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The term drawback is applied to a certain amount
of duties of Customs/central excise, some times the whole, some times only a
part remitted or paid by Government on the exportation of the commodities on
which they were levied. To entitle goods to drawback, they must be exported to
a foreign port, the object of the relief afforded by the Drawback being to
enable the goods to be disposed of in the foreign market as if they had never
been taxed at all. For Customs purpose drawback means the refund of duty of
customs and duty of central Excise that are chargeable on imported and
indigenous materials used in the manufacture of Exported goods.
This scheme applies to
a. export goods imported into India as such
b. export goods imported into India after having been taken for use
c. export goods manufactured / produced out of
imported material
d. export goods manufactured / produced out of indigenous material
e. Export goods manufactured /produced out of
imported or and indigenous materials.
There are two types of drawback. One is called
drawback under Section 74 of the Customs Act, 62 which allows
drawback of duty paid on goods originally imported on payment of duty and
subsequently re-exported. The manner and time limit for filing the claims are
governed by "Re- export of Imported Goods (Drawback of Customs duties) Rules,
1995.
1. The other scheme is payment of drawback
under Section 75 and Rules made thereunder at
specified rated on export of goods manufactured in India. The manner and time
limit for filing the claims are prescribed under the Customs and Central Excise
Duties Drawback Rules 1995 as amended from time to time.
2. The Central government notifies the Drawback
rates for various products either on a general basis (all industry rates) or
for individual exporters( brand rates) as the case may be. Drawback
sanctioned under section 75 has a two tier system involving (i) fixation of
rates by the Directorate of Drawback in the Central Board of Excise and Customs
and (ii) disbursement of drawback amount by the Customs Houses and/ Central
Excise Commissionerate
Under the drawback scheme, the relief is given
from the burden of duty incidence of Customs & Central Excise on basic
inputs like raw materials. Components, Intermediates and packing materials used
at various stages of production / manufacture. No relief of drawback is
extended to duties suffered on capital goods, fuels and consumables used in
relation to the manufacture of the export goods. It may also be noted that no
relief of Sales Tax or Octroi or any other indirect tax is given by way of
drawback. The finished stage of excise duties on the export product is also not
reimbursed under this scheme and there are separate provisions for rebate of
such finished stage duties under the Central Excises and Salt Act 1944 and
the Rules framed thereunder.
SCOPE
In this category, two types of cases are covered
viz.,
1. Imported goods exported as such i.e. without
putting into use – 98% of duty is refunded and
2. Imported goods exported after use – the
percentage of duty is refunded according to the period between the date of
clearance for home consumption and the date when the goods are placed under
Customs control for exports. The percentage of duty drawback is notified under
Notification. No 19 Cus, dated 6th Feb, 1965 as amended from
time to tim
The elements necessary to claim drawback are;
1. The goods on which drawback is claimed must have been previously
imported;
2. Import duty must have been paid on these goods when they were
imported;
3. The goods should be entered for export within two years from the
date of payment of duty on their importation (whether provisional or final
duty). The period can be further extended to three years by the Commissioner of
Customs on sufficient cause being shown.
4. The goods are identified as the goods imported.
5. The goods must be capable of being identified as imported goods.
6. The goods must actually be re-exported to any place outside India.
7. The market price of such goods must not be less than the amount of
drawback claimed.
8. The amount of drawback should not be less than Rs. 50/- as
per Section 76-(1) (c) of the Customs Act.
Drawback claims under Section 74
of the Customs Act are now being processed manually. To claim drawback
under Section 74, the exporter should file the shipping bill
under claim for drawback in the prescribed FORM and after
assessment the goods are to be examined by the Customs officers for purposes of
physical identification. After shipment, the claim is filed in the department,
for sanction of drawback. The pre-receipted drawback payment order has to be
forwarded to the drawback department upon which cheque is issued. If the information
submitted by the exporter is insufficient to process the claim, a deficiency
memo will be issued to the exporter seeking further information or documents
to process the claim. On compliance the claims will be processed in the usual
manner.
a. Triplicate copy of the Shipping Bill bearing
examination report recorded by the proper officer of the customs at the time of
export.
b. Copy of the Bill of entry or any other prescribed documents
against which goods were cleared for importation.
c. Import invoice.
d. Evidence of payment of duty paid at the time of importation of
goods.
e. Permission from the Reserve Bank of India for
re-exports of goods, wherever necessary.
f. Export invoice and packing list.
g. Copy of the Bill of Lading or Airway bill.
h. Any other documents as may be specified in the
deficiency Memo.
