1. Drawback on re-export of imported goods
1.1 Duty Drawback on export of duty paid imported goods is allowed in terms of Section 74 of Customs Act, 1962 read with Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. The goods are to be entered for export within two years from date of payment of duty on importation thereof. Under certain circumstances this period may be extended upto one year by the Principal Chief Commissioner/Chief Commissioner of Customs and beyond that by the Board.
[Refer Notification No.33/94-Cus(N.T.) dated 01.07.1994]
1.2 Application by exporter is required to be made within 3 months from the date on which an order permitting clearance and loading of goods for exportation is made by the proper officer. This period may be extended up to 12 months from such date of order subject to conditions and fee payment.
[Refer Circular No.13/2010-Cus., dated 24-6-2010]
1.3 A portion of the Customs duty paid at the time of import is given back as duty drawback, subject to certain procedure and conditions including identification of export goods with those imported on duty payment and their usage. Where the goods are not put into use, ninety eight per cent of Duty Drawback is admissible. Otherwise drawback is granted based on period of use. Used goods do not get Drawback if exported 18 months after import.
[Refer Notification No.19-Cus., dated 6-2-1965]
1.4 On the issues of compliance to Rules, 1995 relating to manner and time of claiming drawback, identification, determination of and extent of use and other attendant aspects, all cases of drawback processing or denial are to be handled by way of detailed speaking order, following the principles of natural justice. Each such order is examined by the Commissioner for its legality and propriety.
[Refer Circular No.35/2013-Cus., dated 5-9-2013]
1.5 The examination report on shipping bill for re-export must be recorded separately in a self-contained and explicit manner on each of the two aspects of identity and use. The examination report should not be made of phrases that are cryptic, generalised or sweeping in nature such as ‘as per declaration’, ‘in such condition’, ‘found in order’, ‘found as declared’, ‘goods are same’ etc.
[Refer Circular No.16/2016-Cus., dated 09.05.2016]
1.6 In order to prevent dual benefit while sanctioning drawback under Section 74 of the Customs Act, 1962, it may be ensured that a certificate duly signed by the Central/State/UT GST officer, having jurisdiction over the exporter is obtained, that no credit of integrated tax /compensation cess paid on imported goods has been availed or no refund of such credit or integrated tax paid on reexported goods has been claimed.
[Refer Circular No.21/2017-Cus., dated 30.06.2017]
1.7 The Pay and Accounts Office (PAO) under Chief Controller of Accounts, CBIC does the accounting and reconciliation of drawback payments after the receipt of monthly account from the concerned Commissionerates or Customs Houses.
2. Duty drawback on export of manufactured goods:
2.1 Duty Drawback rebates Customs and Central Excise duties chargeable on any imported materials or excisable materials used in the manufacture of goods exported. The composite rates of Duty Drawback comprising incidence of Customs and Central Excise duties and Service Tax have been discontinued w.e.f. 1.10.2017. Drawback is now limited to incidence of duties of Customs on inputs used and remnant Central Excise Duty on specified petroleum products used for generation of captive power for manufacture or processing of export goods. Duty Drawback is of two types: (i) All Industry Rate and (ii) Brand Rate. The legal framework is provided by Sections75, 75A and 76 of the Customs Act, 1962.Customs and Central Excise Duties Drawback Rules, 2017 (Drawback Rules, 2017)(earlier The Customs, Central Excise duties and Service Tax Drawback Rules, 1995) have been issued under the Customs Act, 1962 and the Central Excise Act, 1944.
2.2 The All Industry Rates (AIR) are notified, generally every year, by the Government in the form of a Drawback Schedule based on the average quantity and value of inputs and duties (both Customs & Central Excise) borne by export products. The AIRs are essentially average rates based on assessment of average incidence. These AIRs are recommended by a Drawback Committee which is set up by the Government.
2.3 AIR are fixed after extensive discussions with stakeholders like Export Promotion Councils, Trade Associations, individual exporters so as to obtain relevant data, which includes procurement prices of inputs, indigenous as well as imported, applicable duty rates, consumption ratios and FOB values of export products. Data is also sought from Customs and Central Excise field formations and Ministries which is taken into account.
2.4 The AIR may be fixed as a percentage of FOB price of export product or as specific rates. Drawback Caps are imposed in cases to obviate the possibility of misuse. All claims of duty drawback are filed with reference to the tariff items and description of goods given in the Schedule. The rates of drawback specified in the Schedule are not applicable to export of commodity or product manufactured or exported, among others, in discharge of export obligation under Advance Authorisation or Duty free Import Authorisation issued under Duty Exemption Scheme of relevant Foreign Trade Policy; by a licensed hundred per cent Export Oriented Unit; by units situated in Free Trade Zone, Export Processing Zone or Special Economic Zone, etc. However in case of exports in discharge of export obligation under Special Advance Authorization scheme of DGFT, rates of drawback specified in the Schedule shall apply subject to certain restrictions and modifications.
