Government Allows SEZ Units to Reclaim Undelivered Goods, Limits Relief

28 Oct 2026 CW Team

The Ministry of Commerce and Industry notified the Special Economic Zones (Third Amendment) Rules, 2026, on October 15, amending Rule 49(2). Under the new provision, goods rejected by domestic tariff area (DTA) buyers must be returned to the SEZ within 30 days of clearance. The unit must establish the identity of the returned goods to the satisfaction of the specified officer and provide evidence that the buyer has not claimed benefits such as input tax credit.

SEZ units must maintain a separate, auditable inventory of returned goods. The amendment permits them to resell the goods in their original condition to the same buyer or another DTA buyer. Such resale will be treated as a fresh domestic sale, with applicable duty payable under Section 30 of the SEZ Act.

Units may separately seek a refund of the duty paid at the time of the original clearance under Rule 47(5), with refunds governed by the Customs Act, 1962. Tax lawyer Somesh Jain of Sachdev & Jain said the change addresses a gap in the earlier rules, which explicitly allowed goods to be brought back for repairs but not when buyers declined delivery.

Jain said the relief remained narrow because it covered only specified reasons for non-acceptance and imposed a 30-day return window. Goods returned for repairs may be brought back within six months of clearance, any extension approved by the specified officer or the warranty period, whichever is later. Duty will apply to the repair value, subject to verification of the goods’ identity. He added that units would need to pay duty on resale and await a separate refund of the original duty, making refund processing time a potential working-capital concern.

The government has amended the Special Economic Zone (SEZ) Rules, 2006, allowing SEZ units to bring back duty-paid goods that domestic buyers fail to accept under specified conditions. The revised provision also permits the units to resell the goods in the domestic market, addressing inventory accumulation caused by changes in fashion, market conditions or breaches of sale terms. The Ministry of Commerce and Industry notified the Special Economic Zones (Third Amendment) Rules, 2026, on October 15, amending Rule 49(2). Under the new provision, goods rejected by domestic tariff area (DTA) buyers must be returned to the SEZ within 30 days of clearance. The unit must establish the identity of the returned goods to the satisfaction of the specified officer and provide evidence that the buyer has not claimed benefits such as input tax credit. SEZ units must maintain a separate, auditable inventory of returned goods. The amendment permits them to resell the goods in their original condition to the same buyer or another DTA buyer. Such resale will be treated as a fresh domestic sale, with applicable duty payable under Section 30 of the SEZ Act. Units may separately seek a refund of the duty paid at the time of the original clearance under Rule 47(5), with refunds governed by the Customs Act, 1962. Tax lawyer Somesh Jain of Sachdev & Jain said the change addresses a gap in the earlier rules, which explicitly allowed goods to be brought back for repairs but not when buyers declined delivery. Jain said the relief remained narrow because it covered only specified reasons for non-acceptance and imposed a 30-day return window. Goods returned for repairs may be brought back within six months of clearance, any extension approved by the specified officer or the warranty period, whichever is later. Duty will apply to the repair value, subject to verification of the goods’ identity. He added that units would need to pay duty on resale and await a separate refund of the original duty, making refund processing time a potential working-capital concern.

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