If duty paid goods are to be exported as baggage
under claim for drawback, a Formal declaration has to be filed by
the passenger which is deemed to be an entry for export and thereupon an order
permitting clearance of the goods for export is made by proper officer. The
following procedure to be followed
Passengers intending to re-export goods imported
and cleared as baggage item under a claim for drawback of duty should furnish
with Supdt. of Customs Airport, a declaration in the prescribed FORM,
in duplicate. Passengers should also produce at the time of re-export of the
goods duty payment documents relating to goods cleared by them as baggage.
The goods are examined by the Supdt. of Customs
and on being satisfied with the identity of the goods he will permit export and
also recommend drawback of duty due on the goods by making suitable endorsement
on the examination and also make a suitable note on the duty payment documents
produced by the passengers.
The duplicate copy of the declaration cum
examination export along with duty payment document is returned to the
passenger and the original copy transmitted to the Asst./Deputy Commissioner
drawback Section.
If the payment is to be made to a person other
than the passenger, an authority letter as included in the declaration FORM should
be furnished by the passenger duly authenticated before the Supdt. Customs: a
pre – receipt on a revenue stamp should also be tendered by him.
The passenger or his authorised agent should
file his/her drawback claim along with the copy of the declaration at (a) above
and the duty payment document the office of the Asst./ Deputy Commissioner of
Customs, Drawback Section. The cheque granted as draw back of duty
is sent to the specified address.
Where goods are to be exported by post under a
claim for drawback, the outer packing carrying the address of the consignee
shall also carry in bold letters the words "DRAWBACK FOR EXPORTS".
The exporter shall deliver to the Postal Authorities along with the parcel or
package a claim in the FORM in quadruplicate duly filled in.
The date of receipt of the aforesaid claim FORM by
the proper officer of Customs from the postal Authorities shall be deemed to be
date of filing of drawback claim by the exporter for the purpose Section 75
A. . The proper officer of Customs shall give an intimation of the same to the
exporter in the prescribed form.
In case the aforesaid claim for is not complete
in all respects, the exporter shall be informed of the deficiencies
therein within fifteen days of its receipt from postal authorities by a
deficiency memo in the prescribed FORM and such claim shall be
deemed not to have been received.
When the exporter complies with the requirements
specified in the deficiency memo, within thirty days of receipt of the
deficiency memo, he shall be issued an acknowledgement by the proper officer in
the prescribed FORM.The date of acknowledgement shall be deemed to
be date of filing the claim for the purpose of Section 75A.
FORM FOR CLAIM OF DRAWBACK UNDER SECTION 74 OF THE
CUSTOMS ACT 1962 ON GOODS EXPORTED BY POST ( Rule 3 of Re-export of
Imported goods (Drawback of Customs Duties) Rules, 1995
In order to claim drawback under Section 74 the
goods should be entered for export within two years from the date of payment of
duty on the importation thereof. Provided that in any particular case the
period of two years may on sufficient cause shown be extended by the by the
Central Board of Customs and Central Excise by such period as it may deem fit.
The time limit have to be computed from the date
of payment of duty up to the date of entry of goods for export under Sec 50 of
the Customs Act for export by air or sea, under Section 77 for
baggage items and Under Section83 of the Customs Act for export by
post
The claims should be filed in the manner
prescribed under Rule 5 of Re-export of Imported Goods(Drawback of Customs
Duties) Rules,1995, read with Public Notices issued by the Custom Houses. The
time limit for filing the claim is three months from the date of let export
order. If the exporter was prevented by sufficient cause from filing the claims
within three months, the Asst. Commissioner of Customs can relax the time limit
by three months. .
