2/8/2015

DutyDrawback

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Home>Experts>Excise>DutyDrawback

DutyDrawback(Excise)

Thisqueryis:Resolved
Pleaseclarifytheschemeofdutydrawbackandit'sprocedure.What
precautionsneedstobetakenatthetimeofimportandexport?What
aretheobligationsforthisscheme.

Author:
Anonymous
(Author)
12September2010

DEARANONYMOUS,
Drawbackistherefundofduties,taxes,andfeesimposedonimported
merchandisewhichissubsequentlyexported.

VariousschemeslikeEOU,SEZ,DEEC,manufactureunderbondetc.
areavailabletoobtaininputswithoutpaymentofcustomsduty/excise
dutyorobtainrefundofdutypaidoninputs.IncaseofCentralExcise,
ManufacturerscanavailCenvatcreditofdutypaidoninputsand
(Expert)
utilisethesameforpaymentofdutyonothergoodssoldinIndia,or
13September2010 theycanobtainrefund.Schemeslikemanufactureunderbondarealso
availableforcustoms.Manufacturersorprocessorswhoareunableto
availanyoftheseschemescanavaildutydrawback.Here,theexcise
dutyandcustomsdutypaidoninputsisrefundedtotheexporterof
finishedproductbywayofdutydrawback.Section75ofCustoms
Actprovidefordrawbackonmaterialsusedinmanufactureor
processingofexportproduct.Section37ofCentralExciseActallows
CentralGovernmenttoframerulesforpurposeoftheAct.Underthese
powers,CustomsandCentralExciseDutiesDrawbackRules,1995
havebeenframed.
RAMESH
KUMAR
VERMA

Itmaybenotedthatdutydrawbackundersection75isgrantedwhen
importedmaterialsareusedinthemanufactureofgoodswhichare
thenexported,whiledutydrawbackundersection74isapplicable
whenimportedgoodsarereexportedasitisandarticleiseasily
identifiable.

SearchExperts
GO

DrawbackofcustomsandexcisedutypaidoninputsDrawback
meanstherebateofdutychargeableonanyimportedmaterialsor
excisablematerialsusedinmanufactureorprocessingofgoodswhich
aremanufacturedinIndiaandexported.Exportmeanstakingoutof
India.Supplyofstoresforuseinvesseloraircraftproceedingto
foreignportisalsocovered,sinceitistreatedasexportaspersection
89ofCustomsAct.
DutyDrawbackisequalto(a)customsdutypaidonimportedinputs
includingSADplus(b)excisedutypaidonindigenousinputs.Duty
paidonpackingmaterialisalsoeligible.However,ifinputsare
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obtainedwithoutpaymentofcustoms/exciseduty,nodrawbackwillbe
paid.Ifcustoms/excisedutyispaidonpartofinputsorrebate/refundis
obtained,onlythatpartonwhichdutyispaidandonwhich
rebate/refundisnotobtainedwillbeeligiblefordrawback.No
drawbackisavailableonothertaxeslikesalestaxandoctroi.

