Chandra Sekhar K

Duty Drawback provisions are made to grant rebate of duty or tax chargeable on any imported / excisable materials and input services used in the manufacture of export goods. The duties and taxes neutralized under the scheme are (i) Customs and Union Excise Duties in respect of inputs and (ii) Service Tax in respect of input services. Duty Drawback is of two types: (i) All Industry Rate and (ii) Brand Rate. The legal framework is provided under Sections 75 and 76 of the Customs Act, 1962 and the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995 (Drawback Rules, 1995) issued under the provisions of Section 75 of the Customs Act, 1962, Section 37 of the Central Excise Act, 1944 and Section 93 A read with section 94 of the Finance Act, 1994the Finance Act, 1994.

2. Consequent to introduction of Goods and Service Tax (GST) with effect from 01.07.2017, necessary changes have been made to make Drawback provisions are in consonance with the GST provisions. The input tax incidence of taxes covered in GST regime are neutralized through the refund mechanism provided under GST Laws. As far as drawback is concerned, Drawback Rules, 1995 are now replaced by a new set of rules called ‘Customs and Central Excise Duties Drawback Rules, 2017(hereinafter referred to as ‘DBK Rules, 2017’) which came into effect from 1st October, 2017 (Refer Notification No. 88/2017 Cus (NT) dated 21.09.2017). The definition of drawback as per Rule 2(a) of DBK Rules, 2017 provides for drawback of Customs and Central Excise Duties excluding Integrated Tax and compensation Cess leviable under sub-section (7) and (9) of Section 3 of the Customs Tariff Act, 1975 chargeable on any imported materials or excisable materials used in the production or manufacture of goods exported. References to Service Tax and input services have been omitted. As a result the drawback is limited to incidence of duties of Customs on inputs used and Central Excise Duties on specified petroleum products used for generation of captive power for manufacture of processing of export goods.

3. The Central Government has revised and published All Industry Rates (AIR) of Drawback vide Notification No. 89/2017 Cus (NT) dated 21.09.2017 which came into effect from 01.10.2017 and further amendments were carried out in respect of certain goods vide Notification No. 8/2018 – CUSTOMS (N.T.) dated 22.01.2018 which came into effect from 25.01.2018.

4. The provisions of Rule 6 ibid deal with the cases where no amount or rate of drawback has been determined. The provisions of Rule 7 ibid deal with the cases where amount or rate of drawback determined under rule 3 or, as the case may be, revised under rule 4, for a class of goods (All Industry Rate) is less than eighty percent of the duties paid on the materials or components used in the production of export goods. Now the brand rate application under Rule 6(1)(a) or under Rule 7(1) of DBK Rules, 2017 shall be filed to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, having jurisdiction over the port of export.

The Board Circulars 38/2017 Cus dated 22.09.2017 and 23/2017 Cus dated 30.06.2017 may be verified for details.

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