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  • PROCESSING OF DRAWBACK

    SHIPPING BILL & DUTY

    DRAWBACK CLAIMS PROCEDURE

    By;Dr. Ram Singh

    Associate ProfessorInternational Trade Operations and Logistics

    Indian Institute of Foreign Trade,New Delhi

    Email: [email protected]

    Interaction with Managers / Officers IIFT

    mailto:[email protected]

  • DUTY DRAWBACK DEFINED

    The term drawback is applied to a certain amount ofduties of Customs/central excise, some times the whole,some times only a part remitted or paid by Governmenton the exportation of the commodities on which theywere levied.

    To entitle goods to drawback, they must be exported to aforeign port, the object of the relief afforded by theDrawback being to enable the goods to be disposed of inthe foreign market as if they had never been taxed at all.

    For Customs purpose drawback means the refund ofduty of customs and duty of central Excise that arechargeable on imported and indigenous materials usedin the manufacture of Exported goods.

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  • GOODS ELIGIBLE FOR

    DRAWBACK

    This scheme applies to:

    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.

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  • TYPES OF DRAWBACK

    Under Section 74 of Customs Act 1962

    1. "Re- export of Imported Goods (Drawback of Customsduties) Rules, 1995.

    Section 75 of Customs Act 1962

    1. Customs and Central Excise Duties Drawback Rules 1995

    2. All Industry Rates/ Brand Rates

    3. Drawback sanctioned under section 75 has a two tier systeminvolving

    (i) fixation of rates by the Directorate of Drawback inthe Central Board of Excise and Customs and

    (ii) disbursement of drawback amount by the CustomsHouses and/ Central Excise Commissionerate

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  • DUTIES REBATED UNDER

    DRAWBACK SCHEME

    Drawback Given:

    1. Basic inputs like raw materials, Components, Intermediates and packing

    materials used at various stages of production / manufacture.

    Drawback Not Given:

    1. Capital goods, fuels and consumables used in relation to the manufacture of the

    export goods

    2. no relief of Sales Tax or Octroi or any other indirect tax is given by way of

    drawback.

    3. The finished stage of excise duties on the export product is also not reimbursed

    under this scheme ..

    4. there are separate provisions for rebate of such finished stage duties under the

    Central Excises and Salt Act 1944 and the Rules framed thereunder.

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  • DRAWBACK UNDER SECTION 74-IMPORTED

    GOODS RE-EXPORTED: SCOPE

    In this category, two types of cases are coveredviz.,

    1. Imported goods exported as such i.e. withoutputting into use 98% of duty is refunded and

    2. Imported goods exported after use thepercentage of duty is refunded according to theperiod between the date of clearance for homeconsumption and the date when the goods areplaced under Customs control for exports. Thepercentage of duty drawback is notified underNotification. No 19 Cus, dated 6th Feb, 1965as amended from time to time

  • DRAWBACK ON RE-EXPORT OF USED GOODS

    SECTION 74 OF CUSTOMS ACT 1962

    Not more than three months-95%

    More than three months but not more than six months-85%

    More than six months but not more than nine months-75%

    More than nine months but not more than twelve months-70%

    More than twelve months but not more than fifteenmonths-65%

    More than fifteen months but not more than eighteenmonths60%

    More than eighteen months but not more than twenty--one months55%

  • DRAWBACK ON RE-EXPORT OF USED GOODS

    SECTION 74 OF CUSTOMS ACT 1962

    More than twenty--one months but not more than twenty-

    -four months 50%

    More than twenty--four months but not more than

    twenty--seven months 45%

    More than twenty--seven months but not more than thirty

    months 40%

    More than thirty months but not more than thirty--

    three months 35%

    More than thirty--three months but not more than three

    months but not more than thirty --six months30%

    More than thirty--six months NIL

  • ELEMENTS NECESSARY FOR DRAWBACK

    UNDER SECTION 74

    The elements necessary to claim drawback are;

    1. The goods on which drawback is claimed must have beenpreviously imported;

    2. Import duty must have been paid on these goods when they wereimported;

    3. The goods should be entered for export within two years from thedate of payment of duty on their importation (whether provisional orfinal duty). The period can be further extended to three years by theCommissioner of Customs on sufficient cause being shown.

    4. The goods are identified as the goods imported.

    5. The goods must be capable of being identified as imported goods.

    6. The goods must actually be re-exported to any place outside India.

    7. The market price of such goods must not be less than the amountof drawback claimed.

    8. The amount of drawback should not be less than Rs. 500/- as perSection 76-(1) (c) of the Customs Act.

  • PROCEDURE TO CLAIM DRAWBACK

    UNDER SECTION 74

    Drawback claims under Section 74 of the Customs Actare now being processed manually. To claim drawbackunder Section 74, the exporter should file the shippingbill under claim for drawback in the prescribed FORMand after assessment the goods are to be examined bythe Customs officers for purposes of physicalidentification. After shipment, the claim is filed in thedepartment, for sanction of drawback. The pre-receipted drawback payment order has to be forwardedto the drawback department upon which cheque isissued. If the information submitted by the exporter isinsufficient to process the claim, a deficiency memowill be issued to the exporter seeking furtherinformation or documents to process the claim. Oncompliance the claims will be processed in the usualmanner.

  • SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING

    DRAWBACK CLAIM UNDER SECTION 74

    Triplicate copy of the Shipping Bill bearingexamination report recorded by the proper officer ofthe customs at the time of export.

    Copy of the Bill of entry or any other prescribeddocuments against which goods were cleared forimportation.

    Import invoice.

    Evidence of payment of duty paid at the time ofimportation of goods.

    Export invoice and packing list.

    Copy of the Bill of Lading or Airway bill.

    Any other documents as may be specified in thedeficiency Memo.

  • DRAWBACK UNDER SECTION 75 OF

    THE CUSTOMS ACT 1962: SCOPE

    This is an export

    promotion incentive

    payable for goods

    manufacture in India

    with duty paid inputs

    whether indigenous

    or imported.

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  • ALL INDUSTRY RATES

    The rates of drawback are announced by the Govt. ofIndia, Ministry of Finance for various categories of goods.

    schedule appended to the Customs and Central ExciseDuties Drawback Rules, 1995.

    The schedule of rates is normally announced on the 1st ofJune every year or 3 months after the budget. The ratesmentioned in the schedule are called all-industry rates ofdrawback.

    The all industry rates of drawback are worked out on thebasis of broad averages of consumption of inputs, dutiessuffered, quantity of wastage, f.o.b. prices of the exportproducts etc.

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