Duty Drawback Scheme

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Duty Drawback Scheme

The duty drawback scheme has been notified for a large number of export products by the Government after an assessment of the average incidence of Customs, Central Excise duties, Service Tax and Transaction Cost suffered by the export products. Duty Drawback Scheme aims to provide the refund/ recoupment of custom and excise duties paid on inputs or raw materials and service tax paid on the input services used in the manufacture of export goods. In this article, we look at the procedure for claiming Duty Drawback of export in India.

Customs Act, 1962

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-exports 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 claim 98% of the duty paid by him as drawback under section 74.
  • Section 75: As per section 75, if the export of goods 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 not received within the stipulated period, a drawback is to be reversed or adjusted. Duty Drawback under section 75 can be claimed either as a fixed percentage depending upon the value of goods exported.

Goods Eligible for Drawback

The following are the eligible goods for the duty drawback.

  • To export goods imported into India
  • To export goods imported into India after having been taken for use
  • To export goods manufactured/produced out of imported material
  • To export goods manufactured/produced out of indigenous material
  • To export goods manufactured /produced out of imported or and indigenous materials.

Eligibility Criteria

The below following are the minimum criteria to claim for processing drawback claim.

  • Any individual must be the legal owner of the goods at the time the goods are exported.
  • You must have paid customs duty on imported goods.
  • Duty drawback is available on most goods on which customs duty was paid on importation and which has been exported.

Documents Required

The below 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-exports of goods
  • Copy of the Bill of Lading or Airway bill.
  • Copy of the Bank Certified Invoices.
  • Sixtuplicate Copy of AR-4
  • Export invoice and packing list.
  • Freight and Insurance certificate
  • Copy of the Test report of goods
  • Modvat Declaration
  • A worksheet showing the drawback amount claimed
  • DEEC Book and licence copy where applicable.
  • Transhipment certificate where applicable
  • Blank acknowledgement card in duplicate
  • Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue stamp

Duty Drawback Rates

The following are the drawback rates of which import duty with the fixed percentage shall be allowed in respect of used goods after their importation and which have been out of customs control.

S. No. The period between the date of clearance and the date when the goods are placed under Customs control for export Percent of drawback
1. Not more than 3 months 95%
2. More than 3 months but not more than 6 months 85%
3. 6-9 months 75%
4. 9-12 months 70%
5. 12-15 months 65%
6. 15-18 months 60%
7. More than 18 months Nil

Procedure for Claiming Duty Drawback

The procedure for claiming duty drawback on export goods (whether AIR or Brand Rate) to be claimed at the time of export and requisite particulars filled in the prescribed format of Shipping Bill/Bill of Export under Drawback. If the processing of documents has been computerised, then the exporter is not required to file any separate application for claiming duty drawback. In the case of manual export, a separate application is to be submitted for claiming duty drawback. The claim is to be accompanied by certain documents as laid down in the Drawback Rules 1995. Triplicate copy of the shipping bill becomes the application only after the Export General Manifest is filed.

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