As per circular No.14/2003 dated 06.03.2003, Sometimes, various components/ vendor duty drawback items of the export goods, like those in the Automobile Industry are manufactured in the jurisdictions of more than one Central Excise Commissionerate.
In vendor duty drawback such cases, Brand Rate application is required to be filed within the stipulated period in the Headquarters of Central Excise Commissionerate having jurisdiction over the manufacturing unit wherein the finished/ final export goods are manufactured/ assembled.
In vendor duty drawback such cases, the applicant is required to specify the components/ vendor items which are manufactured in the jurisdiction of other Central Excise Commissionerates and submit the requisite data subsequently in the Headquarters of the concerned Commissionerates of Central Excise having jurisdiction over the units wherein such components/ vendor items are manufactured.
Vendor duty drawback the Commissionerate in which the original Brand Rate application has been filed will get the data (pertaining to its Commissionerate) furnished in the application verified and fix the Brand Rate. This Brand Rate may be subsequently revised on the receipt of the Verification Reports in respect of the components/ vendor items from the concerned Central Excise Commissionerates. In the subject claim the Brand rate was filed within the stipulated time.
The Term Duty drawback is applied to a certain amount of duties of Customs and Central Excise, sometimes the whole, sometimes only a part remitted or paid by Government on the exportation of the commodities on which they were levied.
To entitle goods to duty drawback, they must be exported to a foreign port, the object of the relief afforded by the drawback being to enable the goods to be disposed of in the foreign market as if they had never been taxed at all.
For Customs purpose duty drawback means the refund of duty of customs and duty of central excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods.
It is essentially an average rate based on the average quantity and value of inputs and duties (both Excise & Customs) borne by them and Service Tax suffered by a particular export product. The All Industry Rates are notified by the Government in the form of a Drawback Schedule every year and the present Schedule covers 2837 entries. The legal framework in this regard 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.
The All Industry Rate (AIR) of Duty Drawback are notified for a large number of export products every year by the Government after an assessment of average incidence of Customs, Central Excise duties and Service Tax suffered by the export products. The All Industry Rate (AIR) are fixed after extensive discussions with all stake holders viz. Export Promotion Councils, Trade Associations, and individual exporters to solicit relevant data, which includes the data on procurement prices of inputs, indigenous as well as imported, applicable duty rates, consumption ratios and FOB values of export products. Corroborating data is also collected from Central Excise and Customs field formations. This data is analysed and forms the basis for the All Industry Rate (AIR) of Duty Drawback.
The All Industry Rate (AIR) of Duty Drawback is generally fixed as a percentage of FOB price of export product. Caps have been imposed in respect of many export products in order to obviate the possibility of misuse by unscrupulous exporters through over invoicing of the export value.
The scrutiny, sanction and payment of Duty Drawback claims in major Custom Houses is done through the EDI system. The EDI system facilitates credit/disbursal of Drawback directly to the exporter’s bank accounts once the EGM has been filed by respective airlines / shipping lines. The correct filing of EGM is essential for speedy processing and disbursal of Drawback claims.
Notification No. 84/2010-Cus (N.T.), dated 17-9-2010 is relevant for ascertaining the current All Industry Rate (AIR) of Duty Drawback for various export products.
It is allowed in cases where the export product does not have any AIR of Duty Drawback or the same neutralizes less than 4/5th of the duties paid on materials used in the manufacture of export goods. This work is handled by the jurisdictional Commissioners of Customs & Central Excise. Exporters who wish to avail of the Brand Rate of Duty Drawback need to apply for fixation of the rate for their export goods to the jurisdictional Central Excise Commissionerate. The Brand Rate of Duty Drawback is granted in terms of Rules 6 and 7 of the Drawback Rules, 1995.
Where the export product has not been notified in All Industry Rate (AIR) of Duty Drawback or where the exporter considers the All Industry Rate (AIR) of Duty Drawback insufficient to fully neutralize the duties suffered by his export product, he may opt for the Brand Rate of Duty Drawback. Under this scheme, the exporters are compensated by paying the amount of Customs, Central Excise duties and Service Tax incidence actually incurred by the export product. For this purpose, the exporter has to produce documents/proof about the actual quantity of inputs / services utilized in the manufacture of export product along with evidence of payment of duties thereon.
The exporter has to make an application to the Commissioner having jurisdiction over the manufacturing unit, within 3 months from the date of the ‘Let Export’ order. The application should include details of materials/components/input services used in the manufacture of goods and the duties/taxes paid on such materials/ components/input services. The period of 3 months can be extended up to 12 months subject to conditions and payment of requisite fee as provided in the Drawback Rules, 1995.
In terms of Rule 6 of the Drawback Rules, 1995 on receipt of the Brand Rate application, the jurisdictional Commissioner shall verify the details furnished by the exporter and determine the amount/rate of Drawback. Where exporter desires that he may be granted Drawback provisionally, the jurisdictional Commissioner may determine the same, provided the exporter executes a general bond, binding himself to refund the Drawback amount granted to him, if it is found later that the Duty Drawback was either not admissible to him or a lower amount was payable. The Brand Rate letter is thereafter issued to the exporter. The Custom House of the port of export is also given a copy to facilitate payment of Drawback to the exporter.
The Duty Drawback facility on export of duty paid imported goods is available in terms of Sec. 74 (It is discussed in more detail in under mention para) of the Customs Act, 1962. Under this scheme part of the Customs duty paid at the time of import is remitted on export of the imported goods, subject to their identification and adherence to the prescribed procedure.
in case of goods which were earlier imported on the payment of duty and are later sought to be exported within a specified period, Customs Duty paid at the time of import of the goods, with certain cuts, can be claimed as Duty Drawback at the time of export of such goods. Such Duty Drawback is granted in terms of Sec. 74 of the Customs Act, 1962 read with Re-export of Imported Goods (Drawback of Customs Duty) Rules, 1995. For this purpose, the identity of export goods is cross verified with the particulars furnished at the time of import of such goods.
Where the goods are not put into use after import, 98% of Duty Drawback is admissible under Sec. 74 of the Customs Act, 1962. In cases the goods have been put into use after import, Duty Drawback is granted on a sliding scale basis depending upon the extent of use of the goods. No Duty Drawback is available if the goods are exported 18 months after import. Application for Duty Drawback is required to be made within 3 months from the date of export of goods, which can be extended up to 12 months subject to conditions and payment of requisite fee as provided in the Drawback Rules, 1995.
Under Brand Rate of Duty Drawback Scheme, a “Simplified Scheme” is also available to limited companies and registered partnership firms.
Under this Scheme, a rate letter for duty drawback is issued prior to receipt of verification report from the jurisdictional Central Excise Authorities on the basis of application made by the exporter subject to certain certification etc.
For this purpose, besides application in the prescribed format along with enclosures, the exporter is also required to submit Chartered Accountant/Chartered Engineer’s certificate about the authenticity of consumption pattern and duty payments as claimed.
An indemnity bond undertaking to pay back the duty drawback being claimed by him if it is found later on verification that the drawback amount paid to him is in excess of the admissible amount, has also to be furnished.
In all cases where duty drawback is paid under Simplified Scheme, after receipt of the verification report from jurisdictional Central Excise Authority, the veracity of the application is counter checked with the said verification report and recovery action taken, where ever found necessary.
The following documents are typically required for duty drawback applications:
Verification: – Verify the claim in concern jurisdiction office, company visit, getting the verification Report.
Fixation: – Getting the Brand Rate letter In Brand Rate Fixation Cell.
Realization: – Processing the Shipping Bill in Drawback Department.
Our processing time: 60 days