ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 14.03.2026
Understanding Section 135, GIR, and the Legal Implications of the Bombay High Court Judgment
Adv Ravi Shekhar Jha
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
The Customs Act, 1962, is a pivotal legislation in India that governs the import and export of goods, ensuring compliance with customs duties and preventing illegal activities such as smuggling. One of the most significant provisions under this Act is Section 135, which deals with penalties for offences related to customs violations. Recently, the Bombay High Court delivered a landmark judgment that delved into the procedural aspects of investigations under the Customs Act, particularly in relation to Section 135 and the General Interpretative Rules (GIR) for classification of goods.
Section 135 of the Customs Act, 1962: An Overview
Section 135 of the Customs Act lays down penalties for offences such as misdeclaration of value, fraudulent evasion of duty, and dealing with prohibited goods. The section is divided into two parts:
Section 135(1): This subsection prescribes penalties for individuals who:
Misdeclare the value of goods or fraudulently evade or attempt to evade customs duty.
Acquire possession of goods liable for confiscation under Sections 111 or 113 of the Customs Act.
Attempt to export goods that are liable for confiscation under Section 113.
The penalties under Section 135(1) are categorized based on the severity of the offence:
If the market price of the goods exceeds ₹1 crore, or the evasion of duty exceeds ₹30 lakh, or the goods are prohibited as notified by the Central Government, the offence is punishable with imprisonment for up to 7 years and a fine. The minimum imprisonment is one year unless special reasons are recorded.
For other cases, the punishment may extend to 3 years of imprisonment, a fine, or both.
Section 135(2): This subsection deals with repeat offenders. If a person convicted under Section 135 or Section 136(1) is convicted again for a similar offence, they may face imprisonment for up to 7 years and a fine, with a minimum imprisonment of one year unless special reasons are recorded.
General Interpretative Rules (GIR) and Classification of Goods
The General Interpretative Rules (GIR) are a set of guidelines used for the classification of goods under the Harmonized System of Nomenclature (HSN). These rules are critical for determining the correct classification of goods for customs purposes, which directly impacts the applicable duty rates.
The GIR consists of six rules:
Rule 1: Classification is determined according to the terms of the headings and any relevant section or chapter notes.
Rule 2: Covers incomplete or unfinished goods and mixtures or combinations of materials.
Rule 3: Provides guidance for classifying goods that could fall under multiple headings.
Rule 4: States that goods not specifically covered by any heading should be classified under the heading most akin to them.
Rule 5: Deals with cases where goods are sold in sets or containers.
Rule 6: Specifies that classification should be determined at the subheading level.
The GIR plays a crucial role in ensuring uniformity and consistency in the classification of goods, which is essential for the proper implementation of customs laws, including Section 135.
The Bombay High Court Judgment: Key Legal Principles
The Bombay High Court judgment in the case involving Adani Power Limited and the Directorate of Revenue Intelligence (DRI) provides significant insights into the procedural requirements for investigations under the Customs Act. The case revolved around allegations of overvaluation of Indonesian coal imports by Adani Group companies, which allegedly led to the evasion of customs duties and manipulation of power tariff compensation.
Key Allegations
The DRI alleged that Adani Group companies:
Overstated the import value of Indonesian coal compared to its actual export value.
Misdeclared the grade and value of coal to evade customs duties.
Benefited from concessional duty rates under the ASEAN-India Free Trade Agreement (AIFTA) while overstating the value of imported coal.
The DRI sought to issue Letters of Rogatory (LRs) under Section 166A of the CrPC to collect evidence from foreign jurisdictions, including Singapore, UAE, Hong Kong, and the British Virgin Islands.
Legal Issues Addressed
The court examined whether the DRI had legally and validly commenced its investigation into the alleged offences under Section 135 of the Customs Act and whether it was entitled to invoke Section 166A of the CrPC for issuing Letters of Rogatory.
Court’s Observations
Procedural Safeguards Under CrPC: The court emphasized that the Customs Act does not provide a specific procedure for initiating investigations into cognizable or non-cognizable offences. Therefore, the procedural safeguards under Chapter XII of the CrPC, including Sections 154 and 155, must be followed.
Non-Obstante Clause in Section 166A: The court clarified that the non-obstante clause in Section 166A of the CrPC does not override the mandatory procedural safeguards in Chapter XII of the CrPC. Section 166A can only be invoked during a valid investigation initiated under Sections 154 or 155.
