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DUTY
DRAWBACK
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POLICY &
PROCEDURE
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Drawback
is an international term and is widely acknowledged as most
important incentive for export In India drawback is covered
under Section 74, 75 & 76 of Customs Act 1962 as amended.Under
Section 74, drawback is admissible on re-export of duty paid
goods. Under Section 75 drawback is admissible on the use
of imported raw materials in the manufacture of export product
and under Section 76 there are certain prohibition under certain
type of cases particularly the drawback is admissible if the
market price of the product is less than the amount of drawback
and if the drawback is less than Rs.50/-.
The drawback under Section 74 is admissible when the imported
goods are re-exported and in this case 98% of the duty is
repaid as drawback. This type of drawback is dealt by the
Commissioner of Customs of the Port of Export subject to certain
restrictions and conditions.
Under Section 75 of the Customs Act 1962 and Section 37 of
the Central Excise and Salt Act 1944 the Central Govt. has
made the drawback rules as per the Notification No. 37/95-
Customs dtd 26.5.1995.
Under these rules of Drawback, the Commissioner of Drawback
in Jeevan Deep Building, Dept. of Revenue, Ministry of Finance,
is fixing rates of drawback in the general items of export.
These rates in the Trade Practice are called as All Industry
Rates and are published every year 90 days after general budget
i.e normally if the budget is announced on 28th February then
the drawback rates are announced from 1st June. Now if the
export product is not covered under the All Industry Rates
the exporter/manufacturer can apply for fixation of brand
rate of drawback under Rule6 of the drawback rules and these
rates are called Brand Rates of Drawback. There is also another
provision under Rule 7 of the Drawback rules that if the exporter
/ manufacturer feels that the drawback rate allowed is inadequate
then he can go for fixation of Special Brand Rate under Rule
7 of the Drawback rules and the primary condition for fixation
of such rate is that the All Industry Rate is in fact less
than 4/5th of such amount or rate determined under this rule.
As a matter of fact the drawback amount is supposed to be
equivalent to the amount of Customs Duty in respect of imported
raw material / inputs used in the export products and the
Central Excise Duty suffered on the indigenous inputs provided
MODVAT facility has not been availed for the indigenous inputs.
For fixation of Brand Rate as well as Special Brand Rates
applicant has to file for fixation of rates under Rule 6 /
Rule 7 to the Commissioner of Drawback, Jeevan Deep Bldg.,
within 60 days of the let export date. Further 30 days can
also be allowed by the Commissioner of Drawback on request
with reasonable grounds to be made by the Exporter / manufacturer.
Fixation of Brand rate is done by the Commissioner of Drawback
after receipt of verified data filed by the exporter / manufacturer.
The verification of date is done by Jurisdictional of Central
Excise in this regard and the verification of data is to be
done within one month of the receipt of the brand rate application
and this is under normal procedure of the drawback. However
as a matter of liberalization the Govt. has also allowed the
brand rate to be fixed under simplified procedureon provisional
basis. Under simplified procedure the verification is to be
conducted at a later stage this facility was admissible earlier
to limited companies only but since 1996 onwards the same
facility was extended to Partnership concerned. To avail this
facility the applicant has to execute a bond on the prescribed
format stating that the difference in the rate if any found
on verification of data will be recoverable from the exporter
/ manufacturer immediately.
After fixation of rates the exporter / manufacturer has to
go for payment of drawback from the Commissioner of Customs
of Port of Export and the normal time allowed for filing such
claims may be on the basis of All Industry Rate / Special
Brand Rate within a period of 90 days of let export or the
drawback rate fixation whichever is later in the payment procedure
also certain new schemes of quick payment have been floated
for examples if the export is by Air/ICD then the Commissioner
of Customs, New Delhi is operating computerized scheme of
quick payment of drawback and the exporter is to open an account
with the Punjab National Bank Branch in the New Customs House
before the exports are made. After that within normally a
period of one week the drawback amount is automatically credited
to the account of the export without availing any claim whatsoever.Automatic
credit is only admissible in respect of the exports where
All Industry Rates of Drawback are available for the export
products. For all other cases one has to file claim with the
Asstt. Commissioner of the Port of Exports.
For condonation in delay in respect of filing of payment claims
with the Port of Export Customs Authorities the power has
been delegated upto 6 months from the let export date to Asstt.
Commissioner of Customs DBK and upto 9 months to the Commissioner
of Customs.
The Govt. has also announced that if the payment of drawback
is not made within 90 days from the acknowledgement of claim
by the Asstt. Collector of Customs then the interest is payable
to the exporter for the period beyond 90 days. |
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