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Circular No. 91
dated 11/8/95
F.No. 609/166/95-DBK
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject: Payment of Drawback under Duty Exemption Scheme on exports made in discharge of obligation against Value Based Advance Licence and Quantity Based Advance Licence issued on or after 1st April, 1995

A number of representations have been received from Export Promotion Councils regarding difficulties being faced by them in claiming drawback on export made made Duty Exemption Scheme. It has been pointed out in these representations that some of the field formations are not permitting filing of drawback shipping Bills on exports made under Quantity Based Advance Licence or Value Based Advance Licence where application has been made to the Licensing authorities prior to 1.4.1995 but the licence has not  been received as yet. In some cases Customs authorities are also insisting that additional duty should first be paid on imports made against Advance Licences before drawback can be paid in terms of 1st proviso to Note 2(b) of the general notes contained in drawback Public Notice No. Drawback / PN – 5/95 dated 15th June, 1995 whereby All Industry Rates effective from 16th June, 1995 were announced.

2. The above representations have been examined in the Ministry and it is clarified that in all cases where an application for advance licence has been made before 1.4.95 but the advance licence was not issued prior to that date, import against such VABAL or QABAL issued on or after 1.4.95 shall be governed by Notification No. 79/95-Customs and 80/95- Customs both dated 31st May, 1995 and such imports shall attract additional duties of Customs. Accordingly, exports made in discharge of export obligation against such licences even where exports were made prior to issue of licence in terms of para 66 of the Exim Policy, shall be eligible for drawback. As such, for exports made prior to the issue of advance licence-

(a) drawback may be allowed if the exporters have filed the drawback shipping bills for effecting their exports;

(b) In view of the changes effected in the customs notifications for VABAL and QABAL with effect from 1.4.95, the exports under these two shames are eligible for drawback. Hence, exporters should be allowed to file drawback shipping bills for effecting exports for fulfilling export obligation under these two schemes; and

(c) for payment of drawback, customs house should not insist that imports of the inputs should have been taken place and additional customs duty should have been paid before sanctioning such drawbacks.

In respect of above cases drawback should be allowed in terms of Drawback Public Notice No. Drawback / PN-4/ 95 dated 2.5.95 and 1st Proviso to Note 2(b) of the General Notes to Drawback Public Notice No. Drawback / PN-5/95 dated 15.6.95 whereby All Industry Rates effective from 16.6.95 ware notified, on exports made on or after 2nd May, 1995.

3. There may be cases where exports may have been made on free Shipping Bills prior to 1.4.95 and even thereafter say upto 31.5.95(i.e. after the Handbook is published on 1.5.95 and then taken for its circulation ) towards discharge of export obligation against VABAL or QABAL to be issued on or after 1.4.95 in terms of Para 66 of the Exim Policy. In such cases drawback can be paid only after requirement of rule 11 of Customs and Central Excise Duties Drawback Rules, 1971 or rule 11of the new 1995 rules, is relaxed by the Central  Government under rule 15 of 1971 rules or under rule 17 of 1995 rules. Since in such cases exporters were not aware at the time of making exports, that they will be required to pay additional duty on imports against Advance Licences issued to them on or after 1.4.95, requiring each exporter to seek relaxation form the Central Government individually would would cause unnecessary hardship. It has therefore been decided that in all cases where exports were made on a free Shipping Bill on or before 31.5.95 in discharge of export obligation under a VABAL or QABAL issued/ to be issued on or after 1.4.95 and the exporter desires to claim drawback in terms of Public Notice No. Drawback / PN-4/95 dated 2.5.95 or in terms of 1st Proviso to Note 2(b) of General Notes to Public Notice No. Drawback / PN-5/95 dated 15.6.95, permission for conversion of Shipping Bills to Drawback Shipping Bills in relaxation of rule 11 of 1971 or 1995 rules, as the case may be, shall be deemed to have been accorded by the Central Government under rule 15 of 1971 rule of rule 17 of 1995 rules respectively.

(A.K. Madan)
Under Secretary to the Government of India

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