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Supply from SEZ to EOU Whether the Transaction Treated as Import for EOU? Whether Customs Duties are Applicable?

SEZ : Overview

Special Economic Zones (SEZ) in India is a specially delimited enclave. Most importantly, the economic laws in this geographical area are different from the prevailing laws in other parts of India. An SEZ is deemed as a Foreign Territory for matters that relate to the Trade Tariffs, Duties, and Operations.

In this article Let’s Discuss on the Topic Supply from SEZ to EOU : Whether the Transaction Treated as Import for EOU? Whether Customs Duties are Applicable?

Before Deliberating on the Topic, let’s first understand the basic Concept of S E Z and the provisions in the Special Economic Zones Act, 2005.

What is the Meaning of Special Economic Zone under the Act?

Special Economic Zone (S E Z) is a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.

Section 2(z a) of Special Economic Zones Act, 2005 :

“Special Economic Zone” means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of Section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone.

Section 53 of Special Economic Zones Act, 2005.

(1) A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations.

(2) A Special Economic Zone shall, with effect from such date as Central Government may notify, be deemed to be a port, inland container depot, land station and land customs stations, as the case may be, under section 7 of the Customs Act, 1962.

What is the Meaning of DTA under the SEZ Act?

Sec 2(i) of Special Economic Zones Act, 2005 :

“Domestic Tariff Area” (DTA) means the whole of India (including the territorial waters and continental shelf) but does not include the areas of  the Special Economic Zones;

From this Definition, it is clear that EOUs are also Treated as DTA under SEZ Act.

Whether the Transaction Treated as Import for EOU?

Having understood the Concept of S E Z and Definition of DTA, let’s now discuss how Supply from S E Z to E O U is Treated.

S E Z is Treated as a Foreign Territory as per Section 53 of the S E Z Acts, 2005 and EOU is Treated as DTA under Section 2 (1) of the SEZ Acts, 2005.

Therefore, any Supply from S E Z to DTA is Treated as Import for DTA Unit, implies the same Treatment for E O U.

That means Supply from S E Z to E O U is also treated as Import for E O U.

As per Section 30 of the SEZ Act, 2005, Supplies from SEZ to DTA, here in this case EOU, Chargeable to Duties of Customs.

However, Para 6.01 (d)(ii) of FTP 2015-20 and Customs Notification No. 52/2003-Customs, dated 31.03.2003 as amended from time to time provides for exemption from Basic Custom Duty, Additional Duties of Customs, IGST and Compensation Cess on various goods when imported by the EOUs.

Further the Details can be Viewed in YouTube @

Supply from SEZ to EOU

Hope it is now Clear that Supply from S E Z to E O U is Treated as Imports for EOU and Customs Duties are Chargeable, but EOUs can avail Exemptions.

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2 Comments

  1. KN Venkatesh says:

    Dear Sir / Ma’am,
    Thanks for clarifying the nature of supply from SEZ to EOU ( treated as DTA as per SEZ Act ) is considered as “Imports” to EOU unit.
    However, would you mind to confirm the SEZ format to used under above mention circumstance the SEZ unit must supply goods vide format “BILL OF ENTRY FOR HOME CONSUMPTION (SEZ TO EOU [Rule 38])” or vide “DEEMED EXPORTS (SEZ TO EOU [53(A) (j)])”.
    We thank you in advance and look forward to your valuable response.
    Regards,
    K.N Venkatesh

    1. SN Panigrahi says:

      As Clearly Explained in the Article Supplies from SEZ to EOU is Treated as Import for EOU and therefore the EOU has to File Bill of Entry

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