The government has clarified that when goods are supplied from SEZ units to the domestic market after paying applicable duties and later re-exported, they will be treated as imported goods for the purposes of disbursement of duty drawback.

The instruction clarifies that goods supplied by an SEZ unit to the Domestic Tariff Area (DTA) after payment of customs duties will be treated as imported goods if later re-exported.

According to an instruction of the Central Board of Indirect Taxes and Customs (CBIC) to customs authorities, it has been observed by the audit that divergent practices are being followed in the processing of duty drawback claims filed by DTA units under Customs law.

It has been stated that some field formations have not treated clearance from SEZ to DTA as import and have denied the disbursement of drawback under Section 74 of the Customs Act, 1962.

"...it is hereby clarified that in cases where goods are cleared into DTA from SEZ unit on payment of applicable duties and are re-exported thereafter are to be treated as imported goods for the purposes of disbursement of drawback under Section 74 of the Customs Act, 1962," it said.

Commenting on the move, think tank GTRI said this is a welcome and fair clarification by the CBIC.

It said by treating duty-paid goods supplied from SEZs to the DTA as imported goods for the purpose of refund under Section 74 of the drawback rules when they are later re-exported, the instruction removes an unnecessary ambiguity that had led to different practices across customs formations.

"It will bring uniformity, reduce litigation, and ensure justice for exporters who have already paid applicable customs duties. There is no reason such duties should remain locked when the same identifiable goods are exported again," GTRI Founder Ajay Srivastava said.

He added that the change supports fairness, improves cash flows, and provides greater certainty to DTA buyers, exporters, and SEZ suppliers.

Federation of Indian Export Organisations (FIEO) said the decision provides much-needed clarity on the eligibility of duty drawback for re-exports of goods supplied by SEZ units to the DTA.

"By aligning the treatment with import principles and permitting drawback under Section 74, it removes long-standing ambiguity and supports exporters' liquidity. We welcome this pragmatic step and urge uniform, facilitative implementation at the field level to fully realise its benefits for exporters, especially MSMEs," it said.

Published on April 28, 2026