CUSTOM DUTY DRAW BACK SCHEME

The Government of India issued a Notification No. 98/2013 – CUSTOMS (N.T.) Dt. 14.09.2013 to enable the Exporter of Goods to claim the refund of duties at the rates specified in the notification.

The drawback rates have been determined on the basis of certain broad parameters including, inter alia, prevailing prices of inputs, Standard Input Output Norms, share of imports in the total consumption of inputs, FOB value of export goods, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of duty on HSD/Furnace Oil.

Full text of the Notification and specified rates of Duty Draw back  is as under :-

Notification No. 98/2013 - CUSTOMS (N.T.) Dt. 14.09.2013

G.S.R.         (E).  In exercise of the powers conferred by sub-section (2) of section 75 of the Customs Act, 1962 (52 of 1962), sub-section (2) of section 37 of the Central Excise Act, 1944 (1 of 1944), and section 93A and sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) read with rules 3 and 4 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter referred to as the said rules) and in supersession of the notification of  the  Government  of  India  in  the Ministry of Finance (Department of Revenue) No.92/2012-Customs (N.T.), dated the 4th October, 2012  published vide number G.S.R. 742 (E), dated the 4th  October , 2012, except as respects things done or omitted to be done  before such supersession, the Central Government hereby determines the rates of drawback as specified in the Schedule annexed hereto (hereinafter referred to as the said Schedule) subject to the following  notes and conditions, namely:-

Notes and conditions:

(1)       The tariff items and descriptions of goods in the said Schedule are aligned with the tariff items and descriptions of goods in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) at the four-digit level only. The descriptions of goods given at the six digit or eight digit or modified six or eight or ten digits are in several cases not aligned with the descriptions of goods given in the said First Schedule to the Customs Tariff Act, 1975.

(2)       The General Rules for the Interpretation of the First Schedule to the said Customs Tariff Act, 1975 shall mutatis mutandis apply for classifying the export goods listed in the said Schedule.

(3)       Notwithstanding anything contained in the said Schedule, -

(i)         all artware or handicraft items shall be classified under the heading of artware or handicraft (of constituent material) as mentioned in the relevant Chapters;

(ii)         any identifiable ready to use machined part or component predominantly made of  iron, steel or aluminium, made through casting or forging process, and not specifically mentioned at six digit level or more in Chapter 84 or 85 or 87, may be classified under the relevant tariff item (depending upon material composition and making process) under heading 8487 or 8548 or 8708, as the case may be, irrespective of classification of such part or component at four digit level in Chapter 84 or 85 or 87 of the said Schedule;

(iii)        the sports gloves mentioned below heading 4203 shall be classified in that heading and all other sports gloves shall be classified under heading 9506.

(4)       The figures shown in columns (4) and (6) in the said Schedule refer to the rate of drawback expressed as a  percentage of the free on board ( f.o.b.) value or the rate per unit quantity of the export goods, as the case may be.

(5)       The figures shown in columns (5) and (7) in the said Schedule refer to the maximum amount of drawback that can be availed of per unit specified in column (3).

(6)       The figures shown under the drawback rate and drawback cap appearing below the column “Drawback when Cenvat facility has not been availed” refer to the total drawback (customs,  central   excise   and   service   tax  component   put   together)    allowable   and  those appearing under the column “Drawback when Cenvat facility has been availed” refer to  the drawback allowable  under the customs  component. The difference between the two columns refers to the central excise and service tax component of drawback. If the rate indicated is the same in both the columns, it shall mean that the same pertains to only customs component and is available irrespective of whether the exporter has availed of Cenvat or not.

(7)      Drawback at the rates specified in the said Schedule shall be applicable only if the procedural requirements for claiming drawback as specified in rules 11, 12 and 13 of the said rules, unless otherwise relaxed by the competent authority, are satisfied.

(8)       The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is -

(a)        manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962);

(b)        manufactured or exported in discharge of export obligation against an Advance Licence or Advance Authorisation or Duty Free Import Authorisation  issued under the Duty Exemption Scheme of the relevant Export and Import Policy or the Foreign Trade Policy:

Provided that where exports are made against Advance Licences issued on or after the 1st April, 1997, in discharge of export obligations in terms of notification No. 31/97 – Customs, dated the 1st April, 1997, or against Duty Free Replenishment Certificate Licence issued in terms of  notification No. 48/2000-Customs, dated the 25th April, 2000, or against  Duty Free   Replenishment  Certificate Licence   issued  in terms of  notification No. 46/2002-Customs, dated the 22nd  April, 2002, or against  Duty Free   Replenishment  Certificate Licence   issued  in terms of notification No. 90/2004-Customs, dated the 10th September, 2004, drawback at the rate equivalent to Central Excise allocation of rate of drawback specified in the said Schedule shall be admissible subject to the conditions specified therein;

(c)        manufactured or exported by a unit licensed as hundred per cent. Export Oriented Unit in terms of the  provisions of the relevant Export and Import Policy and the Foreign Trade Policy;

(d)        manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zones;

(e)        manufactured or exported availing the benefit of the notification No. 32/1997–Customs, dated 01st April, 1997.

