The Central Board of Indirect Taxes and Customs, under the Ministry of Finance, has issued Instruction No. 06/2026-Customs dated April 27, 2026, providing clarity regarding the admissibility of duty drawback on re-export of goods supplied from Special Economic Zones (SEZ) to Domestic Tariff Area (DTA).
Background of the Issue
The Board has taken note of observations raised in Audit Para 5.8 of Audit Report No. 33 of 2025, which highlighted inconsistencies in the processing of drawback claims filed by DTA units under Section 74 of the Customs Act, 1962. It was observed that certain field formations denied drawback benefits on the premise that clearance from SEZ to DTA does not qualify as “import.”
Legal Position Examined
Upon detailed examination, the Board referred to provisions under Section 30 of the Special Economic Zones Act, 2005, which clearly stipulate that goods cleared from SEZ to DTA attract applicable customs duties, including anti-dumping, countervailing, and safeguard duties. Such clearances are governed by duty rates and valuation applicable on the date of removal.
Further, as per Section 2(o) of the SEZ Act, the definition of “import” includes movement of goods into SEZs and transactions between SEZ units, thereby reinforcing the special status of SEZs as deemed foreign territory for trade purposes.
Eligibility under Section 74 of Customs Act
Section 74 of the Customs Act allows duty drawback on re-export of duty-paid goods, subject to conditions such as:
- The goods must be capable of being easily identified, and
- The goods must have been previously imported into India
Given that SEZs are treated as foreign territory, movement of goods from SEZ to DTA is construed as import. Therefore, goods cleared into DTA on payment of duty satisfy the conditions for drawback eligibility upon re-export.
Key Clarification Issued
The Board has categorically clarified that:
Goods supplied from SEZ units to DTA, on which applicable duties have been paid, shall be treated as imported goods for the purpose of granting duty drawback under Section 74 of the Customs Act, 1962, upon their re-export.
Implementation and Compliance
All field formations under CBIC have been directed to align their practices with this clarification and ensure uniform processing of drawback claims. Any implementation issues or difficulties may be reported to the Board for further guidance.
The Instructions can be accessed at: https://taxinformation.cbic.gov.in/view-pdf/1000575/ENG/Instructions