Customs Act as a Special Law: While the Customs Act is a special law, it does not provide a comprehensive procedure for initiating investigations. In the absence of such provisions, the procedural framework of the CrPC must be followed.
Invalidity of Letters of Rogatory: The court held that the Letters of Rogatory issued by the Magistrate were invalid because the investigation was not initiated in compliance with the mandatory procedural requirements of the CrPC.
Impact on Section 135 and GIR
The judgment highlights the importance of adhering to procedural safeguards when investigating offences under Section 135 of the Customs Act. Misdeclaration of goods, as alleged in this case, often involves complex issues of classification under the General Interpretative Rules (GIR). Accurate classification is crucial to determine the correct duty rates and avoid penalties under Section 135.
Conclusion
The Bombay High Court judgment underscores the interplay between the Customs Act, the CrPC, and the General Interpretative Rules (GIR). It establishes that procedural safeguards under the CrPC must be followed for investigations under the Customs Act, even when the Act classifies offences as cognizable or non-cognizable. The judgment also highlights the critical role of GIR in ensuring accurate classification of goods, which is essential for compliance with customs laws and avoiding penalties under Section 135.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 06.01.2026
Supreme Court Invalidates Retrospective Customs Duty on SEZ-to-DTA Electricity Transfers
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
On January 5, 2026, the Supreme Court of India delivered a significant judgment in the case of Adani Power Ltd. & Anr. vs. Union of India & Ors. (Civil Appeal No. 22 of 2026), addressing the legality of customs duty imposed on electrical energy generated in Special Economic Zones (SEZs) and supplied to the Domestic Tariff Area (DTA). This decision marks the culmination of a decade-long legal battle and has far-reaching implications for taxation, judicial precedent, and the rule of law.
Background of the Case
Adani Power Ltd., a co-developer of a coal-based thermal power plant located in the Mundra SEZ in Gujarat, challenged the imposition of customs duty on electrical energy supplied from its SEZ unit to the DTA. Under Section 30 of the Special Economic Zones Act, 2005 (SEZ Act), goods removed from an SEZ to the DTA are chargeable to customs duties “as if such goods had been imported into India.” However, prior to 2009, electrical energy did not attract customs duty on import, maintaining fiscal neutrality for electricity supplied from SEZs to the DTA.
In 2010, the Union Government introduced Notification No. 25/2010-Cus., which imposed a 16% ad valorem customs duty on electrical energy cleared from SEZs to the DTA, with retrospective effect from June 26, 2009. This notification was challenged by Adani Power Ltd., and in 2015, the Gujarat High Court declared the levy unconstitutional, citing the absence of a lawful charging event, misuse of exemption powers, violation of Article 265 of the Constitution, and arbitrary double taxation.
The Union Government subsequently issued new notifications (Nos. 91/2010-Cus. and 26/2012-Cus.) that imposed reduced per-unit customs duties of ten paise and three paise, respectively, on SEZ-to-DTA electricity clearances. Adani Power Ltd. filed another writ petition in 2016, seeking a refund of the amounts paid under protest for the period between September 16, 2010, and February 15, 2016, arguing that the 2015 judgment should apply to the subsequent period as well.
Key Issues Addressed by the Supreme Court
The Supreme Court identified five critical issues for determination:
Scope and Effect of the 2015 Judgment: The Court held that the 2015 Gujarat High Court judgment was not limited to a single notification or a specific time frame. Instead, it was a general declaration of law that customs duty could not be levied on SEZ-to-DTA electricity clearances under the statutory framework existing at the time.
Changes in Statutory or Factual Footing: The Court found no material changes in the legal or factual basis between the periods before and after September 15, 2010. The subsequent notifications merely altered the rate and prospective nature of the levy but did not address the fundamental absence of a lawful charging event.
Grant of Relief Without Specific Challenges to Later Notifications: The Court rejected the argument that Adani Power Ltd. needed to challenge each subsequent notification separately. It emphasized that once a levy is declared ultra vires, all derivative attempts to enforce the same levy are equally unenforceable.
Effect of Binding Precedent on a Later Coordinate Bench: The Court criticized the Gujarat High Court’s 2019 judgment for narrowing the scope of the 2015 ruling. It reiterated that a coordinate bench is bound to follow an earlier decision unless it refers the matter to a larger bench for reconsideration.