DutydrawbackofSAD(SpecialAdditionalDuty)isallowable.
MF(DR)circularNo.58/2002Cusdated1292002.
ProcessingalsoeligibleforDrawbackDrawbackisallowableifany
manufacture,processoranyoperationiscarriedoutinIndia[section
75(1)ofCustomsAct].Thus,drawbackisavailablenotonlyon
manufacture,butalsoonprocessingandjobwork,wheregoodsmay
notchangeitsidentityandnomanufacturehastakenplace.
TypeofDrawbackRatesAllIndustryDrawbackratesarefixedby
DirectorateofDrawback,Dept.ofRevenue,MinistryofFinance,
Govt.ofIndia,JeevanDeep,ParliamentStreet,NewDelhi110001.
Theratesareperiodicallyrevisednormallyon1stJuneeveryyear.
Datafromindustryiscollectedforthispurpose.Thetypesofratesare
asfollows:
AllIndustryRateThisrateisfixedunderrule3ofDrawbackRules
byconsideringaveragequantityandvalueofeachclassofinputs
importedormanufacturedinIndia.Averageamountofdutiespaidis
considered.Theseratesarefixedforbroadcategoriesofproducts.The
ratesincludedrawbackonpackingmaterials.Normally,theratesare
revisedeveryyearfrom1stJune,i.e.afterconsideringtheimpactof
budget,whichispresentedinFebruaryeveryyear.AllIndustry
drawbackrateisnotfixediftherateislessthan1%ofFOBValue,
unlessthedrawbackclaimpershipmentexceedsRs500.
TheAIR(AllIndustryRate)isusuallyfixedas%ofFOBpriceof
exportproducts.However,inrespectofmanyexportproducts,duty
drawbackcap(ceiling)hasbeenprescribed,sothatevenifanexporter
getshighprice,hisdutydrawbackeligibilitydoesnotgoabovethe
ceilingprescribed.
Thetablegivesallocationofthedrawbackallowedundertwoheads
namelyCustomsandCentralExcise.TheCustomsportioncovers
basiccustomsduty,surchargeandSAD.Exciseportioncoversbasic
andspecialexcisedutyandCVD.Dutydrawbackofcustomsportion
canbepaidevenifexporterhasavailedCenvatcredit,asCenvatcredit
isonlyofexcisedutyandCVD.
TheAllIndustryRate(AIR)isfixedonthebasisofweightedaverages
ofconsumptionofimported/indigenousinputsofarepresentative
crosssectionofexportersandaverageincidenceofduties.Hence,
individualexporterisnotrequiredtoproduceanyevidenceinrespect
ofactualdutiespaidbyhimoninputs.MF(DR)circularNo.
24/2001Cusdated20.4.2001.
BrandRateItispossibletofixAllIndustryRateonlyforsome
standardproducts.Itcannotbefixedforspecialtypeofproducts.In
suchcases,brandrateisfixedunderrule6.Themanufacturerhasto
submitapplicationwithalldetailstoCommissioner,CentralExcise.
Suchapplicationmustbemadewithin60daysofexport.Thisperiod
canbeextendedbyCentralGovernmentbyfurther30days.Further
extensioncanbegrantedevenuptooneyearinifdelaywasdueto
abnormalsituationsasexplainedinMF(DR)circularNo.82/98Cus
dated29101998.
SpecialBrandRateAllIndustryrateisfixedonaveragebasis.Thus,
aparticularmanufacturermayfindthattheactualdutypaidoninputs
ishigherthanAllIndustryRatefixedforhisproduct.Insuchcase,he
canapplyunderrule7ofDrawbackRulesforfixationofSpecial
BrandRate,within30daysfromexport.Theconditionsofeligibility
are(a)theallIndustryratefixedshouldbelessthan80%oftheduties
paidbyhim(b)rateshouldnotbelessthan1%ofFOBvalueof
productexceptwhenamountofdrawbackpershipmentismorethan
Rs.500(c)exportvalueisnotlessthanthevalueofimportedmaterial
usedinthemi.e.thereshouldnotbenegativevalueaddition.

