THE Finance Ministry has deferred the implementation of the much-touted Special Economic Zone (SEZ) scheme from May 1 to May 11, a day after the last leg of the four-phased general elections.

Accordingly, any supplies from the domestic tariff area (DTA) to units in the SEZs would be considered physical exports only after May 11, when the scheme is operationalised by the Revenue Department. The eligibility for duty-entitlement passbook (DEPB) benefits on supplies made from DTA units to the SEZ would also arise only when the scheme is entirely operationalised.

When asked if the nod of the Election Commission had been sought for the latest deferment, a Finance Ministry official replied that the Revenue Department hoped that there would be no objections and had, therefore not sought the commission's nod. "Since the voting process is likely to be completed on May 10, we decided to opt for May 11. From this date, nobody can claim that we are trying to influence the voter. Even otherwise, the SEZ scheme is an issue that predates the announcement of general elections," official sources said.

Special provisions relating to SEZs were inserted in the Customs Act through the Finance Act, 2002, by creating a new Chapter XA. These provisions were to be brought into operation from a date to be notified. Till now, Chapter XA of the Customs Act pertaining to the SEZ scheme has not been brought into operation.

However, this is not the first time that the implementation of the SEZ scheme has been pushed to a later date.

Although the Revenue Department, in July 2003, came up with necessary notifications for according duty exemptions on various types of transactions with SEZs, their implementation date was being postponed from time to time.

Initially, the notifications were to come into effect on August 15 last year, then the date was shifted to October 15.

Then again, the Revenue Department specified December 1 as the date from which the scheme would come into force.

These have been again postponed to January 1, 2004, March 1, April 1, May 1 and now May 11.