Key Clarification on Re-export Drawback for SEZ-Supplied Goods
The Central Board of Indirect Taxes and Customs (CBIC) has issued a significant clarification regarding the eligibility of goods, originally supplied from Special Economic Zones (SEZ) to the Domestic Tariff Area (DTA) and subsequently re-exported, for duty drawback. This directive aims to resolve inconsistencies in how such claims are processed by customs authorities.
Understanding the SEZ-to-DTA Movement
Historically, some customs offices have denied duty drawback claims under Section 74 of the Customs Act, 1962, by not recognizing the movement of goods from an SEZ to a DTA as an import. However, the CBIC, in its Instruction No. 06/2026-Customs dated 27 April 2026, has reinforced the legal understanding that SEZs are treated as foreign territory for trade purposes.
This principle is rooted in Section 30 of the SEZ Act, 2005. This provision mandates that when goods are moved from an SEZ into the DTA, they are subject to applicable customs duties, including anti-dumping, countervailing, and safeguard duties, as outlined in the Customs Tariff Act, 1975. The rate of duty and tariff valuation applied are those in effect on the date of removal from the SEZ, or if that date is unclear, on the date of duty payment.
Furthermore, the SEZ Act, 2005, defines “import” to include bringing goods or receiving services into an SEZ from outside India, or receiving goods or services between units within the same or different SEZs. Consequently, the CBIC has that the clearance of goods from an SEZ into the DTA is indeed considered an import for duty purposes.
Eligibility for Duty Drawback
Section 74 of the Customs Act, 1962, allows for a duty drawback on the re-export of imported goods that have already paid customs duties, provided they can be easily identified. The CBIC’s recent instruction confirms that goods originally supplied from an SEZ to a DTA, upon which applicable duties were paid, meet these criteria when they are subsequently re-exported.
The key takeaway is that these SEZ-to-DTA cleared goods, having been treated as imports due to the payment of duties, are now explicitly eligible for duty drawback under Section 74 of the Customs Act, 1962, upon their re-export.
Action Required by Field Formations
The CBIC has directed all relevant customs field formations to process duty drawback claims accordingly. This means that any instances of goods moving from an SEZ to a DTA, with duties paid, must now be recognized as imports for the purpose of disbursing drawback claims under Section 74 of the Customs Act, 1962.
The Board has requested that any difficulties encountered in implementing this clarification be brought to its notice.
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Readers should treat this as a tax and compliance update, not as personal advice.
This article is for general information based on available source information. It should not be considered legal, tax, investment, or financial advice.