Indirect Tax Laws · Classification of Imported and Export Goods

Drawback on Re-export of Duty-Paid Goods (Section 74, Customs Act, 1962)

Updated 5 October 2026 · Fact-checked

Section 74 lets an importer get back most of the customs duty paid when imported goods are re-exported as such. The goods must be easily identifiable and entered for export within two years of paying duty. Under section 74 read with the notified rates, unused goods get 98% of the duty; used goods get a lower notified percentage.

Understand Drawback on Re-export of Duty-Paid Goods

Customs duty is meant for goods that stay in India. If you import goods, pay duty, and then send the same goods out again, charging duty on them would hurt trade. Section 74 solves this. It gives you a refund of duty, called drawback, when you re-export the goods.

The section applies to goods that are capable of being easily identified and on which duty was paid on importation. The goods can leave in three ways, and the entry is made under the relevant section for each route. A normal shipping entry, where the proper officer permits clearance and loading for export, falls under section 51 (entry for export is made under section 50). Baggage, where the owner declares the contents, falls under section 77. Goods sent by post fall under section 82. In each case the entry or declaration for export under that section is the trigger for the claim.

There are two core conditions. First, the goods must be identified to the satisfaction of the officer as the very goods that were imported. Second, they must be entered for export within two years from the date of payment of duty on importation. The Board can extend this period if you show sufficient cause.

The amount is a percentage of the duty paid. For goods not used after import, it is 98% of the duty. If the goods were used after import, a lower percentage applies, and it reduces with the period of use. The 98% for unused goods and the reducing percentages for used goods come from section 74 read with the rates notified by the Central Government, including under the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. So the refund shrinks as use increases.

Do not mix this with section 75. Section 74 covers imported goods that are re-exported as they are. Section 75 covers drawback on imported materials used in manufacturing goods that are then exported, and on excisable materials. In section 74 the same goods go back out. In section 75 the goods are transformed into something else.

Key rules to remember

Drawback on unused goods: Drawback = 98% × Customs duty paid on importation; The 98% comes from section 74 read with the notified rates and the Re-export Rules, 1995. It applies when the goods are identified, entered for export within the time limit, and were not used after import.
Drawback on used goods: Drawback = Notified percentage (based on period of use) × Customs duty paid; The percentage is fixed by notification under section 74 and the Re-export Rules, 1995, and falls as the period of use rises. Use the table or percentage given in the question. Do not guess it.
Time limit: Entry for export must be within 2 years from the date of payment of duty; Counted from payment of duty, not from the date of arrival or the bill of entry. The Board may extend it for sufficient cause.
Identification condition: Goods must be identified to the satisfaction of the officer as the goods which were imported; Without identification there is no drawback. The goods must be capable of being easily identified.
Modes of export covered: Shipping entry (s.50 entry for export; s.51 clearance and loading permitted) | Baggage (s.77, declaration of contents) | Post (s.82); The entry for export is made under the relevant section for each mode.

How to solve Drawback on Re-export of Duty-Paid Goods questions

Use this order for any question on drawback on re-export. Check the conditions first and the amount last.

1Confirm the goods were imported and customs duty was actually paid on importation. No duty paid means nothing to draw back.
2Check that the goods are capable of being easily identified and were identified to the officer as the imported goods. Look for serial numbers, markings or documents in the facts.
3Note the date of payment of duty and the date the goods were entered for export. Compute the gap and compare it with two years.
4If the gap exceeds two years, check whether the facts mention extension by the Board for sufficient cause. If not, the claim fails.
5Check whether the goods were used after import. Unused means 98% (section 74 with the notified rates). Used means the notified percentage for the period of use.
6Compute the drawback as the applicable percentage × duty paid. Use only the duty the question says was paid.
7Write the answer as provision, facts, conclusion. State the section 74 rule, apply the dates and use, then give the amount or say the claim is not allowed.
8If the question mentions manufacture of export goods from imported inputs, say it falls under section 75 and not section 74.

Quickest way: Three-check shortcut: Identify, Time, Use

When to use it: Use this for MCQs and short case scenarios where you must decide quickly if drawback is available and how much.

Identify: can the goods be traced to the import? If not, stop. No drawback.
Time: count two years from the date duty was paid to the date of entry for export. If over two years and no extension, stop.
Use: unused gives 98% of duty. Used gives a lower notified percentage. Both come from section 74 read with the notified rates.
Multiply by the duty paid. Check that you used the duty paid, not the value of goods.

