Re-Exports from India: A Step-by-Step Guide to Customs Compliance

Introduction

Re-exporting refers to sending back imported goods. In India, this process is governed by customs rules to ensure legal compliance and allow refunds on the duties paid at the time of import. This guide explains the key steps, laws, and procedures for re-exports, including recent updates and official guidelines.

Key Laws and Rules for Re-Exports

The main regulations for re-export compliance are under:

• Customs Act, 1962
• Foreign Trade Policy (FTP) 2023
• Customs Tariff Act, 1975
• 2025 Union Budget reforms

Important Sections:

• Section 74: Allows a refund (drawback) of 98% of the import duty if goods are re-exported within 2 years. This period can be extended.
• Section 26A: Refunds are available for defective goods or goods not meeting specifications if they are exported without claiming a drawback.
• Section 69: Governs procedures and permissions for re-export.

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Some goods, like certain used vehicles or apparel, are not eligible for these refunds. The FTP 2023 provides the trade policy framework, including licensing and compliance requirements for exports, imports, and re-exports.

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When Re-Exports Are Allowed

Freely importable goods may be re-exported (in the same or substantially the same form) even if they are under the "Restricted list" for exports, but with the following conditions:

• Goods are not of Indian origin.
• Goods are kept in a bonded warehouse under customs supervision.
• Goods have never been cleared for home consumption.
• The re-export must comply with Section 69 of the Customs Act, 1962.

Goods listed as Prohibited or under SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) for exports cannot be re-exported.

Special Provisions for Certain Goods

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No Minimum Value Addition for Exports to Iran

The following goods are exempt from minimum value addition requirements if exported to Iran:

• Food, medicine, and medical equipment (covered under ITC(HS) Chapters 2–4, 7–11, 15–21, 23, 30).
• Medical devices under headings 9018, 9019, 9020, 9021, and 9022 of Chapter 90 of ITC(HS).

Exports of these items must still follow all other applicable conditions under FTP and ITC(HS).

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Re-Export of Repaired or Defective Goods

• Goods or parts that were exported and found defective, damaged, or unfit may be imported back for repair and re-exported later.
• No import authorization is needed for such cases, but exporters must return any incentives or benefits availed on the returned goods.
• If the item is restricted for import, an import license is required.
• For goods imported only for root cause analysis, testing, or evaluation (by manufacturers or original equipment makers), re-export of defective parts is not mandatory.

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Re-Export of Imported Defective Goods

• Imported goods that are found defective after customs clearance or are not as per order specifications may be sent back under the Customs Act, 1962.
• This process allows exporters to avoid further penalties while ensuring defective items leave the Indian market.

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Steps for Customs Compliance

1. Obtain Importer Exporter Code (IEC)

• Mandatory for any business engaging in import or export.
• Issued online through the Directorate General of Foreign Trade (DGFT).
• Based on the business’s PAN (Permanent Account Number).

2. Check Legal Compliance and Licensing

• Some products are restricted or need additional licenses from DGFT.
• Classify products using ITC-HS Codes (8-digit system).

3. File Bill of Entry for Imports

• This document declares the type, quantity, and value of imported goods.
• Required for customs clearance.
• Can be filed through the Electronic Data Interchange (EDI) system or manually.

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4. Pay Applicable Duties

• Includes Basic Customs Duty, Anti-dumping Duty (if applicable), and Integrated GST.
• Rates depend on the classification of goods under the Customs Tariff.

Re-Export Process and Required Documents

Re-export can be done by sea, air, post, or baggage. Steps include:

• Verification of Goods: Confirm the goods being exported are the same as those imported.
• Timing: Re-export must occur within 2 years to claim a refund; extensions may be allowed.
• Refund Claims: Refunds depend on the eligibility of goods and compliance with time limits.

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Documents Needed for Re-Export:

• Bill of Lading / Airway Bill
• Commercial Invoice and Packing List
• Proof of Import (such as Bill of Entry)
• GST returns, if applicable
• Bond and proof for specific goods like durable containers
• Shipping Bill (mandatory for exports, including re-exports)

Special Provisions for Certain Goods

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Durable Containers

• Duty-free re-export allowed if returned within 6 months.
• Requires a bond and proper documentation.

Diamonds and Synthetic Diamonds

• Special rules apply for diamond re-exports from zones like Gujarat Hira Bourse.
• Documentation for synthetic diamonds was streamlined in 2024.

Role of Customs House Agents (CHA)

• Licensed professionals who help exporters and importers complete customs formalities.
• Useful for handling documentation, EDI filings, and coordination with customs authorities.

Using the Customs Compliance Information Portal (CIP)

The CIP is an official online tool for checking:

• Customs procedures
• Required licenses and certificates
• Duty rates and classification
• Step-by-step re-export process

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The CIP provides details for about 12,000 tariff items and includes contact information for all customs stations across India.

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Facilitation Measures for Easier Compliance

The government has introduced several systems to make the customs process smoother:

• 24/7 Customs Clearance at major ports and airports
• Single Window Interface for Facilitating Trade (SWIFT): Allows submission of clearance documents at one place online
• E-Sanchit: Enables electronic submission of documents
• TURANT Customs: Ensures faster, paperless customs clearance

These initiatives are part of India’s Ease of Doing Business efforts.

Recommendations for Businesses

• Always obtain IEC and classify goods properly using ITC-HS codes.
• Keep accurate records of all import and export documents.
• Use the CIP portal for checking duties, licensing, and compliance steps.
• Re-export within the allowed time to claim refunds.
• Get help from Customs House Agents or consultants if unsure.

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