[Refer Notification No.89/2017-Cus (N.T.), dated 21.09.2017]
2.5 The tariff items and description of goods in the Schedule are aligned with the tariff items and description of goods in the First Schedule of Customs Tariff Act, 1975 at four digit level only. The description of goods given at six or eight digits in the Schedule are in several case may not be aligned with the description of goods given in the First Schedule to Customs tariff Act, 1975. The general rules for interpretation of First Schedule to Customs Tariff Act, 1975 apply, mutatis mutandis, for classifying the export goods listed in the Schedule.
[Refer Notification No.89/2017-Cus (N.T.), dated 21.09.2017]
2.6 The scrutiny, sanction and payment of Duty Drawback claims at EDI locations is carried out through the EDI system which also facilitates payment directly to the exporter’s bank account, if other conditions are fulfilled.
2.7 The Brand Rate of Duty Drawback may be fixed in terms of Rules 6 and 7 of the Drawback Rules, 2017in cases where the export product does not have the AIR of Duty Drawback or the AIR neutralizes less than eighty per cent. of the duties paid on the materials or components used in the production or manufacture of the export goods. Brand rate is fixed by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, having jurisdiction over the place of export.
2.8 An exporter intending to claim Brand rate of Drawback, has to file an application for fixation of the brand rate within 3 months from the date of Let Export Order which can be extended up to 12 months from LEO subject to conditions and payment of fee as provided in the Drawback Rules, 2017. This application has to be made before the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, having jurisdiction over the place of export.
[Refer Drawback Rules, 2017 and Circular No. 38/2017-Cus dated 22.09.2017]
2.9 The application for fixation of Brand rate is to include, inter alia, the proportion in which the materials or components are used in the production or manufacture of goods and the duties paid on such materials or components.
2.10 In Brand rate of drawback, the exporter is compensated the incidence of Customs and Central Excise duties actually incurred in the export product based on verification of documents and proof of usage of actual quantity of materials or components utilized in the manufacture of export product and duties/tax paid thereon.
2.11 Exporters who file application for fixation of Brand Rate under Rule 6 of the Drawback Rules, 2017 may also apply to the Principal Commissioner of Customs or Commissioner of Customs for provisional drawback to be granted to him pending determination of amount or rate of drawback. Similarly, exporters claiming Brand rate of duty drawback under rule 7 of the Drawback Rules, 2017 shall be paid a provisional drawback amount, as may be specified by the Central Government, by the proper officer of Customs. He may also apply to the Principal Commissioner of Customs or Commissioner of Customs for further provisional drawback.
[Refer Rules 6 and 7 of drawback Rules,2017]
2.12 A time limit of 15 days is prescribed for Customs Commissionerates to issue such provisional Brand rate letters in case of revised simplified procedure and 25 days for final Brand rate letters in the case of normal procedure. The work related to fixation of brand rates should be regularly monitored by the Commissioner of Customs, and by Chief Commissioners, for ensuring concerted and sustained action for disposing Brand rate work. The Brand rate fixation letter issued by Customs Commissionerates has to indicate full and comprehensive description/details of the exported goods and other details.
[Refer Circular No. 14/2003-Cus dated 06.03.2003, D.O. letter No. 609/110/2005-DBK dated 26.08.2005 and Instructions No. 603/01/2011- DBK dated 31-7-2013 and dated 11.10.2013]
3. Procedure for claiming Duty Drawback:
3.1 AIR or the Brand Rate may be claimed on the shipping bill at the time of export and requisite particulars filled in the prescribed format of Shipping Bill/Bill of Export. In case of exports under electronic Shipping Bill, the Shipping Bill itself is treated as the claim for Drawback. In case of manual export, triplicate copy of the Shipping Bill is treated as claim for Drawback. The claim is complete only when accompanied by prescribed documents described in the Drawback Rules 2017. If the requisite documents are not furnished or there is any deficiency, the claim may be returned for furnishing requisite information/documents. The export shipment, however, will not be stopped for this reason.
[Refer Rule14 of Drawback Rules, 2017]
3.2 Duty Drawback on goods exported by post is also allowed on following the procedure prescribed under Rule 12of the Drawback Rules, 2017.