Common mistakes in Drawback on Re-export of Duty-Paid Goods

Counting the two years from the date of arrival or the bill of entry date.
Students link all import timelines to the import date.
Fix: The section counts from the date of payment of duty on importation. Always find the payment date in the facts.
Giving 100% of duty as drawback for unused goods.
It feels natural that unused goods should get a full refund.
Fix: Under section 74 read with the notified rates, unused goods get 98% of the duty. Write 98% and compute the amount.
Applying 98% to used goods as well.
Students forget that use after import reduces the refund.
Fix: For used goods, apply the notified percentage for the period of use, as given in the question.
Calculating drawback on the value of goods or the sale price abroad.
Drawback is mixed up with export incentives that depend on FOB value.
Fix: Section 74 drawback is a percentage of customs duty paid on import. Value does not enter the formula.
Allowing drawback when the goods cannot be identified.
Students focus on time and amount and skip the identification condition.
Fix: Check identification first. Both identification and the time limit must be met.
Confusing section 74 with section 75.
Both are called drawback and both involve imported goods and export.
Fix: Section 74: same imported goods re-exported as they are. Section 75: imported materials used in manufacturing goods that are exported.

Worked examples

Example 1

Alpha Ltd imported a testing machine and paid customs duty of ₹6,00,000 on 1 August 2025. The machine was never put to use and has a unique serial number recorded in the import documents. Alpha Ltd entered it for export on 20 June 2027, and the officer was satisfied about its identity. Compute the drawback under section 74.

Show the solution

Duty was paid on importation and the machine is easily identifiable by its serial number, so the identification condition is met.
Time limit: two years from 1 August 2025 ends on 31 July 2027. Entry for export on 20 June 2027 is inside this period.
The machine was unused, so the applicable rate is 98% of the duty paid.
Drawback = 98% × ₹6,00,000 = ₹5,88,000.

Answer: Alpha Ltd is eligible for drawback of ₹5,88,000 under section 74.

Example 2

Beta Traders imported 500 sealed cartons of equipment and paid duty of ₹4,00,000 on 12 January 2025. The goods are fully identifiable and unused. Because of a buyer dispute, Beta entered them for export on 20 February 2027. No extension was sought from the Board. Can Beta claim drawback?

Show the solution

Duty was paid and the goods are identifiable and unused, so the identification and use conditions are met.
Time limit: two years from 12 January 2025 ends on 11 January 2027.
The date of entry for export is 20 February 2027, which is after that date. The time limit has been crossed.
No extension by the Board for sufficient cause is shown in the facts, so the proviso cannot help.

Answer: Beta Traders cannot claim drawback under section 74 because the goods were not entered for export within two years of payment of duty. The only relief is to apply to the Board for extension on sufficient cause, and the claim can proceed only if that is granted.

Exam tips

Write the provision first: identifiable goods, duty paid, entry for export within two years, identification to the officer's satisfaction. Then apply the facts. This is the provision-facts-conclusion form.
In case scenarios, underline the dates. The most common trap is a gap just over or just under two years from the date of payment of duty.
If the question gives a table of percentages for used goods, read the period of use carefully and pick the right row. If it gives none, state that a lower notified percentage applies.
For difference questions, make a short two-line contrast: section 74 is re-export of the same goods; section 75 is export of goods made from imported materials.
Always show the multiplication step even if the answer is simple. Marks are given for the working.

Practice questions from Classification of Imported and Export Goods

Drawback on Re-export of Duty-Paid Goods in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalSection 74: Drawback on Re-export of Duty-Paid Goods

Drawback on Re-export of Duty-Paid Goods: frequently asked questions

What is drawback under section 74 of the Customs Act?

It is a refund of customs duty paid on imported goods when those same goods are re-exported. The goods must be easily identifiable and entered for export within two years of payment of duty. For unused goods, 98% of the duty is repaid under section 74 read with the notified rates.

What is the time limit for claiming drawback on re-export?

The goods must be entered for export within two years from the date of payment of duty on importation. The Board can extend this period if sufficient cause is shown. Without an extension, a later entry loses the right to drawback.

How much drawback is given on used goods?

The percentage is lower than for unused goods and depends on the period of use after import. It is fixed by notification under section 74 and the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. In an exam, use the percentage or table given in the question and apply it to the duty paid.

What is the difference between section 74 and section 75 drawback?

Section 74 applies when imported goods are re-exported as they are, and you get a percentage of the import duty back. Section 75 applies when imported materials are used in manufacturing goods that are exported. The first is about the same goods going back, the second is about inputs in a new product.

Does drawback under section 74 apply to baggage and post?

Yes. Goods can be exported through a shipping entry (entry under section 50, clearance and loading under section 51), as baggage with a declaration of contents (section 77), or by post (section 82). The entry is made under the relevant section for each mode, so the procedure differs. The core conditions of identification and the two-year limit still apply.