Directions for Refund and Future Compliance: The Court directed the Union of India and customs authorities to refund the amounts deposited by Adani Power Ltd. under protest for the period in question, without interest. It also prohibited further demands for customs duty on SEZ-to-DTA electricity clearances for the relevant period.
Key Takeaways from the Judgment
Limits of Delegated Legislation: The Supreme Court reaffirmed that delegated legislation, such as exemption notifications under Section 25 of the Customs Act, cannot be used to impose a new levy. The power to exempt is distinct from the power to tax, which rests solely with Parliament.
Judicial Precedent: The judgment underscores the importance of judicial discipline and adherence to precedent. A coordinate bench cannot arbitrarily narrow the scope of an earlier ruling; it must either follow the precedent or refer the matter to a larger bench.
Finality of Adjudication: The Court emphasized that once a judicial decision has attained finality, the executive is obligated to conform its conduct to the law declared. Reintroducing an invalidated levy through successive notifications undermines the rule of law and burdens the judiciary with repetitive litigation.
Restitution of Unlawfully Collected Taxes: The Court held that the State cannot retain amounts collected under a levy declared ultra vires. Restitution is a necessary consequence of the finding of illegality.
Conclusion
The Supreme Court’s judgment in the Adani Power Ltd. case is a landmark decision that reinforces the principles of constitutional taxation, judicial discipline, and the rule of law. By striking down the levy of customs duty on SEZ-to-DTA electricity clearances, the Court has provided clarity on the limits of delegated legislation and the importance of adhering to judicial precedent. The decision also serves as a reminder to the executive of its obligation to respect and implement judicial pronouncements, ensuring finality in litigation and upholding public confidence in governance.
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Customs duty on transactions between the Domestic Tariff Area (DTA) and Special Economic Zones (SEZs) has gone through a lot of churn in the last few years – especially around export duty on DTA→SEZ supplies and import-like duties on SEZ→DTA clearances. With the latest Supreme Court and High Court rulings, plus some important notifications and circulars, the position is now much clearer (and more taxpayer-friendly) on several issues.
1. Why DTA–SEZ Customs Duty Is Such a Hot Topic
SEZs are legally treated as deemed foreign territory for certain tax purposes. Under the SEZ framework, goods going from DTA to SEZ are treated as “exports”, while goods coming from SEZ to DTA are treated as “imports” – but that’s under the SEZ law, not automatically under the Customs Act.
This duality has created classic disputes:
Can export duty be levied on DTA→SEZ supplies?
How exactly are customs duties computed on SEZ→DTA clearances?
Can returned goods from SEZ to DTA get re-import exemption (Notification 45/2017-Cus)?
What is the interplay between Customs Act, 1962, the SEZ Act, 2005 and Customs Tariff Act, 1975 in these flows?
Recent jurisprudence – especially the 2025 Supreme Court ruling in the Adani Power matter and the Andhra Pradesh High Court’s decision striking down the fifth proviso to Rule 27(1) of the SEZ Rules – has addressed some of these issues head-on.
2. Statutory Framework: Customs Act vs SEZ Act
2.1 Key provisions of the SEZ Act, 2005
Some of the most important provisions of the SEZ Act for duty issues are:
Section 2(m) – Defines “export” to include:
physical exports out of India, and
supplying goods from DTA to a SEZ unit or developer.
Section 26 – Grants exemptions from customs duties, excise, service tax etc. on goods/services imported or procured from DTA for authorised operations in SEZ.
Section 30 – Charging section for SEZ→DTA clearances: goods removed from an SEZ to DTA are chargeable to duties of customs (including ADD/CVD/SGD) as if such goods are imported into India.
Section 51 – Gives the SEZ Act overriding effect over other laws if there is inconsistency.
Section 53 – Deems an SEZ to be a territory outside the customs territory of India for specified purposes.
2.2 Customs Act, 1962 & Customs Tariff Act, 1975
Section 12, Customs Act – The charging provision for customs duty on goods imported into or exported from India.
Customs Tariff Act, 1975 – Specifies rates of BCD, export duty, ADD, CVD, safeguard duty, etc.
The core constitutional point is: no customs duty can be levied without a clear charging section in an Act of Parliament. Rules, notifications and circulars cannot create a new levy.
