Export under Rebate

Export under Rebate

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Export under Rebate

According to Section 11B of the Central Excise Act, 1944, the term refund includes ‘rebate’ of duty excise on excisable goods that are exported from India or an excisable material that is used to manufacture goods that are exported from India. The procedure that is mentioned in the rules and notification are subject to Section 11B of the Act. The conditions and procedure pertaining to the export under a claim of the rebate are specified in Notification no. 19/2004-CE, dated 6th September 2004 that is issued under Rule 18 of the Central Excise Rules, 2002. In this article, we look at the procedure for undertaking export under rebate.

Categories of Exports

There are three categories of exports. They are

  • Export of all excisable goods to any country except Nepal and Bhutan
  • Export to Nepal and Bhutan
  • Export of tea to any country except Nepal and Bhutan

Export to Countries Except for Nepal and Bhutan

The conditions for exporting the excisable goods other than mineral oils that are supplied as ship stores to aircraft on the foreign-run to all countries except Nepal and Bhutan are as follows.

  • It is mandatory that the excisable goods have to be exported only after the payment of duty, which has to be made directly from a factory or warehouse. The condition of ‘payment of duty’ is completed once the exporter records the details of the removals in the Daily Stock Account that is maintained under theRule 10 Central Excise Act, whereas the duty would be discharged in the manner that of specified under Rule 8 of the Central Excise Act that would be made on a fortnightly or monthly basis.
  • In some cases, the Board issues instructions/ procedures for exporting duty-paid goods from a place other than the factory or the warehouse. General permission would be granted in respect of goods where it would be possible to correlate the goods and their duty paid to character.
  • The excisable goods would be exported within six months from the date they were cleared for export from the factory of manufacture or warehouse. These dates are given on the ARE. 1 and the invoice that is issued for that purpose. The Commissioner of Central Excise is authorized to extend this period for reasons that are recorded in writing in a particular case. The exporter has to submit a written request to the Commissioner stating valid reasons why they are unable to export within the stipulated six months’ period. The Commissioner has to give his decision within seven working days from the receipt of the request. However, such permissions should not be given in a routine manner. 
  • The excisable goods that are supplied as ship’s stores for consumption on board a vessel bound for any foreign port will be covered by the issuing a notification by which the Customs Commissioner at the port of shipments may consider it to be reasonable. 
  • The market price of the excisable goods while exporting should not be less than the amount of rebate of duty that is claimed.
  • The rebate claim would be admissible only when the amount of rebate of duty admissible is five hundred rupees or more.
  • The rebate of duty that is paid on the excisable goods export of which is restricted under any law for the time being that is in force, shall not be made.

Forms to be Used

ARE. 1 is the export documents that have been prepared in quintuplicate. This document consists of the serial number that begins from the first day of the financial year. The stationery for AR. 4 Form would be used with a modified name ‘Are. 1’ for this financial year. One ARE. 1, certain declaration have to be given by the exporter. These details should be read carefully and have to be signed by the exporter or by his authorized agent. The different copies of ARE. 1 Forms have to be presented according to the following colours.  

Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue

An invoice would be prepared according to Rule 11 of the Central Excise Act 1944. 

Filing Rebate Claim

There is no particular form for filing the claim of rebate. The same can be done by the exporter on their letterhead that has to filed using the required documents. 

Procedure for Clearance of Export

An exporter gets two optional procedures to clear the export consignments from the factory or warehouse. They are

  • Examination and sealing of goods at the place of dispatch by a Central Excise Officer.
  • Under the self-sealing and self-certification. 

Sealing of Goods and Examination at Place of Despatch

The exporter has to prepare five copies of the application in Form ARE. 1 according to the format given in Annexure-I to Notification No. 40/2001-Central Excise dated 26.06.2001. These goods are assessed to duty in the same manner as the goods that are required for home consumption. The classification and rate of duty have to be in terms of the Central Excise Tariff Act, 1985. The value would be considered as the ‘transaction value’ and have to conform to Section 4 or Section 4A of the Central Excise Act, 1944. It is evident that this value may be less than equal to or higher than the F.O.B value that is mentioned by the exporter on the Shipping Bill. 

The duty payable shall be determined on the ARE. 1 and invoice and recorded in the Daily Stock Account has to be paid according to Rule 8 of the Central Excise Act, 1944.

