For Customs purpose drawback means the refund/rebate of duty of customs and duty of central excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods.
Following conditions to be met to avail the duty drawback:- Export goods imported into India as such;
- Export goods imported into India after having been taken for use
- Export goods manufactured / produced out of imported material
- Export goods manufactured / produced out of indigenous material
- Export goods manufactured /produced out of imported or and indigenous materials.
The Duty Drawback is of two types :
(i) All Industry Rate (AIR) And
(ii) Brand Rate.
All Industry Rate (AIR):
The All Industry Rate (AIR) is essentially an average rate based on the average quantity and value of inputs and duties (both Excise & Customs) borne by them and Service Tax suffered by a particular export product. The All Industry Rates are notified by the Government in the form of a Drawback Schedule every year. The legal framework in this regard is provided under Sections 75 and 76 of the Customs Act, 1962 and the Customs and Central Excise Duty Drawback Rules, 2017. The AIR of Duty Drawback is not applicable to export of product manufactured in Warehouse under Section 65 of Customs Act, 1962, Special Economic Zones, Export Oriented Units (EOUs) etc.
Circular No. 19/2005 - Cus 21st March, 2005
Brand Rate :
The Brand Rate of Duty Drawback is allowed in cases where the export product does not have any AIR of Duty Drawback or the same neutralizes less than 4/5th of the duties paid on materials used in the manufacture of export goods. Exporters who wish to avail of the Brand Rate of Duty Drawback need to apply for fixation of the rate for their export goods to the jurisdictional Customs. The Brand Rate of Duty Drawback is granted in terms of Rules 6 and 7 of the Drawback Rules, 1995 and now Drawback Rules 2017.
Circular 14/2003 dated 06.03.2003 decentralisation of fixation of Brand Rate and Procedure laid down later amended by Circular 23/2017 dated 30.06.2017 1.03.2014
Imported goods re-exported-Drawback under Sec. 74
In case of goods which were earlier imported on the payment of duty and are later sought to be exported within a specified period, Customs Duty paid at the time of import of the goods, with certain cuts, can be claimed as Duty Drawback at the time of export of such goods.
Such Duty Drawback is granted in terms of Sec. 74 of the Customs Act, 1962 read with Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995.
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 Custom, dated 6th Feb, 1965 amended from time to time.
| Sr. No. | Length of period between the date of clearance for home consumption and the date when the goods are placed under Customs control for export | Percentage of import duty to be paid as Drawback |
|---|---|---|
| 1 | Not more than three months | 95% |
| 2 | More than three months but not more than six months | 85% |
| 3 | More than six months but not more than nine months | 75% |
| 4 | More than nine months but not more than twelve months | 70% |
| 5 | More than twelve months but not more than fifteen months | 65% |
| 6 | More than fifteen months but not more than eighteen months | 60% |
| 7 | More than eighteen months | NIL |
Application for Duty Drawback is required to be made within 3 months from the date of export of goods, which can be extended upto 12 months subject to conditions and payment of requisite fee as provided in the Drawback Rules, 1995
Provided further that when any of the goods specified below have been used after their importation into India, drawback of import duty paid thereon shall not be allowed when they are exported out of India.- Wearing apparel.
- Tea-chests.
- Exposed cinematograph films passed by the Board of Film Censors in India
- Unexposed photographic films, paper and plates, and X-ray films.
Sec 76: Recovery of Duty Draw back
If BRC’s or Negative statement from Bank or CA Certificate not submitted within 6 Months of export then the authorities gives you the personal hearing and then there may be recovery demand as per rule16A of drawback rules. One has to file an appeal and submit all the BRC to come clear in the appeal.
Circular 05/2009 Cus. XOS DBK to submit the realisation of Exports on 6 monthly basis.
Circular 06/2017 Cus. Acceptance of E BRC as a Proof of Realisation.
The elements necessary to claim drawback are;
- The goods on which drawback is claimed must have been previously imported;
- Import duty must have been paid on these goods when they were imported;
- 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.
- The goods are identified as the goods imported.
- TThe goods must be capable of being identified as imported goods.
- The goods must actually be re-exported to any place outside India.
- The market price of such goods must not be less than the amount of drawback claimed.
- The amount of drawback should not be less than Rs. 50/- as per Sec. 76-(1) (c) of the Customs Act.
Circular No. - 72/2002 dated 1.11.2002- Re- Export not mandatorily to be done to the same supplier or from same port from where the goods were imported.
FEMA RULES; G R WAIVER - NOT.NO. FEMA 5/2000-RB Dated 03.05.2000