Duty Drawback is a trusted and time-tested scheme administered by CBIC to promote exports. It rebates the incidence of Customs and Central Excise duties, chargeable on imported and excisable material respectively when used as inputs for goods to be exported. This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specified taxes. Duty Drawback provides essential support to exporters.
The scheme comprises of three categories, i.e. (a) All Industry Rate; (b) Brand Rate; and (c) Drawback on re-export of imported goods.
All Industry Rate (AIR) of Duty Drawback: The AIR of Duty Drawback for an export product is an average rate, based on the average quantity and value of material and average duties of Customs and Central Excise borne by each class of material, from which export goods are ordinarily manufactured. AIRs are normally reviewed annually on the Drawback Committee’s recommendation. AIR of Duty Drawback is popular among exporters and mostly preferred by medium and small exporters because:
Brand Rate of Duty Drawback: Brand Rate of Duty Drawback is a unique facility provided to exporters for a rebate of actual duty incidence suffered by an export Under the Brand Rate mechanism, a specific Duty Drawback rate can be applied for by the exporter if the export product does not have an AIR or the available AIR neutralises less than 80% of the duties paid on materials used in the manufacture of export goods.
The salient features are as follows:
Duty Drawback on re-export of imported goods: Duty Drawback can also be claimed on the export of duty-paid imported Under this facility, goods imported earlier may be exported and Duty Drawback of up to 98% of import duty paid can be claimed on such exports. Proof of duty paid on importation and identification of the export goods as those that were imported earlier are among the primary requirements under this scheme.