NOTIFICATION ISSUED UNDER SECTION 74
OF THE CUSTOMS ACT
Notification No.19/65-Customs, dated 1965,
Notification No.1117-Customs, dated 10-6-1881.
SCOPE
This is an export promotion incentive payable for
goods manufacture in India with duty paid inputs whether indigenous or
imported.
ALL INDUSTRY RATES
The rates of drawback are announced by the Govt.
of India, Ministry of Finance for various categories of goods and are indicated
in the schedule appended to the Customs and Central Excise Duties
Drawback Rules, 1995. The schedule of rates is normally announced
on the 1st of June every year or 3 months after the budget. The rates mentioned
in the schedule are called all-industry rates of drawback.
They are applicable to manufacturer exporters as well as merchant exporters.
The all industry rates of drawback are fixed under Rule 3 and can be revised by
the Govt. under Rule 4. The all industry rates of drawback are worked out on
the basis of broad averages of consumption of inputs, duties suffered, quantity
of wastage, f.o.b. prices of the export products etc.
Except where specifically authorised the all –
industry rates of drawback are not applicable where an export product has been-
a. exported in discharge of export obligation
against an Advance Licence issued under Duty Exemption Scheme vide the relevant
Import and Export Policy.
b. manufactured partly or wholly in bond under
Section 65 of the Customs Act, 1962,
c. exported by a unit licensed under any 100%
Export Oriented Schemes (100%EOY/EHTP/STP/Agriculture/aquaculture etc)
d. exported by a Unit situated in a Free trade
zone/ Export processing Zones
e. manufactured and exported in terms of Rule 12(1)
(a) of the Central of the Central Excise Rules 1944; and
f. manufactured and exported in terms of Rule 13(1)
(a) of the Central Excises Rules, 1944; and
g. manufactured and exported availing the facility
under the Import and Export Pass Book schemes of he relevant Exim policy
The restrictions as mentioned in the above
clauses are not applicable where payment of drawback at a particular
rate/amount has been specifically authorised thereunder any sub serial number
in the All industry table subject to such terms and conditions as may be
specified thereunder.
BRAND RATES
If any category of goods all industry rates is
not available, the exporter can approach the Directorate of Drawback for
fixation brand rates. Brand rates are fixed under Rule 6 for specific
manufacturer exporter. Even if all industry rates are available for the produce
and if the manufacturer desires to have higher rates of drawback because of
higher duty paid inputs, such manufacturer can apply for special brand rates
under Rule 7.
For fixation of Brand rates, the manufacturer
has to submit the application to Directorate of Drawback within 30 days of
their first shipment. The application and data in duplicate should be submitted
to the Ministry with copies to the concerned Central Excise Commissionerate or
the Custom House. The brand rates are fixed by the Commissioner Drawback on the
basis of report sent by the jurisdictional Commissionerate after verification
of data submitted by the manufacturer exporter.
The rates fixed under all industry categories in
most cases are percentage of fob value of goods. . If the pricing of goods is
on CIF basis, the insurance and freight bills are required be produced to
arrive at the fob value. The rates are operative in terms of Section 16
read with Section 51 of the Customs Act. That is the crucial
date for application of the rate of drawback in force is the date of ‘let
export order’ given by the appraiser. The all industry rates of drawback are
payable subject to restriction and prohibitions mentioned in the General Notes
to the Drawback Schedule.
For the purpose of claiming drawback, the
exporter is required to file a drawback-shipping bill in the prescribed Format
as required under Rule 13 along with the necessary declaration. The goods after
assessment are examined by the officers posted in the Examination Shed as
required for each individual case. The examination report will indicate the
nature of goods in terms of drawback schedule for classification and
application of correct rate. Samples may have to be drawn for testing by lab in
respect of chemicals, synthetic fabrics’ etc as specified from time to time to
confirm the declarations in the export documents. The triplicate Copy if the
drawback shipping bill which contain the examination report is the claim copy
SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING THE
CLAIM.
