M/s. Green Textiles Pvt. Ltd. is a unit established in a notified Special Economic Zone (SEZ) for manufacturing eco-friendly fabrics exclusively for export. The company imported raw materials without payment of customs d

Section 30 of the Special Economic Zones Act, 2005 provides that any goods removed from a Special Economic Zone to the Domestic Tariff Area 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. This section further provides that 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. This section empowers the Central Government to make rules specifying conditions in this regard. Section 53 provides that a Special Economic Zone, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorised operations. In the present case, M/s Green Textiles Pvt. Ltd. imported raw materials duty-free under the benefit available to SEZ units. However, by transferring part of those materials to its sister concern in the DTA, the company effectively removed goods from SEZ to DTA. Under Section 30, such removal attracts customs duty. The fact that both companies belong to the same corporate group is irrelevant because SEZ and DTA are treated as separate territories under Section 53. Accordingly, the company's action is not legally valid. The transferred goods are liable to customs duties, and the company may face further consequences under the SEZ Act, 2005. Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and shall be deemed to be territory outside the customs territory of India for the purposes of authorised trade operations and duties and tariffs, subject to regulatory control.