The Duty Drawback Scheme, governed by the Customs Act of 1962, provides exporters with refunds or recoupments of customs, central excise duties, and service tax paid on inputs or raw materials used in manufacturing goods meant for export. Here are the key rules governing duty drawback:
Customs Act, 1962: Duty drawback provisions are outlined under Sections 74 and 75 of the Customs Act, 1962. Section 74 allows exporters to claim 98% of the duty paid on re-exports of imported goods within two years of import duty payment. Section 75 permits drawback of customs duties on goods manufactured or processed using imported materials with value addition.
Eligible Goods: Duty drawback is available for various categories of goods, including those imported into India, goods used after importation, and goods manufactured or produced from imported or indigenous materials.
Eligibility Criteria: To claim duty drawback, individuals must be legal owners of the exported goods at the time of export. They must have paid customs duty on imported goods. Duty drawback is available on most goods on which customs duty was paid on importation and subsequently exported.
Documentation: To process duty drawback claims, exporters need to provide various documents, including copies of the shipping bill, bill of entry, import invoice, proof of duty payment, approvals from the Reserve Bank of India for re-exports, bill of lading, export invoice, and others.
Components of the Scheme: The Duty Drawback Scheme comprises two primary components: All Industry Rate (AIR) and Brand Rate. AIR rates are announced periodically, while exporters can apply for Brand Rate fixation if AIR rates are deemed inadequate.
Duty Drawback Rates: Drawback rates vary based on the period between clearance and export placement under customs control. Rates range from 95% for goods exported within three months of clearance to nil for goods exported after 18 months or more.
Procedure for Claiming: Exporters file electronic shipping bills for exports, which are treated as claims for drawback. Ports with electronic data interchange (EDI) process these claims. Exporters must open accounts with designated banks for direct credit of drawback amounts.
Understanding and adhering to these rules is essential for exporters to effectively utilize the Duty Drawback Scheme and maximize benefits while streamlining export processes.