1. Triplicate of the Shipping Bill
2. Copy of the Bank Certified Invoices.
3. Copy of the Bill Lading / Airway Bill
4. Sixtuplicate Copy of AR-4 wherever applicable
5. Freight and Insurance certificate wherever the
contract is CIF / C&F
6. Copy of the Test report where the goods are
required to be tested
7. Copy of the Brand rate letters where the
drawback claim is against the Brand rate
8. Mate receipt
9. Copy of the Contract or Letter of credit as the
case may be
10. Modvat Declaration wherever applicable
11. Any declaration required as per foot note of the Drawback schedule
12. Work sheet showing the drawback amount claimed
13. DEEC Book and licence copy where applicable.
14. Transshipment certificate where applicable
15. Proof of foreign agency commission paid if any
16. Blank acknowledgement card in duplicate
17. Pre – receipt for drawback amount on the reverse of Shipping Bill
duly signed on the Rs1/- revenue stamp
The claims are settled and passed by the
appraiser if the amount sanctioned is below Rs 1,00,000/- and by the Assistant
Commissioner, if the amount of drawback exceeds Rs1.00.000/-. After pre-audit,
the cheques are issued to the designated banks for credit to the exporters
account or handed over to the authorized representative of the exporter. For
further details refer to the Public Notices issued by the concerned
Custom Houses/ Central Excise Commissionerate.
FORM FOR
CLAIM OF DRAWBACK UNDER SECTION 75 OF THE CUSTOMS ACT 1962
READ WITH RULE 13 OF CUSTOMS AND CENTRAL EXCISE RULES 1995
Computerized processing of shipping bills is in
vogue at over 19 ports in India. The shipping bills are processed under the
Indian Customs EDI systems (ICES). Under the system, there would be no
processing of paper documents except statutory declarations and endorsements
until ‘let export’ order stage. Till such time exporters / CHAs are given
access to file documents through the Service centre set up in the Custom Houses
/ Air Cargo complexes. Processing of drawback claims under the system will be
applicable for all exports except in respect of the claims under Section 74
of the Customs Act and those relating to EPZ/100% EOU. For the excluded
categories the export Shipping Bills will be filed manually and processed by AC
Drawback, as hitherto. Under the EDI system there is no need for filing
separate drawback claims. The shipping bill itself treated as drawback
claim.
In the EDI system the exporters are required to
open their accounts with the Bank nominated by the Custom Houses/ ACC. This has
to be done to enable direct credit of drawback amount to their accounts,
obviating the need for issue of cheques.
For export of goods under claim for drawback,
the exporters will file S.D.F declaration in Annexure B in lieu of GR –1 FORM.
The declaration in Annexure C would also be filed when the export goods are
presented at the Export shed for examination and Let export. In addition they
should file a declaration if any in the appendices applicable to the goods
mentioned in the Public Notices issued by the Customs Houses / ACC for
processing Shipping Bills under the EDI system.
The rates of drawback under S.S Nos. are
dependent upon conditions mentioned against them in the Drawback Schedule. To
enable the EDI system to process the claims correctly exporters are advised to
give the correct Sl.No. of relevant appendix applicable to their case. If the
relevant declarations are not filed along with the Shipping Bill the system
will not process the drawback claims. The exporters are therefore advised to
file the declaration along with the Shipping Bills.
After actual export of the goods, the drawback
claims will be processed through the system on first come first served basis.
The status of Shipping Bills and sanction of drawback claim can be ascertained
from the query counter set up at the Service centre. If any query has been
raised or deficiency noticed, the same will be shown on the terminal provided
there. The exporter or his authorised representative may obtain a printout of
the query/deficiency form the Service Centre if he so desires. The claim will
come in Que. of the system as soon the reply is entered.
Shipping Bills in respect of goods under claim
for drawback against brand rates would also be processed in the same manner,
except that drawback would be sanctioned only after the original brand letter
is produced to AC Export and is entered in the system. The exporter should specify
the S.S No 98.01 for such provisional claim
All the claims sanctioned on a particular day
will be enumerated in a scroll and transferred to the Nominated Bank through
the system. The Bank will credit the drawback amount in their respective
accounts of the exporters on the next day. Bank will send a fortnightly
statement to the exporters of such credits made in their accounts.
