SEZ to DTA Clearance in India: Concessional Duty Window (April 2026 – March 2027)

India's CBIC has opened a one-time concessional duty window - effective April 1, 2026 to March 31, 2027 - allowing eligible SEZ manufacturing units to clear goods into the Domestic Tariff Area (DTA) at reduced Basic Customs Duty rates, provided production began on or before March 31, 2025, a minimum 20% value addition is achieved, and DTA sales do not exceed 30% of the unit's highest annual export FOB value. CBIC Circular 18/2026-Customs (April 1, 2026) mandates faceless assessment for Bills of Entry filed by SEZ units clearing goods to DTA at these concessional rates, routing them through the RMS while physical clearance remains with local SEZ customs officers.

Sources: CBIC Notification No. 11/2026-Customs (March 31, 2026); CBIC Circular 18/2026-Customs (April 1, 2026); ICEGATE SEZ Relief Window FAQs (icegate.gov.in); PIB Press Release PRID 2247628 (pib.gov.in)

What is the SEZ to DTA Clearance Window (April 2026 – March 2027)?

This is a one-time policy window granted by India's Central Board of Indirect Taxes and Customs (CBIC) through Notification No. 11/2026-Customs, dated March 31, 2026. It lets SEZ units that began manufacturing on or before March 31, 2025 sell a portion of their output into the Domestic Tariff Area and pay less customs duty on those clearances than they normally would.

The window runs from April 1, 2026 through March 31, 2027. After that, the old rules apply again.

This isn't a new concept – SEZ units have always been allowed to sell into DTA, subject to customs duty on the net foreign exchange content. What changes here is the rate. The notification cuts the applicable BCD and AIDC (Additional Import Duty on Countervailing Duty) down to concessional levels, giving units a financial incentive to serve the domestic market during this specific period.

CBIC also issued Circular No. 18/2026-Customs on April 1, 2026, putting these SEZ-to-DTA clearances under a faceless assessment framework. That means the Bill of Entry filed for DTA clearance doesn't get checked by a customs officer in person at the port – it goes through the automated assessment system instead.

Who Is Eligible?

Eligibility is determined by three conditions that must all be met simultaneously.

Production cut-off: The manufacturing unit must have commenced production on or before March 31, 2025. Units that started up after that date are not eligible for this window, no matter what they make.

Minimum value addition: The unit must achieve a minimum value addition (VA) of 20% on the goods being cleared to DTA. Value addition here is calculated as a percentage of the FoB value of exports - not on domestic sales. We'll cover the formula in detail below.

30% DTA cap: DTA sales during the window cannot exceed 30% of the unit's highest annual export FoB value. This is measured against the best export performance year the unit has on record. If a unit exported ₹100 crore worth of goods in its best year, it can clear a maximum of ₹30 crore worth of goods into DTA during the window - regardless of how much it produces.

There is no separate registration process for this window. Eligibility is checked when you file the Bill of Entry for DTA clearance - based on the unit's track record and the nature of the goods.

What Concessional Duty Benefits Are Available?

The benefit under Notification 11/2026-Customs is a reduction in the combined BCD and AIDC rate applicable to DTA clearances. The table below shows the present standard rates alongside the concessional rates available during the window.

The reduction is not a flat percentage - it varies by slab. A unit currently paying 20% combined BCD+AIDC drops to 12.5%. A unit paying 30-40% drops to 20%. Goods with higher duty stacks see the most meaningful benefit.

Note that IGST on DTA clearances is outside this notification. IGST applies as per the regular GST framework on DTA sales.

Figure 1: Present Duty Rate vs. Concessional Rate — CBIC Notification 11/2026

CBIC Circular 18/2026: How Faceless Assessment Works

Circular No. 18/2026-Customs, issued April 1, 2026, brought SEZ-to-DTA Bills of Entry into the faceless assessment ecosystem.

Under faceless assessment, the Bill of Entry is processed electronically. The system - not a specific officer at your customs station - reviews the declaration, supporting documents, and the Development Commissioner (DC) certificate and assigns a risk category. Low-risk entries get auto-clearance. Entries that need a second look get routed to a faceless officer who may raise queries or ask for additional documents through the ICEGATE portal.

