Duty Drawback

By
Dr. A.K. Sengupta
(Formal Dean, IIFT)

• Duty drawback is defined as the rebate of duty chargeable on

any imported or excisable material used in the manufacture of
goods exported.
• It is also admissible for re-exports of goods on which import duty
has been paid.
.
• Drawback rates are drawn up annually and released soon after
the annual budget.
• The rates are based on parameters, including prevailing prices of
inputs, standard input-output norms published by DGFT, share of
imports in total input .
• In most cases, the drawback is less than 100% of the import duty
paid.
• The rates are expressed as a percentage of the fob value of
exports.
• The drawback rates are fixed, either for any class of products
manufactured, known as “all industry” rates or for a product
manufactured by a particular manufacturer, known as “Brand”
rates.
All-industry Rates

• These are published in the form of notification by the

government every year and are normally valid for one year.
 • All-industry rates are calculated on the basis of broad
averages of consumption of inputs, duties and taxes, quantity of
wastage and fob prices of export products.
• The rates are on quantity basis.(eg. Per kg, or per tonne) or
percentage of fob. Value.
• The rates are revived and revised periodically.
• It is estimated that “all-industry” rates neutralize around 70-
80 per cent of the total duty paid on the inputs for export
production.

Brand Rate

• If all-industry rates are unavailable or if it is felt that duty

draw back provides inadequate compensation for import duty
paid on inputs, the exporter may request for the
establishment of “special brand rates”
• Special brand rates are envisaged to neutralize upto 90-95
percent of total tax paid on inputs
• All industry rates are based on average rates of consumption
of inputs and rates of duty paid-special brand rate scheme is
product-and-exporter specific, requiring detailed submission
of proof of duty paid by the exporter.

Availability of drawback

Drawback is available on the following items:

• Materials and components used in the process of

manufacture irrecoverable wastage which arises in the
manufacturing process.
• Material used for packing the finished export products
• Finished products

Drawback on Re-export

• Drawback is also allowed on goods originally imported

into India and exported in the two years form payments
of import duty.
• For goods exported without being used, 98% of the
import duty is refunded.
• For goods exported after use, the % age of duty
refunded varies depending on the period between
import and export of the product.
• The rates range form 85% of the import duty for goods
that remain in the country for upto 6 months, to 30% for
goods that remain in the country of between 30-36
months.

• The rates of duty drawback are paid by the directorate

of Duty drawback under ministry of finance, generally
three months after the budget is introduced in the
Parliament.
 Cargo Risk-Marine Insurance
By
Dr. A.K. Sengupta
(Former Dean, IIFT

• In spite of all modern developments in transportation,

transit disasters are an ever-present hazard for those
engaged in export/import business.
• Every shipment runs the risk of a long list of hazards viz.
storm, collision, theft, leakage, explosion, spoilage etc.
• It is possible to transfer the financial loses resulting from
perils of and in transit to professional risk bearers known
as underwriters (Insurance companies)

Under a CIF contract it is the exporter who is required

to take the marine insurance

Risks Covered

• Risks covered by marine insurance are usually

determined by an agreement between the parties
concerned.
• In general the following risks are covered under
marine insurance
(a) “Perils of the sea:, which includes out- of- the
ordinary wind and wave action, collision, and
damage by sea direct.
(b) “Fire” which includes direct fire damage and also
consequential damage by smoke or steam.
(c) “Assailing thieves” refer to a forcible taking the
goods
(d) “Jettison” that is throwing of articles overboard,
usually at times of emergency
(e) “Barratry”- It is willful mis-conduct of master or
crew and would include theft, international casting
away of vessel or any breach of trust with dishonest
intent.
(f) Capture at Sea by pirates,

Marine Insurers in India

• National Insurance Company, Kolkata

• New India Assurance Company, Mumbai
• Oriental Fire and General Insurance Company,
New Delhi.
• United India Fire & General Insurance Company,
Chennai.