Duty Drawback Scheme for Goods
The Duty Drawback Scheme allows exporters to urge a refund on customs paid on goods to be imported, where those goods are to be treated, processed, or incorporated in other products for export or are exported unused since importation.
The duty drawback scheme has been approached for an outsized number of export products by the govt after an assessment of the typical incidence of Customs, Central Excise duties, Service Tax and Transaction Cost suffered by the export products.
The primary objective of Duty Drawback Scheme is to provide the refund or recoupment of custom and excise duties paid on inputs or raw materials and service tax spent on the input services utilised in the manufacture of export goods.
The scope of the Duty Drawback Scheme covers two cases :
- Imported goods exported without putting into use – 98% of duty is refunded and
- Imported goods exported after use – the share of duty is refunded consistent with the amount between the date of clearance for home consumption and therefore, the date when the products are placed under Customs control for exports. The percentage of duty drawback is notified under Notification: no 19 Custom, dated 6th Feb 1965 as amended from time to time.
Goods Eligible for Drawback
Goods eligible for the Duty Drawback Scheme are :
- Export goods imported into India
- 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 materialExport Goods manufactured /delivered out of imported or and indigenous materials.
Duty Drawback Scheme is of two types :
The All Industry Rate(AIR)
The All Industry Rate (AIR) is a mean rate supported the typical quantity and value of inputs and duties (both Excise & Customs) borne by them and repair Tax suffered by a particular export product. The Government notifies the All Industry Rates in the form of a Drawback Schedule every year, and the present Schedule covers 2837 entries. The legal framework during this regard is provided under Sections 75 and 76 of the Customs Act, 1962 and therefore the Customs and Central Excise Duties and repair Tax Drawback Rules, 1995.
The Brand Rate
The Brand Rate of Duty Drawback Scheme is allowed in cases where the export product doesn't have any AIR of Duty Drawback or the same neutralises but 4/5th of the duties paid on materials utilised in the manufacture of export goods. This work is handled by the jurisdictional Commissioners of Customs & Central Excise. Exporters who wish to avail of the Brand Rate of Duty Drawback got to apply for fixation of the speed for his or her export goods to the jurisdictional Central Excise Commissionerate. The Brand Rate of Duty Drawback is granted in terms of Rules 6 and seven of the disadvantage Rules, 1995.
Duty Drawback Facilities
The Duty Drawback facility on the export of duty paid imported goods is available in terms of Sec. 74. Under this scheme, a part of the customs paid at the time necessary is remitted on the export of the imported goods, subject to their identification and adherence to the prescribed procedure.
The Duty Drawback provisions are described under Section 74 and Section 75 under the Customs Act, 1962. This Act laid down the various restrictions and conditions to claim drawback of duties under certain situations :
Section 74: As per section 74, if the re-export of imported goods, which are identified quickly and within two years from the date of payment of duty on the importation. Then an exporter is eligible to say 98% of the tax paid by him as drawback under section 74.
Section 75: As per section 75, if the export of products manufactured or processed out of imported material with value addition, then a drawback should be allowed of duties of customs chargeable on any imported materials of a class or description. If sale proceeds are not received within the stipulated period, a drawback is to be reversed or adjusted. Duty Drawback under section 75 are often claimed either as a hard and fast percentage depending upon the worth of products exported.
Following are the minimum criteria to claim for processing a drawback claim :
- Any individual must be the legal owner of the goods at the time the products are exported.
- You must have paid customs duty on imported goods.
- Duty drawback is out there on most products on which customs were paid on importation and which has been exported.
Following are the documents required for processing drawback claim :
- Triplicate copy of the Shipping Bill
- Copy of the Bill of entry
- Import Invoice
- Proof of payment of duty paid on the importation of goods.
- Approval from the Reserve Bank of India for re-export of goods
- Copy of the Bill of Lading or Airwaybill.
- Copy of the Bank Certified Invoices.
- Copy of AR-4
- Export invoice and packing list.
- Freight and Insurance certificate
- Copy of the Test report of goods
- Mod vat Declaration
- A worksheet showing the drawback amount claimed
- DEEC Book and licence copy where applicable.
- Transshipment certificate where applicable
- Blank acknowledgement card in duplicate
- Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- stamp
Elements necessary to claim drawback are :
- The products on which drawback is claimed must are previously imported.
- Duty must are paid on these goods once they were imported.
- The products 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 are often further extended to 3 years by the Commissioner of Customs on sufficient cause being shown.
- The products are identified because of the goods imported.
- The products must be capable of being classified as imported goods.
- The products must be re-exported to anywhere outside India.
- The market value of such goods must not be, but the quantity of drawback claimed.
- The quantity of drawback shouldn't be but Rs. 50/- as per Sec. 76-(1) (c) of the Customs Act.
Procedure for Claiming
The procedure for claiming duty drawback on export goods (whether AIR or Brand Rate) to be requested at the time of export and necessary particulars filled within the prescribed format of Shipping Bill/Bill of Export under Drawback.
If the processing of documents has been computerised, then the exporter isn't required to file any separate application for claiming duty drawback. In the case of manual export, a separate app is to be submitted for claiming duty drawback. The claim is to be amid certain documents as laid down within the Drawback Rules 1995. Triplicate copy of the shipping bill becomes the appliance only after the Export General Manifest is filed.
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Frequently Asked Questions
Q. What is the duty drawback in GST?
Duty Drawback Scheme provisions are made to grant rebate of duty or Tax chargeable on any imported/excisable materials and input services used in the manufacture of export goods. The input tax incidence of taxes covered in GST regime are neutralised through the refund mechanism provided under GST Laws.
Q. What is the drawback in export?
Drawback is a refund of the Customs duties and specific fees paid on imported merchandise as well as the return of individual particular Internal Revenue taxes. Custom issues these refunds, only the imported merchandise is either exported or destroyed and when a claim for drawback has been made.
Q. Who can claim duty drawback?
As per section 74, if the re-export of imported goods, which are identified quickly and within two years from the date of payment of duty on the importation. Then an exporter is eligible to say 98% of the tax paid by him as drawback under section 74.
Q. Is GST applicable on duty drawback?
Under the Goods Service Tax, the duty drawback would only be available for the customs paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation. There was some confusion surrounding the refund of the Tax paid by exporters on the data.