The assessment happens away from the port. The exporter or CHA doesn't need to physically present documents to a customs officer at the docks, which is a genuine shift from the old way of doing things. Faster turnaround is possible, assuming the documentation is clean.

If the faceless officer raises a query, respond through ICEGATE. There's no physical hearing, but you do need to respond completely and on time, or the BoE gets held.

Step-by-Step Filing Process

Here's how a typical DTA clearance plays out under this window.

Step 1: Confirm eligibility

Before filing anything, confirm the unit qualifies. Check the production start date, verify the VA figure for the goods being cleared, and confirm the DTA cap has not already been reached for the year.

Step 2: Obtain the DC certificate

The unit needs a certificate from the Development Commissioner (DC) of the SEZ where it operates. The DC certificate typically confirms the unit's approval status, the value addition achieved, and - importantly - that the unit's export performance supports the volume of DTA clearance being requested. Get this certificate before filing the BoE.

Step 3: File the Bill of Entry on ICEGATE

File the Bill of Entry (BoE) for home consumption on the ICEGATE portal. The BoE should declare the HS code, value, origin (SEZ unit), and the applicable concessional duty rate under Notification 11/2026-Customs correctly. Attach or reference the DC certificate in the filing.

Step 4: Faceless assessment

The BoE enters the automated assessment queue. The system routes it based on risk parameters. Most clean filings with complete DC certificates get through without query. If the system flags something, respond to the query through ICEGATE within the specified time.

Step 5: Duty payment

Once the BoE is assessed and accepted, pay the reduced concessional duty through ICEGATE. The payment goes as usual - customs duty at the concessional rate, plus IGST as applicable on the DTA sale.

Step 6: Customs clearance and DTA delivery

After duty payment, the goods are cleared for release. The unit or its CHA can arrange delivery from the SEZ to the domestic buyer.

With clean documentation and no query, the whole process takes 2–5 working days. DC certificate delays or queries can stretch that out.

Value Addition Formula Explained

The value addition requirement is 20% minimum, measured against export performance. The formula is based on the CTH (Change of Tariff Heading) approach or the build-up method – the same methodology used in SEZ annual reporting to the DC.

The formula used in SEZ annual DC reporting goes like this:

VA% = [(FoB Value of Exports − (Import Value + Domestic Procurement)) / (Import Value + Domestic Procurement)] × 100

For this window specifically, the DC certificate will typically confirm the VA percentage achieved by the unit based on its audited export records.

Worked example

Suppose an SEZ pharmaceutical intermediates unit has:

• Annual FoB export value: ₹80 crore (best year)
• Imported inputs used in production: ₹35 crore
• Domestic inputs used in production: ₹15 crore

Value addition = (₹80 crore – ₹35 crore + ₹15 crore) / ₹80 crore × 100 = ₹60 crore / ₹80 crore × 100 = 75%

The unit comfortably clears the 20% threshold.

Now for DTA cap:

• Maximum DTA clearance allowed = 30% of ₹80 crore = ₹24 crore
• If this unit wants to clear ₹20 crore worth of goods into DTA during the window, it is within the cap.

Assume the goods attract a standard BCD+AIDC of 20% and the unit qualifies for the 12.5% concessional rate:

• Standard duty = ₹20 crore × 20% = ₹4 crore
• Concessional duty = ₹20 crore × 12.5% = ₹2.5 crore
• Duty saving = ₹1.5 crore

This is a simplified example. The actual DC certificate and duty calculation will depend on the specific HS codes, input values, and export records of the unit.

GST Treatment for DTA Sales

This part trips up a lot of people, so it's worth being clear.

When an SEZ unit sells goods into DTA, it is making a taxable supply under GST. IGST applies to the DTA sale. The IGST rate depends on the product category - there is no IGST exemption under this window.

What the unit cannot do is claim input tax credit (ITC) of the IGST paid on inputs used in goods cleared to DTA, the way a domestic manufacturer would. SEZ units sit outside the GST model - they're not in the ITC chain. GST on inputs for SEZ production gets absorbed as a cost, and the IGST collected on DTA sales goes to the government after any permissible adjustments.

