Goods supplied by a unit in a Special Economic Zone (SEZ) and rejected by the domestic buyer on account of change in fashion can now be brought back post fulfilment of certain conditions, as the government has expanded the conditions for return of goods supplied by a unit in SEZ to the Domestic Tariff Area (DTA).

“Goods supplied by a Unit into Domestic Tariff Area on payment of duty may be brought back to the Unit where a Domestic Tariff Area buyer fails to take delivery of the goods due to change in fashion, change in market conditions, or default in conditions of agreement relating to the sale,” a notification amending SEZ rules 2006 stated. The goods need to be brought back by the unit within 30 days from the date of clearance from the SEZ Unit.

However, some conditions need to be fulfilled. First, the identity of the goods need to be established to the satisfaction of the specified officer. Second, the SEZ unit should provide evidence that no benefits — including input tax credit — have been availed by the DTA buyer who has failed to take delivery of the goods, and third, a separate inventory need to be maintained.

Further, the SEZ unit can re-sell the same goods without any alteration of the original condition of the goods, in the DTA either to the same buyer or to different buyer. If there is fresh sale, then duty will be required to be paid. “The refund of duty paid at the time of original clearance shall be made,” the notification said while adding that the refund of duties on goods received back will also be possible.

Further, in cases where repairs are to be carried out on the goods supplied by a unit to the DTA on payment of applicable duties, they can be brought back within a period of six months from the date of clearance or permitted period or within the warranty period whichever is later. Duty will be required to be paid on the value of repairs, the notification said.

Earlier on April 1, the Finance Ministry notified a relief measure allowing SEZ units to sell goods in DTA under specific conditions, effective for one year starting Wednesday. However, the notification excludes several categories from this exemption, including petroleum products like petrol and diesel, as well as various food products.

This follows a Union Budget announcement by Finance Minister Nirmala Sitharaman regarding a special one-time measure to facilitate sales by eligible SEZ manufacturing units to the DTA at concessional duty rates. The move aims to address capacity utilization concerns triggered by global trade disruptions.

According to the notification dated March 31, a lower duty ranging from 5 per cent to 12.5 per cent will apply. This exemption is available only to SEZ units that commenced production on or before March 31, 2025. Furthermore, the goods must be manufactured within the SEZ and meet a minimum value addition requirement of 20 per cent.

The total value of goods cleared to the DTA under this exemption in a financial year is capped at 30 per cent of the unit’s highest annual Free on Board (FOB) export value from any of the three immediately preceding financial years. The relief does not extend to units in Free Trade and Warehousing Zones, nor to imported goods removed to the DTA as-is or after use.

Published on October 20, 2026