Introduction: The Government of India’s Ministry of Finance has released a significant notification, No. 77/2023-Customs (N.T.), dated October 20, 2023, announcing revisions in the All Industry Rates of Duty Drawback. This notification is a crucial update for the business community and exporters, as it impacts the rates at which they can claim duty drawbacks for various goods.
Detailed Analysis: The key points to understand in this notification are as follows:
1. Legal Authority: The changes in duty drawback rates are made under the authority of the Customs Act, 1962 and the Central Excise Act, 1944, in conjunction with the Customs and Central Excise Duties Drawback Rules, 2017.
2. Tariff Item Alignment: The notification mentions that the descriptions of goods in the Schedule are aligned with the tariff items in the Customs Tariff Act, 1975. However, there might be discrepancies in descriptions between the two.
3. Classification Rules: The general rules for classifying export goods are referenced from the Customs Tariff Act, 1975. Specific guidelines for the classification of various items are also outlined.
4. Drawback Rates: The rates of drawback are specified as percentages of the free on board value or per unit quantity of export goods. The maximum amount of drawback that can be claimed per unit is also mentioned.
5. Procedural Requirements: Exporters can avail of the drawback rates only if they meet the procedural requirements outlined in rule 12, 13, and 14 of the rules, unless exceptions are granted.
6. Exemptions: Certain categories of goods, such as those partially or wholly manufactured in a warehouse, have exemptions from the revised drawback rates. The notification details these exemptions.
7. Composite Articles: The notification provides guidance on how to determine drawback rates for composite articles when specific rates are not provided.
8. Textile Materials: Definitions for terms like “dyed” in relation to textile materials are clarified.
9. Size Specifications: Specifications for leather shoes, boots, and half boots are outlined based on international size standards.
10. Airfreight Exports: Specific drawback rates for certain goods are applicable only to items exported by airfreight, post parcel, or authorized courier.
11. Effective Date: The notification will come into effect on October 30, 2023.
Conclusion: The Ministry of Finance’s latest notification, No. 77/2023-Customs (N.T.), represents a significant development for exporters and businesses in India. The revised duty drawback rates will have implications for export operations and the overall trade landscape. Exporters should carefully review the notification and ensure compliance with the procedural requirements to benefit from the updated rates. This change is essential for staying informed and making informed decisions in the field of international trade.
*****
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NEW DELHI
Notification No. 77/2023-Custom (N.T.) | Dated: 20th October, 2023
G.S.R.792(E). – In exercise of the powers conferred by sub-section (2) of section 75 of the Customs Act, 1962 (52 of 1962) and sub-section (2) of section 37 of the Central Excise Act, 1944 (1 of 1944), read with rules 3 and 4 of the Customs and Central Excise Duties Drawback Rules, 2017 (hereinafter referred to as the said rules) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 07/2020-Customs (N.T.) dated the 28th January, 2020 published vide number G.S.R. 55(E), dated the 28th January, 2020, except as respect to things done or omitted to be done before such supersession, the Central Government hereby determines the rates of drawback as specified in the Schedule annexed hereto (hereinafter referred to as the said Schedule) subject to the following notes and conditions, namely :-
Notes and conditions –
(1) The tariff items and descriptions of goods in the said Schedule are aligned with the tariff items and descriptions of goods in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) at the four-digit level only. The descriptions of goods given at the six digit or eight digits in the said Schedule are in several cases not aligned with the descriptions of goods given in the First Schedule to the Customs Tariff Act, 1975.
(2) The 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 said Schedule.
(3) Notwithstanding anything contained in the said Schedule, –
(i) all art-ware or handicraft items shall be classified under the heading of art-ware or handicraft (of constituent material) as mentioned in the relevant Chapters;
(ii) any identifiable ready to use machined part or component predominantly made of iron, steel or aluminium, made through casting or forging process, and not specifically mentioned at six digit level or more in Chapter 84 or 85 or 87, except those classifiable under heading 8432 or 8433 or 8436, may be classified under the relevant tariff item (depending upon material com-position and making process) under heading 8487 or 8548 or 8708, as the case may be, irrespective of classification of such part or component at four digit level in Chapter 84 or 85 or 87 of the said Schedule;
(iii) the sports gloves mentioned below heading 4203 or 6116 or 6216 shall be classified in that heading and all other sports gloves shall be classified under heading 9506.
(4) The figures shown in column (4) in the said Schedule refer to the rate of drawback expressed as a percentage of the free on board value or the rate per unit quantity of the export goods, as the case may be.
(5) The figures shown in column (5) in the said Schedule refer to the maximum amount of drawback that can be availed of per unit specified in column (3).
(6) An export product accompanied with a tax invoice and forming part of project export (including turnkey export or supplies) for which no figure is shown in column (5) in the said Schedule, shall be so declared by the exporter and the maximum amount of drawback that can be availed under the said Schedule shall not exceed the amount calculated by applying ad-valorem rate of drawback shown in column (4) to one and half times the tax invoice value.
(7) The rates of drawback specified against the various tariff items in the said Schedule in specific terms or on ad valorem basis, unless otherwise specifically provided, are inclusive of drawback for packing materials used, if any.
