Reversal of Custom duty as per para 6.08 FTP 2023 for DTA sales done by EOU unit
This query is : Resolved
24 June 2025
ir,
We operate as an Export Oriented Unit (EOU) and currently benefit from import duty exemption on inputs under Notification No. 52/2003 Customs dated 31.03.2003, which are used in the production of our final finished goods. We also procure indigenous goods for the same production process.
As per FTP Para 6.08, we occasionally make DTA (Domestic Tariff Area) sales of our finished products.
My question is regarding the reversal of customs duty on these DTA sales. Specifically, should we reverse the customs duty only on the imported inputs consumed in the production of the finished goods sold in DTA, or should the reversal apply to the customs duty equivalent of both imported inputs AND indigenous goods that went into the production of those final finished products?
We operate as an Export Oriented Unit (EOU) and currently benefit from import duty exemption on inputs under Notification No. 52/2003 Customs dated 31.03.2003, which are used in the production of our final finished goods. We also procure indigenous goods for the same production process.
As per FTP Para 6.08, we occasionally make DTA (Domestic Tariff Area) sales of our finished products.
My question is regarding the reversal of customs duty on these DTA sales. Specifically, should we reverse the customs duty only on the imported inputs consumed in the production of the finished goods sold in DTA, or should the reversal apply to the customs duty equivalent of both imported inputs AND indigenous goods that went into the production of those final finished products?
12 August 2025
Key points on reversal of customs duty for DTA sales by EOUs:
Customs Duty Exemption to EOUs:
EOUs get import duty exemption on inputs/raw materials imported for export production.
When EOUs sell finished goods in Domestic Tariff Area (DTA), they have to reverse the customs duty benefit proportionate to the inputs used in those DTA sales.
What needs reversal as per Para 6.08 FTP 2023?
The customs duty reversal is required only on the imported inputs on which exemption was availed.
Indigenous goods (local purchases) do not attract customs duty; hence, no reversal is needed on indigenous inputs or raw materials.
How to calculate the reversal?
Customs duty to be reversed = Proportionate customs duty paid on imported inputs used in the production of goods sold in DTA.
No customs duty reversal on indigenous inputs or expenses.
Procedure for reversal:
Reverse the customs duty amount by paying the equivalent duty to Customs/DTA authorities or depositing in the relevant government account as per FTP guidelines.
Customs Duty Exemption to EOUs:
EOUs get import duty exemption on inputs/raw materials imported for export production.
When EOUs sell finished goods in Domestic Tariff Area (DTA), they have to reverse the customs duty benefit proportionate to the inputs used in those DTA sales.
What needs reversal as per Para 6.08 FTP 2023?
The customs duty reversal is required only on the imported inputs on which exemption was availed.
Indigenous goods (local purchases) do not attract customs duty; hence, no reversal is needed on indigenous inputs or raw materials.
How to calculate the reversal?
Customs duty to be reversed = Proportionate customs duty paid on imported inputs used in the production of goods sold in DTA.
No customs duty reversal on indigenous inputs or expenses.
Procedure for reversal:
Reverse the customs duty amount by paying the equivalent duty to Customs/DTA authorities or depositing in the relevant government account as per FTP guidelines.
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