DUTY DRAWBACK UNDER EDI SYSTEM
Drawback in relation to any goods manufactured in India, and exported means the rebate of duty chargeable on any imported materials or excisable materials used in the manufacture of such goods.
Duty drawback is subject to the provisions of the Customs Act 1962, the Central Excise Act and Salt Act 1944 and the rules made thereunder.
Section 75 of the Customs Act 1962
Drawback on imported materials used in the manufacture of goods, which are exported
(1) Where it appears to the Central Government that in respect of goods of any class or description [manufactured, processed or on which any operation has been carried out in India] [being goods which have been entered for export and in respect of which an order permitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer] [or being goods entered for export by post under section 82 and in respect of which an order permitting clearance for exportation has been made by the proper officer ] a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the [manufacture or processing of such goods or carrying out any operation on such goods], the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules made under sub-section (2) :
[PROVIDED that no drawback shall be allowed under this sub-section in respect of any of the aforesaid goods which the Central Government may, by rules made under sub-section (2), specify, if the export value of such goods or class of goods is less than the value of imported materials used in the [manufacture or processing of such goods or carrying out any operation on such goods] or class of goods, or is not more than such percentage of the value of the imported materials used in the [manufacture or processing of such goods or carrying any operation on such goods] or class of goods as the Central Government may, by notification in the Official Gazette, specify in this behalf:
PROVIDED FURTHER that where any drawback has been allowed on any goods under this sub-section and the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India within the time allowed under the [Foreign Exchange Management Act, 1999 (42 of 1999)], such drawback shall be deemed never to have been allowed and the Central Government may, by rules made under sub-section (2), specify the procedure for the recovery or adjustment of the amount of such drawback].
[(1A) Where it appears to the Central Government that the quantity of a particular material imported into India is more than the total quantity of like material that has been used in the goods [manufactured, processed or on which any operation has been carried out in India] and exported outside India, then, the Central Government may, by notification in the Official Gazette, declare that so much of the material as is contained in the goods exported shall, for the purpose of sub-section (1), be deemed to be imported material.]
(2) The Central Government may make rules for the purpose of carrying out the provisions of sub-section (1) and, in particular, such rules may provide-
[(a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture or processing of the goods or carrying out any operation on the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture or processing of export goods or carrying out any operation on export goods of that class or description either by manufacturers generally or by persons processing or carrying on any operation generally or by any particular manufacturer or particular person carrying on any process or other operation, and interest, if any, payable thereon:]
[(aa) for specifying the goods in respect of which no drawback shall be allowed:
(ab) for specifying the procedure for recovery or adjustment of the amount of any drawback which had been allowed under sub-section (1) [or interest chargeable thereon]:]
(b) for the production of such certificates, documents and other evidence in support of each claim of drawback as may be necessary:
(c) for requiring the [manufacturer or the person carrying out any process or other operation] to give access to every part of his manufactory to any officer of customs specially authorized in this behalf by the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] to enable such authorized officer to inspect the processes of [manufacture, process or any other operation carried out] and to verify by actual check or otherwise the statements made in support of the claim for drawback.
1[(d) for the manner and the time within which the claim for payment of drawback may be filed:]
1[(3) The power to make rules conferred by sub-section (2) include the power to give drawback with retrospective effect from a date not earlier than the date of changes in the rates of duty on inputs used in the export goods.]
75A. Interest on drawback
(1) Where any drawback payable to a claimant under section 74 or section 75 is not paid within a period of [one month] from the date of filing a claim for payment of such drawback, there shall be paid to that claimant in addition to the amount of drawback, interest at the rate fixed under section 27A from the date after the expiry of the said period of [one month] till the date of payment of such drawback:
[(2) Where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable under this Act or the rules made there under, the claimant shall, within a period of two months from the date of demand, pay in addition to the said amount of drawback, interest at the rate fixed under section 28AB and the amount of interest shall be calculated for the period beginning from the date of payment of such drawback to the claimant till the date of recovery of such drawback.]
