner shall initiate penal action under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the rules made there under. 

    Any SEZ unit, while undertaking the Bond-Cum-Legal Undertaking (“BLUT”) (format prescribed in Form-H of the Rules) undertakes that in case of any default in filing the APR within the prescribed time limit or in case of wrong submission, the permission granted for the prescribed operations may be withdrawn and / or the permission for further imports and sales in the Domestic Tariff Area (“DTA”) may be stopped.

    NOTE :Unit having Multiple Licences are required to file the APR separately for each licence under the Jurisdiction.

    FORM For FILLING THE ANNUAL PERFORMANCE REPORT FOR SEZ UNITS (Rule 22) 

    FORM-I 

    VIII. DOCUMENTS REQUIRED FOR PREPARATION OF ANNUAL PERFORMANCE REPORT (APR):

    1. EXPORTS
    2. Details of all exports done during the year (including capital goods, raw materials, consumables, etc). This should include the segregation of the cost of goods i. e, FOB value, insurance and freight.
    3. Supporting documents for the exports i. e, Bill of lading, invoices etc
    4. Cumulative value of exports for the last 5 years period. 
    5. IMPORTS
    6. Details of all Imports done during the year (including raw materials, consumable, packing materials, components etc). This should include the segregation of the cost of goods i. e, CIF value and other associated costs. 
    7. Supporting documents for the imports i. e, Bill of entry, invoices etc
    8. Opening and closing balance of imported goods (including capital goods, raw materials, consumables, packing materials, components etc) of Previous Financial Year (“FY”) 
    1. Cumulative value and details of capital goods imported (including spares) from the inception of the enterprise till the Previous Financial year (i. e, FY 2016-17)

     

    1. Amount of imported raw materials, consumables, packing materials, components, capital goods etc., transferred to / from any SEZ / Export Oriented Units (EOUs) / Software Technology Parks (STPs) / Electronics Hardware Technology Parks (EHTPs)

     

    1. OTHERS 
    1. Downloaded records from SEZ online portal. This would require records of imports, exports, DTA purchases and DTA sales 
    2. Details of DTA (local) purchases of capital goods, raw materials, consumable, packing materials, components etc
    3. Domestic Tariff Area (DTA)sales including sale of scrap, by-product etc
    4. Share allotment details of the enterprise
    5. Records of overseas investment 
    1. Employment record - The list should also contain the gender of the employee and should contain the following bifurcations:

     

    1. List of employees hired directly by the enterprise
    2. List of employees hired on contract basis 
    1. Soft copy of FAR register as on 31st March of the Financial Year for which APR is being prepared 
    1. Trial Balance for the period.
    2. Balance Sheet as on Close of the Financial Year
    3. Soft copies of all Bond Cum Letter of Under Takings (BLUT) executed till date
    4. Soft copies of all Letter of Approval (LOA) issued by the Development Commissioner 
    1. List and details of External Commercial Borrowings (ECBs) pending at the end of the previous year. 
    1. Details of any outflow of foreign exchange during the year in the form of royalty, technical know-how fee, repatriation of dividend / profits, payment of sales commission, interest on overseas borrowings, etc 
    1. Any cases pending for foreign exchange realization.
    2. List of Form I issued under the Central Sales Tax Act, 1956 (April'17 to June'17)

    Soft copies of Sales Tax Returns & VAT Returns (April'17 to June'17)

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