(9)       The rates and caps of drawback specified in columns (4) and (5) of the said schedule shall not be applicable to export of a commodity or product if such commodity or product is –

(a)        manufactured or exported by availing  the  rebate of  duty  paid  on  materials  used  in the manufacture  or  processing  of such  commodity  or  product  in terms of rule 18 of the Central Excise Rules, 2002;

(b)        manufactured or exported in terms of sub-rule (2) of rule 19 of the Central Excise Rules, 2002.

(10)    Where the export product is not specifically covered by the description of goods in the said Schedule, the rate of drawback may be fixed, on an application by an individual manufacturer or exporter in accordance with the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.

(11)     The rates of drawback specified against the various tariff items in the said Schedule in specific terms or on ad valorem basis, unless otherwise specifically provided, are inclusive of drawback for packing materials used, if any.

(12)  The term “dyed”, wherever used in the said Schedule in relation to textile materials, shall include yarn or piece dyed or predominantly printed or coloured in the body.

(13)  In respect of the tariff items in Chapters 60, 61, 62 and 63 of the said Schedule, the blend containing cotton and man made fibre shall mean that content of man made fibre in it shall be more than 15% but less than 85% by weight and the blend containing wool and man made fibre shall mean that content of man made fibre in it shall be more than 15% but less than 85% by weight. The garment or made-up of cotton or wool or man made fibre or silk or noil silk shall mean that the content in it of the respective fibre is 85% or more by weight.

(14)     Wherever specific  rates have been  provided  against  tariff item in the said Schedule, the  drawback  shall be payable  only if  the amount is one  per  cent.  or  more of  free on board  value, except  where the  amount of  drawback  per  shipment  exceeds  five hundred  rupees.

(15)     The expressions “when Cenvat facility has not been availed”, used in the said Schedule, shall mean that the exporter shall satisfy the following conditions, namely:-

(a)        the  exporter shall declare,  and  if  necessary,  establish  to  the satisfaction  of  the Assistant Commissioner of Customs or Assistant Commissioner of Central Excise or Deputy Commissioner of Customs or Deputy Commissioner of  Central Excise, as the case may be, that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export product;

(b)        if the goods are exported under bond or claim for rebate of duty of central excise, a certificate from the Superintendent of Customs or Superintendent of Central Excise in-charge of the factory of production, to the effect that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export product, is produced;

Provided that the certificate regarding non-availment of  Cenvat facility shall not be required in the case of exports of handloom products or handicrafts (including handicrafts of brass artware) or  finished leather and other export products which are unconditionally exempt from the duty of  central excise.

(16)  Whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials on the basis of a self-declaration to be  furnished  by the  exporter  to this  effect and in cases of doubt or where there is any information contrary to the declarations, the proper officer of customs shall cause a verification of such declarations.

(17)     The term ‘article of leather’ in Chapter 42 of the said Schedule shall mean any article wherein 60% or more of the outer visible surface area (excluding shoulder straps or handles or fur skin trimming, if any) is of leather notwithstanding that such article is made of leather and any other material.

(18)     The term “dyed” in relation to fabrics and yarn of cotton, shall include “bleached or mercerized or printed or mélange’’.

(19)     The term “dyed” in relation to textile materials in Chapters 54 and 55 shall include “printed or bleached”.

(20)     In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for adult shall comprise the following sizes, namely: -

(a)              French point or Paris point or Continental Size above 33;

(b)              English or UK adult size 1 and above; and

(c)              American or USA adult size 1 and above.

(21)     In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for children shall comprise the following sizes, namely: -

(a)              French point or Paris point or Continental Size upto 33;

(b)              English or UK children size upto 13; and

(c)              American or USA children size upto 13.

(22)     The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall apply only to goods exported by airfreight, post parcel or authorised courier through the Custom Houses as specified in para 4A.12 of the Hand Book of Procedures (Vol. I), 2009-2014 published vide Public Notice No.1 (RE-2012) / 2009-2014 dated the 5th June, 2012 of the Government of India in the Ministry of Commerce and Industry, after examination by the Customs Appraiser or Superintendent to ascertain the quality of gold or silver and the quantity of net content of gold or silver in the gold jewellery or silver jewellery or silver articles. The Free on Board (FOB) value of any consignment through authorised courier shall not exceed rupees twenty lakhs.

(23)     The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall not be applicable to goods manufactured or exported in discharge of export obligation against any Scheme of the relevant Export and Import Policy or the Foreign Trade Policy of the Government of India which provides for duty free import or replenishment or procurement from local sources of gold or silver.

2.          All claims for duty drawback shall be filed with reference to the tariff items and descriptions of goods shown in columns 1 and 2 of the said Schedule respectively.

3.         This notification shall come into force on the 21st day of September, 2013. 

Circular No. 37 / 2013-Customs

F. No. 609/115/2013-DBK

Government of India

Ministry of Finance, Department of Revenue

Central Board of Excise & Customs

New Delhi, dated 14th September, 2013

To

All Chief Commissioners of Customs/Customs (Prev.)

