CBIC Clarifies Duty Drawback On SEZ-To-DTA Re-Exports

The government has clarified that goods supplied from Special Economic Zone (SEZ) units to the Domestic Tariff Area (DTA) on payment of applicable duties and subsequently re-exported, will be treated as imported goods for the purpose of duty drawback.

In an instruction to customs authorities, the Central Board of Indirect Taxes and Customs (CBIC) noted inconsistencies in how such claims were being handled. In several cases, field formations had denied drawback benefits under Section 74 of the Customs Act, 1962, by not recognising SEZ-to-DTA clearances as imports.

The new clarification removes this ambiguity, confirming that duty-paid goods from SEZs qualify for drawback upon re-export, provided they meet the conditions under Section 74.

Industry stakeholders have welcomed the move, calling it a step towards uniformity and fairness. The Global Trade Research Initiative (GTRI) said the clarification will reduce litigation, improve cash flow for exporters, and ensure that duties paid do not remain blocked when goods are re-exported.

Export bodies, including the Federation of Indian Export Organisations (FIEO), also endorsed the decision, stating that it brings long-awaited clarity and strengthens liquidity for exporters, particularly MSMEs. They have urged consistent implementation across customs offices to maximise the benefits of the reform.