Advisory Circular
CBIC Instruction No. 06/2026-Customs dated 27th April, 2026
Drawback under Section 74 on Re-export of Duty-Paid Goods Cleared from SEZ to DTA
Background
The Comptroller and Auditor General of India, in Audit Para 5.8 of Audit Report No. 33 of 2025, observed that field formations were following divergent practices while processing duty drawback claims filed by Domestic Tariff Area (DTA) units under Section 74 of the Customs Act, 1962. Certain formations had taken the view that clearance of goods from a Special Economic Zone (SEZ) into the DTA does not constitute an “import”, and on that basis declined to sanction drawback when such duty-paid goods were subsequently re-exported.
Statutory Framework Examined by the Board
On examination, the Board has revisited the relevant statutory provisions, particularly under the SEZ Act, 2005 and the Customs Act, 1962, to settle the issue:
Section 30 of the SEZ Act, 2005 – provides that removal of goods from an SEZ into the DTA shall attract Customs duties (including anti-dumping, countervailing, and safeguard duties) under the Customs Tariff Act, 1975. The applicable rate of duty and tariff valuation shall be that in force on the date of removal from the SEZ; where such date is not ascertainable, the rate and valuation in force on the date of payment of duty shall apply.
Section 2(o) of the SEZ Act, 2005 – defines “import”, in the context of a Unit or Developer, as bringing goods (or receiving services) into the SEZ from a place outside India, or from another Unit/Developer of the same or different SEZ.
Section 74 of the Customs Act, 1962 – permits drawback on re-export of duty-paid goods, subject to the twin tests of the goods being (i) capable of being “easily identified” and (ii) having been “imported into India”.
Board’s Clarification
The Board has noted that, for the purposes of trade operations and duties, an SEZ is treated as foreign territory within India. Consequently, movement of goods from an SEZ into the DTA may legitimately be construed as an “import” for the purposes of Section 74 of the Customs Act, 1962. On a comprehensive reading of the SEZ Act provisions, the Board has held that there is no lacuna in the legal position governing DTA sale of SEZ goods.
Accordingly, the Board has clarified that where goods are cleared from an SEZ Unit into the DTA on payment of applicable duties and are thereafter re-exported, such goods shall be treated as imported goods for the purposes of disbursement of drawback under Section 74 of the Customs Act, 1962.
M&C Perspective
This clarification is a welcome and pragmatic alignment of administrative practice with the legal architecture of the SEZ Act. It puts to rest the divergent stand taken by certain field formations and protects DTA buyers who, having paid Customs duties on SEZ-procured goods, subsequently re-export those goods in their original identifiable form.
Key practical takeaways for DTA importers procuring from SEZ Units:
(a) Eligibility for Section 74 drawback now stands clarified for re-export of duty-paid goods originally cleared from an SEZ to the DTA, subject to satisfaction of identity and other conditions prescribed under Section 74 read with the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995.
(b) Documentation must establish a clear audit trail – SEZ Bill of Entry for DTA clearance, payment of duty, and identity of goods at the time of re-export – to satisfy the “easily identified” test.
(c) Pending claims that were rejected or kept in abeyance on the ground that SEZ-to-DTA clearance is not an “import” should now be re-agitated before the jurisdictional Customs authorities by placing reliance on this Instruction.
(d) Where drawback was already denied through a speaking order, suitable appellate or review remedy may be considered, citing the Board’s present clarification as a binding administrative position favouring the assessee.
We shall be happy to assist clients in evaluating eligibility, preparing claims, and addressing legacy disputes arising under Section 74 in the context of SEZ-to-DTA clearances.
Issued for information
Mohan & Chandrasekhar, Chartered Accountants
Hosur | Bengaluru | Chennai