The steamer agents / Airlines will transfer the
EGM electronically to the system so that the physical Export of goods is
confirmed. The system will process the claims only on receipt of the EGM.
For claiming drawback on goods exported by post,
exporter is required to file his claim at the time of booking parcel with the
postal authorities in the form prescribed in the Rules. The date of
receipt of this form from the postal authorities by the
Customs Authorities shall be treated as date of filing claim by the exporter
for the purpose of Section 75 A of the Customs Act. Thus
drawback is paid to the exporter within three months from the date of receipt
of claim from the postal authorities. On receipt of the claim form, intimation
is to be given to he exporter. Where claim form is incomplete a deficiency memo
is issued within fifteen days of its receipt form the postal
authorities. The exporter can resubmit this form after compliance with
deficiencies within a period of 30 days. If such a claim is found to be in
order, the same is acknowledged and the period of three months for payment of
drawback in terms of Section 75 in such cases shall commence
form the date of such acknowledgement.
The claims should be filed in the manner
prescribed under Rule 13, read with Public Notices issued by the Custom Houses.
The time limit for filing the claim is three months from the date of let export
order. If the exporter was prevented by sufficient cause FORM filing
the claims within three months, the Asst. Commissioner of Customs can relax the
time limit by three months and the Commissioner of Customs can relax the time
limit for a period of nine months.
A new Section 75 A has been
incorporated in the Customs Act to provide for payment of interest on delayed
payment of drawback. Interest at the rate of 15% P.A. is payable to the
exporters if the claim is not settled within three months from the date of
issue of acknowledgement by the department. Acknowledgement under Rule 13(I) is
issued only if the claim is complete in all respect. If the claim is deficient,
the department within 15 days from the date of filing the claim will issue a
deficiency memo. The exporter is required to comply with the deficiency memo
within 30 days from the date of receipt of deficiency memo. The time limit in
these cases will be completed after receipt of compliance and issue of
acknowledgement card.
Similarly, where an exporter has been paid erroneous or excess drawback and
fails to repay the same within three months from the date of demand, he is
liable to pay interest at the rate of 20% P.A.
If the exporter finds that the amount of
drawback paid is less than what he is entitled to, there is a provision for
claiming supplementary drawback claims in the prescribed Format
Under Rule 15 of the Drawback Rules, 1995. The time limit filing
supplementary claim is three months from the date of original settlement.
RESTRICTION ON GRANT OF DRAWBACK
Certain limitation have been laid by law in the
matter of admissibility if drawback even though the commodity might have been
notified and covered in the Drawback Table . These are:
(a)The amount or the rate of drawback should
work out 2% or more of the f.o.b. value of the product except in cases where
the amount of drawback exceeds Rs5000/- per shipping Bill.
(b) The f.o.b. value of the product should not
be less than the value of all imported materials used in the manufacture of
that product. In other words the value addition in respect of the particular
product should not be negative
(c) No drawback is admissible where the amount
of the drawback worked out is higher than the present market value of the goods
export (Section 76(1) of the Customs Act)
(d) Drawback is not admissible where the total
amount of drawback is less than Rs 50/-(Section 76(1)(b) of the Customs
Act,1962
(e) No drawback is admissible in case of goods
exported by land to any place in Burma, Tibet or Bhutan as specified in the
Ministry of finance Notification 208 cus. dated 1/10/1977
Rule 16 of the Drawback Rules empowers
the department to recover any erroneous payment of drawback without any time
limit and can initiate recovery proceedings under Sec 142 of the Customs Act
1962
This scheme envisages reimbursement of Customs
and Central Excise duties suffered on inputs used in the manufacture and
packing of finished exports product. The brand rates are determined for
specific export products exported by specific exporters.