3. Types of DTA–SEZ Transactions & Customs Duty Treatment
3.1 DTA → SEZ: Are these “exports” and is customs duty payable?
Under the SEZ Act, supplies from DTA to SEZ are expressly treated as “exports” and SEZ units are entitled to benefits such as drawback and other export incentives.
The Central Board of Excise & Customs (now CBIC) clarified this position through Customs Circular No. 29/2006, recognising that:
Supplies from DTA to SEZ are exports,
They are eligible for rebate/drawback, and
Exemptions from central excise duty apply to such supplies.
3.1.1 Export duty on DTA→SEZ: the big controversy
For years, authorities tried to levy export duty on DTA→SEZ supplies by relying on:
The definition of “export” in Section 2(m) of SEZ Act, and
The fifth proviso to Rule 27(1) of the SEZ Rules, 2006, inserted in 2018, which stated that supplies from DTA to SEZ shall attract export duty where leviable.
This was challenged on the ground that:
Section 12 of the Customs Act levies export duty only when goods go out of India;
SEZ units are still within India’s territory, even if deemed outside the customs territory for limited purposes; and
The SEZ Act has no charging section for export duty on DTA→SEZ supplies, unlike Section 30, which specifically charges customs duty on SEZ→DTA movement.
This controversy has now largely settled in favour of the assessee (discussed in Section 5 below).
3.1.2 GST angle on DTA→SEZ supplies
Under the IGST Act, supplies to SEZ are treated as zero-rated supplies, and all supplies from DTA to SEZ are treated as inter-State supplies to be governed by IGST provisions.
This is separate from customs duty, but in practice many businesses mix the two. The key is:
GST: DTA→SEZ = zero-rated inter-State supply
Customs: DTA→SEZ = no customs/export duty after the recent rulings, absent a charging section
3.2 SEZ → DTA: Treated as “imports” for customs
When goods move from SEZ to DTA, Section 30 of the SEZ Act expressly provides that such clearances are chargeable to duties of customs (including ADD, CVD, safeguard, etc.) as if the goods were imported into India.
CESTAT in Lupin Ltd v. Commissioner of Customs held that:
Clearances from SEZ to DTA attract customs duty under Section 30,
Rule 48(3) of SEZ Rules (which facilitates invoices instead of Bill of Entry in certain cases) cannot override the charging section, and
Reduced or nil duty can apply only where the tariff rate itself is nil or where a valid exemption notification so provides.
Practical implication: Whenever goods are cleared from SEZ to DTA, treat them like imports – file a Bill of Entry (unless the specific “invoice mode” conditions are satisfied) and pay customs duty as per the Customs Tariff.
3.3 DTA → SEZ → DTA (returns of goods, “as is” or after processing)
A very tricky area is when:
Goods are supplied from DTA to SEZ (treated as export under SEZ Act), and
The same goods – either unutilised or processed – are sent back to DTA.
Key questions:
Is this a re-import entitled to benefit of Notification 45/2017-Cus (re-import of goods exported under rebate/drawback/bond)?
Who is the “importer” – the SEZ unit or the DTA buyer?
What is the duty base – original export price, retained value, or full transaction value at the time of return?
The Lupin line of decisions & commentary suggests:
Section 30 SEZ Act is the primary charging section for SEZ→DTA clearances, and
The benefit of Notification 45/2017-Cus is not automatically available for goods returning from SEZ to DTA; in many cases the DTA entity is treated as the importer liable to duty on full value.
In short: “round-tripping” via SEZ does not automatically give a re-import exemption. Very careful structuring and documentation is required.
4. Key Customs Notifications & Circulars Relevant to DTA–SEZ Duty
This is not an exhaustive list, but covers notifications and circulars that often come up when structuring or litigating DTA–SEZ flows:
A comprehensive exemption notification listing effective BCD rates for hundreds of items.
Includes specific entries where goods received from SEZ to DTA and returned to SEZ (e.g. LPG used in manufacture of polyisobutylene) may enjoy nil BCD, subject to conditions.
This shows how the Government has, in some cases, explicitly carved out SEZ–DTA–SEZ flows in the tariff/exemption structure.
4.3 Notification No. 45/2017-Cus., dated 30.06.2017 (Re-import of exported goods)
Grants conditional exemption on re-import of goods earlier exported:
under duty drawback,
under rebate of central excise/service tax, or
under bond/other schemes.