4. Supplementary claim of Duty Drawback:
4.1 Where any exporter finds that the amount of Duty Drawback paid to him under section 75 is less than what he is entitled to on the basis of the amount or rate of Drawback determined, he may prefer a supplementary claim. This claim has to be filed within 3 months of the relevant date, which is fixed as follows: (i) where the rate of Duty Drawback is determined or revised under Rules 3 or 4 of the Drawback Rules, 2017from the date of publication of such rate in the Official Gazette; (ii) where the rate of Duty Drawback is determined or revised upward under Rules 6 or 7 of the Drawback Rules, 2017, from the date of communicating the said rate to the person concerned; and (iii), in all other cases, from the date of payment or settlement of the original Duty Drawback claim by the proper officer:
4.2 The period of 3 months for filing a supplementary claim may be extended up to 18 months subject to conditions and payment of requisite fee as provided in the Drawback Rules, 2017.
[Refer Rule 16 of Drawback Rules, 2017]
4.3 In cases where the drawback claim was made zero-zero without following the normal procedure or principles of natural justice, the Commissioners are required to redress the problem where the exporters have produced the documents/ replied to queries.
[Refer Instruction F. No. 609/14/2014-DBK dated 30.06.2016]
5. Limitations on admissibility of Duty Drawback:
5.1 The Customs Act, 1962 and the Drawback Rules, 2017 lay down certain limitations and conditions for grant of duty drawback. No duty drawback shall be allowed where:
(i) The duty drawback amount due in respect of any goods is less than Rs.50/- (Section 76,ibid.),
(ii) In respect of any goods the market price is less than the amount of drawback due thereon (Section 76 ibid.),
(iii) Where value of export goods is less than the value of imported material used in their manufacture. In this regard, if necessary, certain minimum value addition over the value of imported materials can also be prescribed by the Government (Section 75 ibid.) and
(iv) The drawback amount or rate determined under Rule 3 of Drawback Rules 2017 does not exceed one-third of the market price of the export product (Rule 9 of Drawback Rules, 2017).
5.2 In case the Central Government forms an opinion that there is likelihood of export goods being smuggled back into India, the Government may not allow drawback or allow it subject to specified conditions or limitations. Notifications have been issued under Section 76 of the Customs Act, 1962.
[Notification No. 208-Cus., dated 1-10-1977]
5.3 While prior repatriation of export proceeds is not a pre-requisite for grant of Duty Drawback, the law prescribes that if sale proceeds are not received within the period stipulated by the RBI, the Duty Drawback will be recovered as per procedure laid down in the Drawback Rules, 2017. An exception is made where non-realization of sale proceeds is compensated by the Export Credit Guarantee Corporation of India Ltd. under an insurance cover and the Reserve Bank of India writes off the requirement of realization of sale proceeds on merits and the exporter produces a certificate from the concerned Foreign Mission of India about the fact of non-recovery of sale proceeds from the buyer.
[Refer Rule 18 of Drawback Rules, 2017]
6. Monitoring of realization of export proceeds:
6.1 Each Custom House is to have a special cell monitoring realization of export proceeds. EDI locations are also facilitated, via RBI-BRC module under ICES, to retrieve data on exports (made from 1.4.2014 onwards) under Drawback scheme whose remittance is outstanding beyond due date. Notices are to be issued for recovery of drawback paid in respect of export consignments where export proceeds remain unrealized within the prescribed period. Adjudication as well as further actions are to be taken in a methodical and time bound manner by the field formations.
6.2 For cases where any notices are returned undelivered as the recipient/address was non existent, the Commissioners should also report names of relevant exporters to the Regional Authorities of DGFT so that action could be initiated under FT (DR) Act as well and the IE Codes got cancelled for furnishing wrong address.
[Refer Circular No.5/2009-Cus., dated 2-2-2009, Instructions F.No.609/119/2010-DBK, dated 18-1-2011, F.No.603/01/2011-DBK, dated 11-10-2013,DG(Systems) letter No.IV(35)/46/2013-Systems dated 25/28.8.2014 and Instruction F.NO. 609/59/2012DBK dated 27.11.2015]
7. Other aspects relating to Duty Drawback:
7.1 The Citizen Charter provides for remission of Drawback within 7 working days of filing of manifest in the case of electronic processing of declarations or filing of a paper claim in the case of manual processing.
7.2 While processing Drawback claims, whether under Section 74 or Section 75, wherever any deficiency is noticed in the claim, it is to be communicated to the exporter in a clear unambiguous manner within a period of 10 days, from the date of filing of the claim. Commissioners of Customs are to undertake a periodic review and monitoring of the status of pending drawback claims.
