CIRCULAR NO. 26/2005-Cus.
8th June, 2005
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Sub:Applicability of drawback on exports in CKD/SKD condition-regarding.
The undersigned is directed to invite your attention to the above mentioned subject. It has been represented by the trade and industry that All Industry Rates of Duty Drawback as well as Brand Rates of duty drawback should be allowed on the export products even when they are exported in completely knocked-down (CKD) condition or semi-knocked-down (SKD) condition or unassembled condition. It has been stated that in the current trade practice, importers of other countries, especially developing countries, importing goods from India often insist on dispatch of export goods, such as, televisions, air-conditioners, washing machines, refrigerator, etc. in CKD or SKD condition.Online GST Certification Course by TaxGuru & MSME- Click here to Join
2. The matter has been examined by the Board. In the Duty Drawback Schedule, 2005-06, notified under notification No.36/2005-Customs(N.T.) dated 2nd May, 2005, the tariff items and description of goods have been aligned with the tariff items and description of goods appearing in the First Schedule to the Customs Tariff Act, 1975
at the four digit level. It has been clearly stated in General Note 2 of the above mentioned notification that General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975 shall mutatis mutandis apply for classifying the export goods listed in the Drawback Schedule. Rule 2(a)of the said rules provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule ), presented unassembled or disassembled. In view of this legal position, the goods exported in CKD/SKD/unassembled condition shall be entitled to the All Industry Rate of Drawback if the same is available on goods when exported in complete/ assembled form. In the same way, brand rate of drawback would also be admissible for goods exported in CKD/SKD/unassembled condition.
3. However, in order to safeguard revenue, it may be ensured that All Industry Rate of Drawback and Brand Rate of Drawback are extended to goods exported in CKD/SKD/unassembled condition only if the exporters furnish adequate evidence to substantiate that all the components /parts, etc. being exported constitute the complete export product.
4. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.
Receipt of the Circular may kindly be acknowledged
Dr. M Subramanyam
Deputy Secretary to the Govt. of India