The Supreme Court has ruled that the transfer of goods from a Domestic Tariff Area (DTA) to a Special Economic Zone (SEZ) cannot be treated as an export outside India, thereby exempting such transactions from export duty under the Customs Act, 1962.
A bench comprising Justice BV Nagarathna and Justice R Mahadevan dismissed the Union government’s appeal against a ruling in favour of Adani Power Limited and other entities. The Court observed that the movement of goods to SEZs qualifies as a domestic supply, and therefore no export duty can be levied.
The judgment brings relief to companies operating in SEZs, as it clarifies that duty will not be applicable on goods transferred from DTA units. Legal experts note that the ruling strengthens the SEZ framework and resolves a long-standing dispute between businesses and tax authorities.
The case stemmed from demands raised by customs authorities, arguing that such transfers amounted to exports and therefore attracted duty. With the Supreme Court’s ruling, the earlier interpretation has now been settled in favour of industry.