[Refer Circular No.46/2011-Cus., dated 20-10-2011]
7.3 The field formations are to ensure periodic sample checks and verifications with respect to export declarations accepted for AIR drawback purposes and these are to be regarded as audit checks and their proper record maintained. These include checks on value, present market value, verification of actual freight payment certificates when CIF or C&F values are declared, declarations that affect the applicability of AIR itself etc. In the pre- GST era, these declarations included whether goods were or were not manufactured or exported in terms of rule 19(2) of Central Excise Rules or by availing rebate on material used in manufacture or processing in terms of rule 18 of Central Excise Rules. In the post GST era (transition period of July to September 2017), the declarations were to be given w. r. t. the availment of input tax credit of CGST or IGST on the export goods or inputs or input services used in the manufacture of export product, refund of IGST paid on the export goods or carrying forward of CENVAT credit on export product or on inputs or input services used in the manufacture of export product. Random checks with respect to debit notes raised by foreign buyers after initial realization by exporter, reduction in invoice value after proceeds are negotiated or realized, etc may also be considered by Commissioners. Detections that indicate lower FOB/realization or other information of relevance when benefits under FTP are also involved should also be intimated to Regional Authority of DGFT for necessary action.
[Refer Circular No.46/2011-Cus., dated 20-10-2011,Instruction F.No. 603/01/2011-DBK dated 11-10-2013 and Circular no. 32/2017- Customs dated 27.07.2017]
7.4 Further, by way of audit, the Commissioners are also to exercise special checks, in cases of first time exporters, exporters who have taken large amounts of drawback suddenly, sensitive destinations, sensitive products etc., to ensure there is no misuse of the drawback facility.
7.5 Commissioners are to ensure that Internal Audit wings achieve desired diligence levels and a significantly improved performance. In Customs these areas include payment of reexport drawback and cases of manual processing of drawback.
[Refer Instruction F.No. 603/01/2011-DBK., dated 11-10-2013]
7.6 Field formations are to monitor levels of pendency of EGM not filed, EGM filed in error and no filing of stuffing reports to ensure trade facilitation. The mismatch of declaration made in the Shipping Bill (item details vis-à-vis drawback details) should be verified to avoid the excess payment of drawback on this account.
[Refer Instruction F.No. 603/01/2011-DBK., dated 26.06.2012]
7.7 Board has issued an8 point comprehensive action plan for implementation of Duty Drawback Scheme vide D.O. letter No. F. No. 609/41/2018-DBK dated 27.09.2018. The main action points are briefly as follows:
(i) EGM to be filed by various stakeholders within a week of let export order,
(ii) EGM errors should not exceed 1% of total shipping bills,
(iii) Queries should be resolved well within a month’s time and number of queries should be monitored at senior level,
(iv) Drawback claims must be cleared on a daily basis and scrolls generated by major Customs stations at least twice a week and by others once every week or more,
(v) Percentage of shipping bills scrolled out within seven days should increase to 75% in the current FY and taken further in next FY,
(vi) All efforts should be made to reduce the percentage of shipping bills scrolled out beyond thirty days to nil,
(vii) Focus on disposal of application for Brand rate fixation so that no application remains pending beyond one month at the end of this FY,
(viii) Timely issuance of SCNs in cases of non- reconciliation of sale proceeds and time bound disposal of SCNs.
8. Implementation of RMS for processing of Duty Drawback claims
8.1 Risk-based processing of shipping bills with claim of duty drawback is being initiated with effect from 26.07.2021. In this regard, Systems Directorate and NCTC have made requisite system-based changes for its implementation. In this phase, shipping bills with claim for duty drawback will be routed on the basis of risk evaluation through appropriate selection criteria. For this purpose, after the filing of correct and complete EGM, shipping bills will be sent by ICES to RMS. Subsequent to RMS treatment, ICES will be informed for each shipping bill whether for the processing of the drawback claim, a particular shipping bill will be facilitated without intervention or will be routed to the proper officer (i.e. Superintendent/Appraising Officer or Assistant/Deputy Commissioner as per the threshold amount specified in Circular No. 17/2000-Cus dated 29.02.2000) for further action. For shipping bills routed to the said Customs officers for drawback processing, all necessary checks shall continue to be undertaken by the Customs officers as before. The extant procedure for payment of the duty drawback amount into the exporters’ account will also remain unchanged.
[Refer Circular No. 15/2021-Customs dated 15.07.2021]
9. The disposal time limit of drawback claims has been reduced from 7 days to 3 days
[Instruction No. 21/2020-Customs dated 16.12.2020]
Source – Custom Duty Manual 2023
who is liable to claim for custom duty draw back..
it is applicable for Aircraft parts, if yes than how we can claim for customs duty draw back.
kindly advise the process