The Central Board of Indirect Taxes and Customs (CBIC) has clarified that goods supplied by a Special Economic Zone (SEZ) unit to the Domestic Tariff Area (DTA) on payment of applicable customs duties, and subsequently re-exported, shall be treated as “imported goods” for the purpose of claiming drawback under Section 74 of the Customs Act, 1962. 

The clarification has been issued through Instruction No. 06/2026-Customs dated 27 April 2026 by the Drawback Division of CBIC following objections raised in Audit Report No. 33 of 2025 regarding inconsistent practices by field formations. 

According to the Board, the audit had observed that divergent practices were being followed while processing drawback claims filed by DTA units under Section 74 of the Customs Act. In several cases, customs formations denied drawback benefits by taking the view that clearance of goods from an SEZ to the DTA could not be treated as an “import.” 

Examining the issue, CBIC referred to Section 30 of the SEZ Act, 2005, which provides that removal of goods from an SEZ into the DTA attracts customs duties, including anti-dumping duty, countervailing duty, and safeguard duty, as applicable under the Customs Tariff Act, 1975. The Board noted that the applicable rate of duty and tariff valuation would be the rate and valuation in force on the date of removal from the SEZ. 

The Board further referred to Section 2(o) of the SEZ Act, 2005, which defines “import” in relation to SEZ operations. CBIC observed that, for trade operations and duty purposes, an SEZ is treated as foreign territory within India. Consequently, movement of goods from an SEZ into the DTA may be construed as an import. 

CBIC also analysed Section 74 of the Customs Act, 1962, which permits drawback on re-export of duty-paid goods that were previously imported into India and are capable of being easily identified. The Board stated that the conditions under Section 74 appear to be fulfilled in such transactions because the goods entering DTA from SEZ are effectively treated as imported goods and are duty paid. 

Clarifying the legal position, the instruction categorically states that where goods are cleared into the DTA from an SEZ unit on payment of applicable duties and are later 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. 

The clarification is expected to bring uniformity in processing drawback claims across customs field formations and resolve disputes arising from denial of drawback benefits in re-export cases involving SEZ-origin goods. It may also provide significant relief to DTA units engaged in international trade operations where goods sourced from SEZs are subsequently exported out of India.

Notification Details

Instruction No. 06/2026-Customs

Date: 27/04/2026

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