(8) Drawback at the rates specified in the said Schedule shall be applicable only if the procedural requirements for claiming drawback as specified in rule 12, 13 and 14 of the said rules, unless otherwise relaxed by the competent authority, are satisfied.
(9) The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is, –
(i) manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962);
(ii) manufactured or exported in discharge of export obligation against an Advance Authorisation or Duty-Free Import Authorisation issued under the Duty Exemption Scheme of the relevant Foreign Trade Policy:
Provided that where exports are made against Special Advance Authorisation issued under paragraph 4.04A of the Foreign Trade Policy 2015-20 or Foreign Trade Policy 2023 in discharge of export obligations in terms of Notification No. 45/2016-Customs, dated 13th August, 2016 or Notification No. 27/2023-Customs, dated 1st April, 2023, the rates of drawback specified in the said Schedule shall apply as if in the said Schedule, the entries in columns (4) and (5) against the Tariff items in the said Schedule below all Chapters, except Chapter 61 and 62, are NIL, and those in Chapters 61 and 62 are as specified in the Table annexed hereto;
(iii) manufactured or exported by a unit licensed as hundred per cent Ex-port Oriented Unit in terms of the provisions of the relevant Foreign Trade Policy;
(iv) manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones;
(v) manufactured or exported availing the benefit of the notification No. 32/1997-Customs, dated 1st April, 1997.
(10) Whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials on the basis of a self-declaration to be fur-nished by the exporter to this effect and in case of doubt or where there is any information contrary to the declarations, the proper officer of customs shall cause a verification of such declarations.
(11) The term ‘articles of leather’ in Chapter 42 of the said Schedule shall mean any article wherein (a) 60% or more of the outer visible surface area; or (b) 60% or more of the outer and inner surface area taken together, excluding shoulder straps or handles or fur skin trimming, if any, is of leather notwith-standing that such article is made of leather and any other material.
(12) The term “dyed”, wherever used in the said Schedule in relation to textile materials, shall include yarn or piece dyed or predominantly printed or coloured in the body.
(13) The term “dyed” in relation to fabrics and yarn of cotton, shall include “bleached or mercerised or printed or melange”.
(14) The term “dyed” in relation to textile materials in Chapters 54 and 55 shall include “printed or bleached or melange”.
(15) In respect of the tariff items in Chapters 60, 61, 62 and 63 of the said Schedule, the blend contain-ing cotton and man-made fibre shall mean that content of man-made fibre in it shall be more than 15% but less than 85% by weight and the blend containing wool and man-made fibre shall mean that con-tent of man-made fibre in it shall be more than 15% but less than 85% by weight. The garment or made-up of cotton or wool or man-made fibre or silk shall mean that the content in it of the respective fibre is 85% or more by weight.
(16) The term “shirts” in relation to Chapters 61 and 62 of the said Schedule shall include “shirts with hood”.
(17) In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for adult shall comprise the following sizes, namely : –
(a) French point or Paris point or Continental Size above 33;
(b) English or UK adult size 1 and above; and
(c) American or USA adult size 1 and above.
(18) In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for children shall comprise the following sizes, namely :-
(a) French point or Paris point or Continental Size upto 33;
(b) English or UK children size upto 13; and
(c) American or USA children size upto 13.
(19) The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall apply only to goods exported by airfreight, post parcel or authorised courier through the Custom Houses as specified in para 4.71 of the Hand Book of Procedures, 2023 published vide Public Notice No. 1/2023, dated the 1st April, 2023 of the Government of India in the Ministry of Commerce and Industry, after examination by the Customs Appraiser or Superintendent to ascertain the quality of gold or silver and the quantity of net content of gold or silver in the gold jewellery or silver jewellery or silver articles. The free on board value of any consignment through authorised courier shall not exceed rupees twenty lakhs.
(20) The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall not be applicable to goods manufactured or exported in discharge of export obligation against any Scheme of the relevant Foreign Trade Policy of the Government of India which provides for duty free import or replenishment or procurement from local sources of gold or silver.
(21) “Vehicles” of Chapter 87 of the said Schedule shall comprise completely built unit or completely knocked down (CKD) unit or semi knocked down (SKD) unit.
2. All claims for duty drawback at the rates of drawback notified herein shall be filed with reference to the tariff items and descriptions of goods shown in columns (1) and (2) of the said Schedule respective-ly. Where, in respect of the export product, the rate of drawback specified in the said Schedule is Nil or is not applicable, the rate of drawback may be fixed, on an application by an individual manufacturer or exporter in accordance with the said rules. Where the claim for duty drawback is filed with reference to tariff item of the said Schedule and it is for the rate of drawback specified herein, an application, as re-ferred under sub-rule (1) of rule 7 of the said rules shall not be admissible.
3. The amount referred in sub-rule (3) of rule 7 of the said rules, relating to provisional drawback amount as may be specified by the Central Government, shall be equivalent to the drawback rate and drawback cap shown in column (4) and (5) in the said Schedule for the tariff item corresponding to the export goods, if applicable, and determined as if it were a claim for duty drawback filed with reference to such rate and cap.
4. This notification shall come into force on the 30th day of October, 2023.
(F. No.605/13/2023-DBK)
(Malay Samir)
Deputy Secretary (Drawback)
