TaxTMI 
TaxTMI 
Sir, we are a EOU unit and selling goods to merchant. Whether reversal of custom duty is required, since as per chapter 7 of FTP, merchant exporter is not covered as deemed export?
Reversal of custom duty for selling goods from EOU to merchant exporter
28 Jun 2025 
2 Replies 
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Deemed export exclusion: supplies from EOU to merchant exporters require reversal of customs duties when cleared to DTA.
Supplies by an Export Oriented Unit to a merchant exporter are not treated as deemed exports under the Foreign Trade Policy scope; when goods are cleared into the Domestic Tariff Area such clearances are treated as DTA sales and require reversal of customs duties. The reversal obligation covers duties exempted at procurement or import by the EOU, including Basic Customs Duty, Countervailing Duty, and other applicable customs levies. (AI Summary)
Supplies by an Export Oriented Unit to a merchant exporter are not treated as deemed exports under the Foreign Trade Policy scope; when goods are cleared into the Domestic Tariff Area such clearances are treated as DTA sales and require reversal of customs duties. The reversal obligation covers duties exempted at procurement or import by the EOU, including Basic Customs Duty, Countervailing Duty, and other applicable customs levies. (AI Summary)