Tax applicability for sale from sez to domestic area

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CMA Sumit Jain (Querist)
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05 February 2016 Hello,

A company manufactures goods in SEZ area and sold it to domestic market, in this situation what would be the of duties/taxes (Excise/Custom/VAT) applicability on the purchase of raw material and sale of the finish goods.

Thanks in advance!!

Regards
Sumit Jain

ANIL JANGID

ANIL JANGID (Expert)
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09 February 2016 Clearance from SEZ to DTA are to be in accordance with Section 30 of Special Economic Zones Act, 2005 which is as under:-

Section 30 Domestic clearance by Units.

Subject to the conditions specified in the rules made by the Central Government in this behalf:-

(a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975, where applicable, as leviable on such goods when imported; and

(b) the rate of duty and tariff valuation, if any, applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of duty.

CMA Sumit Jain

CMA Sumit Jain (Querist)
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10 February 2016 Thanks a lot sir,

Is the excise duty levy on the raw material purchase from DTA??

Regards
Sumit Jain

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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26 July 2025 Hey! Here’s the breakdown for **tax applicability when a company manufactures in SEZ and sells to the Domestic Tariff Area (DTA)**:

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### 1. **Purchase of Raw Material from DTA to SEZ unit**

* When raw materials are purchased **from DTA to SEZ unit**, **excise duty** is generally **payable** by the SEZ unit.
* However, under **section 11A of the Central Excise Act** (if applicable), there are some exemptions or concessional rates for raw materials brought into SEZ, but mostly SEZ units pay duty on raw materials procured from DTA.
* **Input CENVAT credit** is available on excise duty paid on raw materials by the SEZ unit.

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### 2. **Sale of Finished Goods from SEZ to DTA**

* Sale from SEZ to DTA is considered an **‘excisable removal’** and is subject to **full excise duty** applicable on the finished goods.
* The SEZ unit will have to **pay excise duty on the goods sold to DTA**.
* Also, SEZ units have to **pay applicable VAT or GST on sale to DTA**, since the sale happens in the domestic market.
* The sale to DTA is treated like a normal domestic sale for indirect tax purposes.

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### 3. **Summary**

| Transaction | Tax Applicability |
| ------------------------------ | ------------------------------------------------ |
| Raw material from DTA to SEZ | Excise duty applicable; CENVAT credit available |
| Finished goods sale SEZ to DTA | Excise duty + VAT/GST applicable |
| Customs duty on imports | Exempt in SEZ (if imported directly by SEZ unit) |

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### Additional points:

* If the raw material is imported directly into SEZ, **customs duty is exempted**.
* SEZ units can claim **benefits and exemptions under SEZ Act** for exports but selling into DTA removes export benefits for those goods.
* For the purchase of raw material from DTA, the SEZ unit acts like a domestic unit and pays excise.

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