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DrawbackRateFixationFormsandprocedureshavebeenprescribed
forsubmittingdetailstojurisdictionalCommissionerofCentral
Excise,whowillfixtherateofdutydrawback.[Earlier,itwasdoneby
DirectorofDrawback,NewDelhi,upto3132003]
DrawbackclaimprocedureExportershallendorseontheshipping
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billthedescription,quantityandotherdetailstodecidewhethergoods
areeligiblefordutydrawback.Heshouldsubmitoneextracopyof
shippingbillfordrawbackpurposes.CopyofInvoiceshouldbe
submitted.
DeclarationbyExporterAdeclarationshouldbemaderule12(1)(a)
(ii)ofDutyDrawbackRules,onshippingbillorbillofexportthat
claimofdrawbackisbeingmadeandthatdutiesofcustomsandexcise
havebeenpaidonmaterials,containersandpackingmaterialsandthat
noseparateclaimforrebateofdutywillbemade.Iftheexporterorhis
authorisedagentwasunabletomakesuchdeclarationduetoreasons
beyondhiscontrol,CommissionerofCustomscangrantexemption
fromthisprovisionofmakingdeclarationonshippingbillorbillof
export.
Furtherdeclarationsarealsorequiredwhenbrandrateorspecialbrand
ratehasbeenfixed.Thesedeclarationshavetobesignedbyexporter.
TriplicatecopyofshippingBillisthedrawbackcopyandshouldbe
markedasDrawbackClaimCopy.Itshouldbesubmittedwithpre
receiptonreversesidewithrevenuestamp.
DeclarationfornonavailmentofCenvat(a)Ifthemanufacturer
exporterorsupportingmanufacturerofmerchantexporterisregistered
withCentralExcise,factofnonavailmentofCenvatcreditcanbe
verifiedfromARE1formfurnished(b)Ifthemanufacturerexporter
orsupportingmanufacturerofmerchantexporterisnotregisteredwith
CentralExcise,theyhavetosubmitselfdeclarationaboutnon
availmentofCenvatinprescribedform.MF(DR)circularNo.
8/2003Cusdated1722003.Thedrawbackrateconsistsoftwo
componentscustomsportion(consistingofbasiccustomsduty,
surchargeandSAD)andexciseportion(consistingofbasicexcise
duty,specialexcisedutyandCVD).TheCenvatcreditisonlyin
respectofcentralexcise.Hence,ithasbeenclarifiedthatevenif
Cenvatcredithasbeenavailed,dutydrawbackinrespectofcustoms
portionwillbeavailable.
DutydrawbackonReexport
Section74ofCustomsAct,1962providefordrawbackifthegoodsare
reexportedassuchorafteruse.Thismayhappenincaseslikeimport
forexhibitions,goodsrejectedorwrongshipmentetc.Thereexported
goodsshouldbeidentifiableashavingbeenimportedandshouldbere
exportedwithintwoyearsfromdateofpaymentofdutywhenthey
wereimported.Thisperiod(oftwoyears)canbeextendedbyCBE&C
onsufficientcausebeingshown.Theseshouldbedeclaredand
inspectedbyCustomsOfficer.Originalshippingbillunderwhichthe
goodswereimportedshouldbeproduced.Thegoodscanbeexported
ascargobyairorsea,orasbaggageorbypost...After
inspection,exportandsubmissionofapplicationwithfulldetails,98%
ofthecustomsdutypaidwhileimportingthegoodsisrepaidas
drawback.
Distinctionbetweensection74and75Section74isapplicablewhen
importedgoodsarereexportedasitisandarticleiseasilyidentifiable,
whilesection75isapplicablewhenimportedmaterialsareusedinthe
manufactureofgoodswhicharethenexportedABCIndiaLtd.v.
UOI1992(61)ELT205(DelHC).InLVTProductsv.CC1998(103)
ELT663(CEGAT),itwasheldthatthereisnoprovisionforrefundof
importduty,ifimportedgoodsarereexported.Theassesseecanonly
claimdutydrawbacku/s74.
ValueatthetimeofexportisrelevantAspersection74(4),goodsare
deemedtohavebeenenteredforexportonthedaterateofdutyistobe
calculatedundersection16.Aspersection16,valueofexportgoods
willbetakenonthedateonwhichproperofficermakesanorder
permittingclearanceofgoodsforexportundersection51ofCustoms
Act.Hence,Valueforthepurposesofsection76(1)(b)willbevalue
atthetimeofexportandnottheoriginalvalueofimportofthegoods.
ThiswasstatedbyCommissioner,CustomsatthemeetingofCustoms
AdvisoryCommitteeheldatMumbaidated281093.(Ref.:W.O.B.
45/93dated91193).
GoodscanbereexportedtoanypartyandfromanyportIthasbeen
clarifiedthatgoodscanbereexportedtoanyparty(andnotonlytothe
samesupplier)andreexportcantakeplacefromanyport.CBEC
circularNo.72/2002Cusdated1112002.
DrawbackforusedgoodsIftheimportedgoodsareusedbeforere
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export,thedrawbackwillbeallowedatareducedpercentage[section
76(2)ofCustomsAct,1962].Ifthegoodswereinpossessionofthe
importer,theymightbetreatedasusedbytheimporter.Asperthe
rulesframedbyCentralGovernment,thetableisasfollows:(a)use
upto6months85%(b)6monthsto12months:70%(c)12monthsto
18months:60%(d)18monthsto24months:50%(e)24monthsto
30months:40%(f)30monthsto36months:30%(g)over36months
:Nil.Drawbackisallowediftheuseisover24monthsonlywith
permissionofCommissionerofCustomsifsufficientcauseisshown.
GoodsforpersonaluseIfthegoods(includingmotorcar)were
importedforpersonaluse,thereductioninimportdutyrefundableis
4%perquarterforfirstyear,3%perquarterforsecondyear,2.5%per
quarterforthirdyearand2%perquarterforfourthyear.
Formoreinfo:(1)cbec.gov.in
(2)dgft.gov.in

DearRameshji,
Thanksalotforinformationofdutydrawbackindetails.
Atthetimeofexportwehavetodeclarethatthisshipmentisagainst
dutydrawback.
Author:
Anonymous

Ithinkitisbettertotakecenvatcreditimmediatelyandtoclaimduty
drawbackforcustomduty.Ascenvatcreditwecantakeimmediately
(Author)
whichisutilisedagainstdomesticsaleorexportsale.(Forexportsale
13September2010 wecanclaimrefundalso)
AsperinformationgivenbyyouIthinkfollowingdocumentsare
requiredforclaimingdutydrawback
1.CommercialInvoice
2.PackingList
3.Triplicatecopyofshippingbill(Drawbackclaimcopyofshipping
bill)
4.Declarationregardingnonavailmentofcenvatdutycreditifcredit
nottaken.
Pleaseconfirmanyotherdocumentrequiredfortheclaim.
Aboveclaimwehavetomakewithourlocalexciseauthority.Within
howmanydaysclaimwillbescanctioned.
Pleaseconfirm.
Thanksinadvance.

ARE1
BRC(PROOFOFSUBMISSIONINBANKINTHISREGARD)
Aboveclaimwehavetomakewithourlocalexciseauthority.Within
howmanydaysclaimwillbescanctioned.
RAMESH
KUMAR
VERMA

REPLY:
7WORKINGDAYSORWITHIN15DAYS.

(Expert)
13September2010

WhereshouldIcheckdrawbackrateforourproduct

Author:
Anonymous
(Author)
13September2010

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dearanonymous,
forthiseithergotofollowingpath:
cbec.gov.in,dgft.gov.inorgotoforumportalsothaticouldpost
drawbackschedule.
regards
RAMESH
KUMAR
VERMA
(Expert)
13September2010

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