The simplified Brand rate Fixation scheme will
be available to all manufacturer – exporters who have a regular production of
the product for which brand rate is being sought and who are corporate bodies
having a detailed accounting system which is normally subject to statutory
audit under the Company Law.
Under this procedure, the manufacturer –
exporter including those who have exported through the trading Houses or Star
trading Houses has to simply file his brand rate application in prescribed Performa
along with an indemnity bond. The data will have to be supported by certificate
from an independent Chartered Engineers, Chartered Accountant/Cost accountants
in relation to the data furnished in Statements I. II & III submitted along
with the application. Taking into account the data the Directorate of Drawback
will fix the brand rates without insisting upon the pre – verification. The
data submitted will, however be subject to post verification by the department
and the applicant should also take steps to assist and ensure quick post
verification. If post – verification reveals that the data furnished was
incorrect in any way then the Brand rates will be suitable revised and the
applicant have to pay back any excess amount claimed. Furthermore. If the
applicant fails to arrange for the post verification of data within three
months. The facility under the scheme will be withdrawn for his subsequent
application.
Request for extension time limit for filing an
application for brand rate under Rules 6 & 7 of the
Drawback Rules, inclusion of Subsequent shipments in the Brand rate
letter, extension of validity period of the brand rate letter and or quantity
enhancement can be considered Drawback Directorate under special circumstances.
For details see guidelines for fixation of Brand rates under simplified and Normal
Procedure.
APPLICATION FOR FIXATION OF DRAWBACK RATES UNDER
RULE 6(1)(a) (BRAND RATE) OR RULE 7(1) (SPECIAL BRAND RATE) OF CUSTOMS AND
CENTRAL EXCISE DRAWBACK RULES,1995 (UNDER NORMAL SCHEME)
STATEMENT DBK – 1 (This is a statement of consumption norms of various inputs and
should be certified by an independent Chartered Engineers)
STATEMENT OF DBK II - ( Direct imports of materials/components made by the manufacturer
and foreign materials obtained locally by the manufacturer during the period
commencing three months prior to the date of shipment/first shipment—upto the
date application for manufacture of the export product)
STATEMENT DBK II A - Details of procurement relating to stock of imported materials as
on commencement date (three months prior to the date of shipment/first
shipment) based on FIFO principle required for the manufacture of the export
product
STATEMENT DBK III – Materials / Components of Indian Origin obtained by the
Manufacturer during the period commencing three months period to the date of
shipments/first shipment upto the date of application of the manufacture of the
export product.
STATEMENT DBK III A- Details of procurements relating to stocks of indigenous materials
as on commencement date (the date thee months period to the date of shipment /
first shipment based FIFO principle) required for the manufacture of the export
product.
APPLICATION FOR FIXATION OF DRAWBACK RATES UNDER
RULE 6(1)(a) (BRAND RATE) OR RULE 7(1) (SPECIAL BRAND RATE) OF CUSTOMS AND
CENTRAL EXCISE DRAWBACK RULES,1995 (UNDER SIMPLIFIED SCHEME)
STATEMENT DBK – 1 (This is a statement of consumption norms
of various inputs and should be certified by an independent Chartered
Engineers)
STATEMENT OF DBK II - ( Direct imports of materials/components
made by the manufacturer and foreign materials obtained locally by the
manufacturer during the period commencing three months prior to the date of
shipment/first shipment—upto the date application for manufacture of the export
product)
STATEMENT DBK II A - Details of procurement relating to stock
of imported materials as on commencement date(three months prior to the date of
shipment/first shipment) based on FIFO principle required for the manufacture
of the export product
STATEMENT DBK III – Materials / Components of Indian Origin obtained by the
Manufacturer during the period commencing three months period to the date of
shipments/first shipment upto the date of application of the manufacture of the
export product.
STATEMENT DBK III A - Details of procurements relating to stocks of indigenous
materials as on commencement date (the date thee months period to the date of
shipment / first shipment based FIFO principle) required for the manufacture of
the export product.
SECTION 75 OF THE CUSTOMS ACT 1962 (Drawback on imported materials used in the manufacture of goods,
which are exported)
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