The notification is central to disputes like Lupin, where it was argued that goods returning from SEZ to DTA should be treated as re-imports eligible for this exemption.
Authorities have taken a restrictive view – in many cases, re-import exemption is denied where the transaction structure doesn’t strictly fit the notification language.
Clarifies that supplies from DTA to SEZ are exports,
Such supplies are eligible for rebate/drawback, and
Specific excise notification (58/2003-CE) for SEZ supplies had become redundant.
This circular has been repeatedly relied upon in litigation to demonstrate that Government’s own understanding is that DTA→SEZ supplies are exports only for benefit (drawback/rebate), not for imposition of customs/export duty.
4.5 Rule 27(1) of SEZ Rules & the Fifth Proviso (2018)
Rule 27(1) allows units or developers to import or procure from DTA without payment of duty, taxes and cess for authorised operations.
The fifth proviso, inserted in 2018, stated that supplies from DTA to SEZ shall attract export duty if leviable on the goods.
The Andhra Pradesh High Court has now held this fifth proviso to be ultra vires the SEZ Act (discussed below).
5. Recent Case Law: How Courts Have Read DTA–SEZ Customs Duty
Here are some key judicial developments that anyone dealing with DTA–SEZ flows should know.
5.1 Union of India v. Adani Power Ltd & Ors – Supreme Court, 2025
In a landmark 2025 judgment, the Supreme Court dismissed the Union’s appeals and held that no export duty is leviable on DTA→SEZ supplies.
Key takeaways:
Section 12, Customs Act is the exclusive charging provision for customs duty.
DTA→SEZ transfers do not involve goods crossing the territorial boundary of India, hence cannot be taxed as “exports” under Section 12.
The SEZ Act defines such supplies as “exports” only for granting benefits, not for expanding the customs duty net.
Rules or SEZ provisions cannot create a new tax levy in the absence of a charging section in the parent Act.
This judgment aligns constitutional tax principles with the SEZ scheme and gives strong support to assessees who resisted export duty demands on DTA→SEZ supplies.
5.2 TUF Metallurgical Pvt Ltd v. Union of India – Andhra Pradesh High Court, 2025
The Andhra Pradesh High Court struck down the fifth proviso to Rule 27(1) of SEZ Rules, 2006 (which mandated export duty on DTA→SEZ supplies) as ultra vires the SEZ Act.
Ruling highlights:
The SEZ Act contains no charging provision for export duty on DTA→SEZ supplies, unlike Section 30 for SEZ→DTA.
Rules framed under the Act cannot create a substantive levy of export duty; they are limited to procedural aspects.
Export duty can only be imposed under Section 12 of the Customs Act, which is not attracted to goods moving between DTA and SEZ within India.
This ruling was a major step in dismantling the export-duty-on-DTA→SEZ regime even before the Supreme Court’s Adani decision.
5.3 Lupin Ltd v. Commissioner of Customs – CESTAT Delhi, 2023
In Lupin, the Tribunal dealt with goods supplied from DTA to SEZ and later returned to DTA.
Key principles:
Section 30 of the SEZ Act is the charging section when goods move from SEZ to DTA. Duty is payable as if the goods are imported into India.
Rule 48(3) SEZ Rules (which allows an invoice instead of Bill of Entry for certain returns) is only a procedural facilitation; it does not override the substantive duty liability.
Benefit of Notification 45/2017-Cus (re-import of exported goods) is not automatic for SEZ→DTA returns; it must be tested strictly against the language and conditions of the notification.
Post-Lupin, customs authorities have been wary of granting re-import exemptions on SEZ→DTA flows unless the DTA importer clearly fits within Notification 45/2017.
5.4 Government Revision / Clarificatory Orders
In revision orders under Section 35EE of the Central Excise Act (applied mutatis mutandis), the Central Government has itself acknowledged that:
Supplies from DTA to SEZ are exports “outside the territory of India” for SEZ purposes,
SEZ Act creates a legal fiction for giving benefits comparable to actual exports,
But no export duty is payable in absence of a charging provision.
These orders are frequently cited in support of taxpayers in DTA–SEZ disputes.
6. Practical Compliance Pointers for Businesses
From a practitioner’s perspective, here’s how you may want to structure your advice/checklist for clients:
6.1 For DTA → SEZ supplies
Treat supplies as exports under SEZ and GST law:
Use LUT/Bond or IGST-paid route for zero-rated supplies under IGST Act.