The exporter requests the Superintendent or the Inspector of the Central Excise having jurisdiction over the factory for production or manufacture, warehouse or approved premises for examination and sealing at the dispatch place 24 hours in advance, or such shorter period as mutually agreed, about the intended time of removal so that arrangements are made for necessary examination and sealing.

If exports under the Duty  Exemption Entitlement Certificate Scheme (DEEC), Duty Exemption Pass Book Scheme (DEPB) and claim for drawback, the Superintendent of Central Excise examines and seals the consignment and sign the documents. If the exporter has a flawless track record of compliance and if there is non-availability of Superintendent of Central Excise due to leave, vacant post or other reasonable causes, the jurisdictional Deputy/ Assistant Commissioner of Central Excise permits examination and sealing by Inspector. Other types of export would be examined and sealed by the Inspector of Central Excise. 

Distribution of Documents 

When an export happens from the factory or warehouse, the distribution of ARE. 1 is as follows. 

Original (First Copy) The Superintendent or Inspector of the Central Excise return to the exporter immediately after endorsements and signature.
Duplicate (Second Copy) The Superintendent or Inspector of the Central Excise return to the exporter immediately after endorsements and signature.
Triplicate (Third Copy) Sends to the concerned officer with whom the rebate claim has to be filed, either by post or by giving it to the exporter in a tamper proof sealed cover after posting the details in official records.
Quadruplicate (Fourth Copy) Retain for official records
Quintuplicate (Fifth Copy) Option Copy – The Superintendent of the Inspector of the Central Excise returns to the exporter after endorsements and signature

Examination of Goods at the Place of Export

The place of export can be a port, airport, Inland Container Depot, Customs Freight Station or Land Customs Station. The exporter presents together with original, duplicate and quintuplicate copies of the application to the Commissioner of Customs or another duly appointed officer.

The goods are examined by the Customs for purposes of Central Excise to furnish the identity and quantity of the goods which are brought in the Customs areas for export if an ARE 1 are the same that were cleared from the factory. The Customs authorities examine the goods for Customs purposes such as verifying certain export incentives such as drawback, DEEC, DEPB or to determine the exportability of the goods. 

For Central Excise purposes, the Officers of Customs at the place of export examines the consignments with the details that are listed in the application and if he finds it is correct and the goods are exportable abiding by the laws, that are presently in force. Once this is done, the officer certifies the copies of the ARE 1 that the goods have been duly exported mentioning the shipping bill number and date and other particulars of export ARE 1.

The Customs officer returns the original copy and the quintuplicate copies of the application to the exporters, forwarding the duplicate copy of the application either by post or by handing over to the exporter in a proof sealed cover to the concerned officer as mentioned in the application, from whom the exporter desires to claim the rebate. But, if the exporter claims rebate by electronic declaration on Electronic Data Inter-change system of Customs, the duplicate would be sent to the Excise Rebate Audit Section at the place of export. The exporter uses the quintuplicate copy to claim any other export incentives. 

Sanction of Claim for Rebate by Central Excise

The rebate claim can be sanctioned by any of the following
Central Excise officers.

  • The Deputy/ Assistant Commissioner of the Central Excise having jurisdiction over the production factory of export goods or the warehouse or
  • The Maritime Commissioner

It is mandatory for the exporter to specify the office and the competed address on the ARE 1 while removing the export goods. This is done to file claim or rebate. 

Required Documents

The following are the required documents that are required to filing or claiming rebate. 

  1. A request on the letterhead of the exporter that contains the claim of rebate ARE 1 numbers and dates, the invoice numbers and dates that amount of rebate on each ARE 1 and its calculations.
  2. Original copy of the ARE 1.
  3. Invoice that is issued under Rule 11.
  4. Self attested copy of the Shipping Bill.
  5. Self attested copy of Bill of Lading.
  6. Disclaimer Certificate.

Once the officer is satisfied with the goods that are cleared for export under the relevant ARE 1 applications specified in the claim, as evident by the original and duplicate copies of ARE 1 that are duly certified by Customs, and the goods that are ‘duty-paid’ character as certified on the triplicate copy of ARE 1 that is received from the jurisdictional Superintendent of Central Excise, the rebate sanctioning authority sanctions the rebate. If there is a reduction or rejection of claim, an opportunity shall be provided to the exporter to explain the case and a genuine order shall be issued. And, if the individual rebate claims exceed Rs. 5 lakh, they shall be pre-audited before it is disbursed.

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