ONGC seeks sops for Mangalore SEZ

Suggests modification in SEZ rules for the same purpose

SANJAY JOG
Posted online: Thursday, October 19, 2006 at 0213 hours IST

MUMBAI, OCT 18: Oil & Natural Gas Corporation (ONGC) has sought slew of
sops for the upcoming special economic zone (SEZ) with an investment of
over Rs 45,000-crore at Mangalore, Karnataka. These concessions are
largely relating to sharing infrastructure for both domestic tariff area
(DTA) and SEZ, correlating import with corresponding export, execution
of bonds/undertakings of exports, central sales tax (CST) exemption and
input duty exemption to DTA supplier.
ONGC sources told FE, “ONGC and Mangalore Refinery and Petrochemicals
Ltd (MRPL) have submitted their suggestions to the Centre, the Karnataka
government and other agencies. We await responses from them.”

ONGC has argued that as per SEZ rules CST exemption is available against
submission of form I. ONGC wants form I be self generated by the SEZ
unit instead of collecting the form from the concerned sales tax division.

As per SEZ rules, DTA exporter is eligible for duty draw back on inputs,
which is a reimbursement. ONGC has recommended that instead of duty
drawback, the DTA exporter should be given exemption of duty.

However, some of the government departments opined that this was not
advisable as, input duty exemption could be vulnerable to misuse. On
execution of bonds/undertaking of exports through form-H, ONGC has
requested that provision relating to execution of bond may be dispensed
with.

On correlating import with corresponding export, ONGC drove home point
that as per the SEZ rules, correlation is to be done and accounts for
correlation is to be maintained.

According to ONGC, inputs would be received from DTA and valuation
should be net of return streams that are given by SEZ to DTA.

ONGC sought the petroleum ministry's intervention if the issue is not
resolved at the level of Karnataka government and its agencies. ONGC
said there was no provision in SEZ rules for sharing of infrastructure
between SEZ and DTA. “As MRPL is already having infrastructure like
tankages and pipelines, ONGC proposed that the use of existing
infrastructure be considered on the basis of mixed bonding, as is
prevalent at present.”

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