Section 76: Prohibition and regulation of drawback in certain cases
(1) Notwithstanding anything hereinbefore contained, no drawback shall be allowed-
(b) in respect of any goods the market price of which is less than the amount of drawback due thereon:
(c) where the drawback due in respect of any goods is less than [fifty rupees].
(2) Without prejudice to the provisions of sub-section (1), if the Central Government is of opinion that goods of any specified description in respect of which drawback may be claimed under this Chapter are likely to be smuggled back into India, it may, by notification in the Official Gazette, direct that drawback shall not be allowed in respect of such goods or may be allowed subject to such restrictions and conditions as may be specified in the notification.
Drawback may be allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government. These rules may be called the customs and Central Excise Duties and Drawback Rules, 1995.
Commonly, the following duty drawback rates may be given.
1. All Industry Rate of Drawback
2. Brand Rate of Drawback
Under the EDI system, the exporter, at the time of filing shipping bill, has to give details about description of items, quantity, drawback sub-serial number under which drawback amount is claimed, other details as required for the sanction of drawback amount. The exporter has to submit various declarations for present market value (PMV), non-availment of Cenvat credit, other declarations as required for the sanction of drawback amount.
Under rule 3 of the Customs and Central Excise Duty Drawback rules,1995, the Central Government determined the Drawback rates for various items from time to time with certain conditions which are specified in the Drawback schedule. Under rule 4, the Central Government may revise amount or rates determined under rule 3.
Under rule 6, the exporter may approach the concerned Central Excise Commissionerate with all relevant documents for fixation of Brand rate of Drawback if the exporter finds the All Industry rate is low for their export product.
Under rule 15, where any exporter finds that the amount of drawback paid to him is less than what he is entitled to on the basis of the amount or rate of drawback determined by the Central Government, he may prefer a supplementary claim in the form at Annexure III, within three months. Otherwise, he has to submit the reasons for the delay to the Assistant/Deputy Commissioner of Customs for condonation for further period of nine months.
Under rule 16, where an amount of drawback and interest, if any, has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, the claimant shall, on demand by a proper officer of Customs repay the amount it shall be recovered in the manner laid down in sub-section (1) of Section 142 of the Customs Act, 1962(52 of 1962).
Under rule 16A, the amount of drawback is recoverable from the exporter when the export proceeds are not realized.
The exporter shall prefer an appeal before the Commissioner of Customs(Appeals) within sixty days from the date of order issued by the Asst./Dy. Commissioner of Customs on any drawback issue. The exporter shall further prefer appeal before the Joint Secretary, Revision Authority, New Delhi against the order of the Commissioner of Customs(Appeals).
Application for supplementary claim for Drawback under Rule 15 of Customs and Central Excise Duties Drawback Rule, 1995.
(where the drawback received falls short of the rate finally fixed by the Government, application for supplementary claim for drawback should be made in the following form)
The Assistant commissioner of Customs
In charge Drawback Department
We hereby make a supplementary claim for drawback of Customs/Central Excise which has been paid less paid to us as explained herein.
1. Exporter :
(c) Telephone No.
(d) Name of Clearing Agent
2. Goods exported
(a) Description :
© Marks & No.
(e) Shipping Bill No. & Date
(b) Rotation No.
4. Drawback already paid
(b) Customs House Reference No.
(c) Quantity/Value on which allowed.
(d) Rate at which allowed
5. Drawback now claimed
(b) Quantity/Value on which allowed
(c) Rate at which claimed
6. Reason for the Supplementary claim:
7. No. of documents enclosed
1. I/We hereby declare that the supplementary claim of drawback is based on the Customs and Central Excise duties paid on the raw materials used in the manufacture of goods/exported the duties so paid have not been claimed as rebate under the Central Excise Rules, 1944.
2. I/We hereby declare that the declaration made herein is true and correct.
*Please enclose copy of communication regarding rate of drawback determined under Rule 6 or 7, any other document in support of supplementary claim or other documents as may be prescribed by Commissioner of Customs. Please also enclose calculation sheet.