For the DTA buyer, purchasing from an SEZ unit under DTA clearance means paying IGST on the invoice - the same as buying from any other supplier. The buyer can claim ITC of IGST paid on the purchase as usual.

From a pricing perspective, the concessional customs duty benefit effectively lowers the landed cost of goods cleared to DTA, which may allow the SEZ unit to offer more competitive pricing to domestic buyers.

Common Compliance Pitfalls

Double-benefit trap: This is the biggest one. Units cannot claim duty drawback on inputs AND concessional duty on the output simultaneously. Claiming both constitutes a double benefit violation under Customs law. Units already availing themselves of other customs duty exemptions, such as advance authorization, EPCG, or DFIA, on the same goods cannot also claim the Notification 11/2026 concessional rate. The CBIC notification is clear on this: the benefit applies only where no other exemption notification already covers the same duty component. Check your existing authorizations before filing.

DTA cap miscalculation: The 30% cap is measured against the best export year FoB, not the current year's performance. Units that had a standout export year in the past but have since scaled down can only clear DTA up to 30% of that older, higher figure. Some units have tried using current-year export performance and found themselves over the limit. Get this verified by the DC before the window opens.

VA shortfall: If VA drops below 20% - say because the unit shifted to more imported inputs - the unit could be disqualified for that clearance. The DC certificate needs to accurately reflect the VA. If it doesn't, the BoE assessment could get held or reversed.

Late DC certificate: The DC certificate needs to be ready before or at the time of BoE filing. Units that treat it as a post-filing formality end up with BoEs stuck in assessment, waiting for paperwork.

Query response delays: Faceless assessment has tight query response windows. Missing one doesn't just delay clearance - it can trigger a show-cause notice. Make sure someone is monitoring ICEGATE actively during the window.

Frequently Asked Questions

Can a unit that started production in February 2025 avail of this window?

Yes, provided it commenced production on or before March 31, 2025. The notification uses this as the cut-off date rather than a specific unit approval date. If the unit was approved and began physical production by March 31, 2025, it qualifies.

What happens if DTA sales exceed the 30% cap during the window?

If a unit clears more than 30% of its highest annual export FoB value into DTA during the window, it loses the concessional benefit on the excess amount. The full standard BCD and AIDC would become payable on the excess quantity, along with applicable interest from the date of filing. Units should track their DTA clearance volumes against the cap throughout the window.

Is there a separate registration or intimation required to claim Notification 11/2026 benefits?

No separate registration is required. The unit declares eligibility and the applicable concessional rate at the time of filing the Bill of Entry on ICEGATE. The DC certificate - which the unit should already be obtaining for its regular DTA clearances - serves as the supporting document. However, units should confirm with their DC office that the certificate covers the specific window period and the concessional rate being claimed.

Does the concessional duty apply to all HS codes?

The concessional rates under Notification 11/2026-Customs apply across HS codes where the standard BCD and AIDC fall within the slabs listed in the rate table. However, some product categories - notably those already attracting customs duty at specific rates under other notifications or schemes - may have their own rules. Units should verify the applicable rate for their specific HS codes before filing, rather than assuming the table covers all cases.

Can an SEZ unit use this window and simultaneously clear goods under the normal DTA route?

Yes, but the total DTA clearance - both under the concessional window and under the regular route - cannot exceed the 30% cap on highest annual export FoB value. Units that have been regularly clearing goods to DTA under the standard route need to check how much headroom remains under the cap before using the concessional window.

SEZ units that meet the eligibility criteria have a genuine opportunity to serve the domestic market at a lower duty cost during this window. The process is straightforward - DC certificate, ICEGATE filing, faceless assessment, duty payment - but it requires tracking the DTA cap carefully and keeping the documentation clean before filing. Getting any of the three conditions wrong - production date, VA threshold, or DTA cap - can pull the benefit away at the assessment stage.

For teams managing multiple SEZ units or large SKU volumes, classification, DC certificates, and DTA cap tracking can get operationally complex quickly. Eximoz handles HS classification, pre-clearance document checks, and BoE filing support - built to reduce the manual errors that cause problems at the assessment stage.