All Chief Commissioners of Central Excise/Customs & Central Excise

All Director Generals under CBEC

All Commissioners of Customs/Customs (Prev.)

All Commissioners of Central Excise/Customs & Central Excise

Subject:  All Industry Rates of Duty Drawback effective 21.09.2013 – Reg.

Ma’am/Sir,

The Ministry has notified the revised All Industry Rates (AIR) of Duty Drawback vide Notification No.  98/2013- Customs (N.T.), dated 14.09.2013. This notification comes into force on 21.09.2013.

2.         Some of the broad aspects, from amongst the changes notified with respect to AIR of duty drawback and entries in the Schedule, are the following –

(a)   As in previous years, the drawback rates have been determined on the basis of certain broad average parameters including, inter alia, prevailing prices of inputs, standard input output norms, share of imports in input consumption, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of duty on HSD/Furnace Oil, value of export goods, etc. Many items, but not all, that were already covered under the drawback schedule prior to incorporation of erstwhile DEPB items, shall see some reduction in AIR of duty drawback. Few items like gold and silver jewellery, silk yarn, silk fabric, silk garments and made-ups, wooden art-ware etc. shall see an increase in AIR.

(b)   The residuary AIR of 1% (composite) and 0.3% (customs) is being provided to hitherto Nil rated items under chapters 4, 15, 22, few items in chapter 24 and casein and its derivatives in chapter 35. AIR is being provided to articles of silver (silversmiths’ wares) subject to similar conditions as applicable to gold/silver jewellery and the Notes and Conditions (22)/(23) of the said Notification shall also have relevance.

(c)   The specific rate provided to Ethanol/ENA under tariff item no. 22071090 is being changed to ad valorem 1% (composite) and 0.3% (customs). Ad valorem rates are being provided to certain items of chapter 37 and imitation jewellery of chapter 71.

(d)   Though, the existing residuary rate of 1% ad valorem (composite) and 0.3% (customs) continues, the higher residuary rates are being reduced from 1.5% to 1.3% (customs) or from 2% to 1.7% (customs), as the case may be.

(e)   The process of realignment of rates, on items incorporated in the drawback schedule from the erstwhile DEPB scheme, is continued along with rationalizing these rates. In general, these items shall see a reduction in the AIR, including some to the applicable residuary rate. In the case of certain electronic goods of chapter 84, 85 or 93, the residuary rate is being provided at 1% (customs).

(f)    In the case of most tariff items with ad valorem all industry rates above 2%, the rates are being supplemented with drawback caps.

(g)   Separate tariff entries are being created for cotton bags, grey and dyed knitted fabrics of cotton, of MMF, of blend where cotton predominates and of blends where MMF predominates, grey and dyed cotton fabrics with lycra, women’s/girls’ tops, embroidered fabrics of MMF, imitation jewellery of glass, multi-speed complete bicycle with geared hubs, cranks made of aluminum, single speed chain wheel and crank (crank made of aluminum), pillows/cushions/quilts/pouffles filled with poly-fil/polyfill, etc. A few tariff items are also being replicated with same rates and caps under different four digit levels and descriptions of certain tariff items are being modified to address classification issues.

(h)   AIR on wheat is being made Nil. Amendments vide Notification No. 97/2013- Customs (N.T.), dated 14.09.2013 shall also make the brand rate unavailable on export of wheat.

3.         For entries in the Schedule that are related to pharmacopeia, where the product descriptions bear suffix like IP and/or BP and/or USP, it is hereby clarified that the pharmacopeia standards IP, BP, USP, EP, JP shall be treated as inter-changeable.

4.         Commissioners are expected to ensure that the due diligence is exercised to prevent any misuse. As before, it may be ensured that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR. Moreover, there is need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill. For example, when quantities declared in Item details and Drawback details are same, but units of their measurement are different, or unit of measurement is same but quantities declared do not match or the 4-digit RITC in the Item Details and Drawback Tariff Item No. in Drawback Details are different.

5.         It is requested to download the notification with the revised Schedule of AIR effective 21.09.2013 from Board’s website (www.cbec.gov.in) and carefully peruse it and thereby take note of all the specific changes notified. While every effort has been made to avoid errors / omissions, these are not ruled out. If an error is noticed, please immediately inform the Board for appropriate corrective action. Difficulties faced, if any, in implementation of the changes may also be brought to Board’s notice. In cases where the drawback caps have not been provided against a particular tariff item, suggestions may be sent to the Board. In the case of export of articles of silver (silversmiths’ wares), which are high value items, there should be close monitoring and a monthly report indicating quantum of export and drawback availed may be sent to the Board for the next 12 months by the Commissioners having jurisdiction over the relevant Custom Houses. Suitable public notice and standing order may be issued for guidance of the trade and officers. Receipt of this Circular may be acknowledged.

(Rajiv Talwar)

Joint Secretary

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