As on date, no export duty is leviable on DTA→SEZ supplies post Adani & TUF Metallurgical, unless Parliament amends the law.
Maintain:
SEZ-endorsed ARE-1/ARE-3/Invoice,
SEZ Approval for authorised operations,
Proof of receipt by SEZ unit/developer,
Documentation for drawback/rebate/ITC refunds.
6.2 For SEZ → DTA clearances
Treat every clearance as import into India, i.e.:
File Bill of Entry (except narrow cases under Rule 48(3)),
Pay BCD, SWS, ADD, safeguard, IGST, etc. as applicable.
Carefully review Notification 50/2017-Cus to see if a specific concessional rate or nil duty applies for your product.
6.3 When goods are returned from SEZ to DTA
Don’t assume automatic re-import exemption under Notification 45/2017-Cus.
Examine:
Who is the exporter in the original DTA→SEZ transaction?
Who is the importer of record for the SEZ→DTA return?
Was the original export under drawback/rebate/bond satisfying Notification 45/2017 conditions?
Consider whether it is more defensible to:
Treat the return as a fresh import via Section 30, claim ITC of IGST, or
Structure via physical export & re-import outside SEZ, if commercially feasible.
6.4 Litigation strategy pointers
For pending or prospective demands of export duty on DTA→SEZ:
Rely on Adani Power (SC, 2025) + TUF Metallurgical (AP HC, 2025) + earlier revision orders & Circular 29/2006 to argue absence of charging provision.
For SEZ→DTA issues:
Accept Section 30 as the charging section, but explore:
Product-specific exemptions in 50/2017-Cus,
Eligibility under 45/2017-Cus,
Valuation disputes (transaction value vs. cost-plus, related party, etc.).
7. Suggested Case Citations
You can safely incorporate and discuss the following real cases:
Union of India v. Adani Power Ltd & Ors, Supreme Court of India, 2025
Issue: Levy of export duty on supplies from DTA to SEZ.
Held: No export duty can be charged on DTA→SEZ; Section 12 Customs Act is not attracted when goods do not physically leave India.
TUF Metallurgical Pvt Ltd v. Union of India & Ors, Andhra Pradesh High Court, 2025
Issue: Validity of fifth proviso to Rule 27(1) SEZ Rules imposing export duty on DTA→SEZ supplies.
Held: Proviso is ultra vires the SEZ Act; there is no charging provision for export duty on such supplies in the Act.
Lupin Ltd v. Commissioner of Customs, CESTAT Delhi, 2023
Issue: Duty on goods returned from SEZ to DTA, and applicability of Notification 45/2017-Cus.
Held: Customs duty under Section 30 SEZ Act is payable on SEZ→DTA clearances; Rule 48(3) cannot override the charging section; re-import exemption must strictly comply with Notification conditions.
Government of India Revision Orders (e.g., F.No. 198/57/16-RA)
Issue: Treatment of supplies from DTA to SEZ as export; availability of benefits and levy of duty.
Held: DTA→SEZ supplies are exports by legal fiction for granting benefits, not for imposing export duty; no export duty is payable in absence of a charging provision.
Various High Court & CESTAT decisions following Adani / TUF Metallurgical
These further reinforce that export duty cannot be levied on DTA→SEZ supplies solely on the basis of SEZ rules or notifications, without an explicit charging section.
8. Conclusion
The law on customs duty in DTA–SEZ transactions is now considerably clearer:
DTA → SEZ
Treated as exports under SEZ/GST law for benefits.
No export duty under Customs Act, in the absence of a clear charging provision (post-Adani & TUF Metallurgical).
SEZ → DTA
Treated as imports into India.
Section 30 SEZ Act read with Customs Tariff applies; customs duty is payable unless validly exempted.
DTA → SEZ → DTA (returns)
Require careful planning to determine whether re-import benefits (45/2017-Cus) are available or whether full customs duty must be paid under Section 30.
For businesses, this is the right time to:
Re-examine historic export duty demands on DTA→SEZ transactions,
Re-align contracts and documentation for SEZ→DTA clearances, and
Proactively plan transaction structures around the current judicial position and key customs notifications discussed above.
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Source: CBIC, Supreme Court, Andhra Pradesh High Court, CESTAT
