Drawback FAQ :
1. What is "All Industry Rate of Drawback" ?
Under Rule 3 of the Customs and Central Excise duties Drawback Rules, 1995, the Government of India fixes the rates of Drawback on various goods generally exported by different exporters. These rates are fixed taking into consideration the amount of Customs duty or the Central Excise duty or both paid on the inputs of the export product. These rates are normally reviewed once in a year or whenever there is a change in the duty structure on the inputs used in the export product. Any exporter can claim the All Industry Rate of Drawback as long as the export is in compliance with the various other provisions of Section 75 and 76 read with the Rules made there under.
2. Whether there is need for filing separate drawback claims?
In case of goods manufactured in India exported under a manual shipping bill for a drawback claim under Section 75 of the Customs Act, 1962, Rule 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 provides that Triplicate copy of the Shipping Bill shall be deemed to be a claim for drawback and said claim for drawback shall be retained by the proper officer making an order permitting clearance and loading of goods for exportation under section 51.
Where the exporter has exported the goods under electronic shipping bill in Electronic Data Interchange (EDI) under the claim of drawback, the electronic shipping bill itself shall be treated as the claim for drawback and there is no need for filing separate drawback claims.
3.What is the procedure for claiming drawback under the EDI system?
The exporter has to file a shipping bill in Electronic Data Interchange (EDI) for export of goods under a claim for drawback. The electronic shipping bill itself shall be treated as the claim for drawback and there is no need for filing separate drawback claims. At JNCH the scheme of computerised processing of Drawback claims under the Indian Customs EDI System is applicable for all exports except in respect of DBK claims relating to cases of re-export of imported goods under Section 74 of the Customs Act, 1962. The procedure for claiming drawback under the EDI system is explained below
In the EDI system the exporter are required to open their accounts with the Bank nominated by the Custom House or a branch anywhere in India of any of banks having core banking facility of transferring the funds electronically through NEFT/ RTGS. This has to be done to enable direct credit of drawback amount to their accounts, obviating the need for issue of cheques. The exporters are required to indicate their Account No. in the declaration form called as Annex.-B along with the details of the bank through which the export proceeds are to be realised. S.D.F declaration is required in lieu of GR Ã¢â‚¬â€œ1 FORM
For export of goods under claim for drawback, as per Rule 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 the exporters will file the claim for drawback accompanied by the following documents:
- copy of export contract or letter of credit, as the case may be,
- copy of Packing list,
- copy of ARE-1 wherever applicable,
- insurance certificate, wherever necessary, and
- copy of communication regarding rate of drawback where the drawback claim is for a rate determined by the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be under rule 6 or rule 7 of these rules.
Under PUBLIC NOTICE- 54 /07 of JNCH the following documents are required to be produced at the time of examination of the cargo.
- 1. CENVAT Certificate/ Self declaration known as Annexure 1 when the Central Excise portion of the drawback is claimed.
- 2. Duty-free finished Leather Declaration in case of leather and leather articles.
- 3. Chartered EngineerÃ¢â‚¬â„¢s certificate wherever applicable.
- 4. Invoice giving complete description of the goods under export. Invoice with the declaration of wool content in case of woolen carpets/floor covering.
- 5. Packing list giving weight/ quantity of individual items when the drawback is based on unit weight/ quantity.
- 6. Test-Reports/ Sample Drawn by Central Excise authorities in case of Factory Stuffed Containers in terms of P.N.03/2007 dtd. 09.02.2007 in case Drawback is based on the composition.
- 7. NOC from the respective agencies/ authorities like WLRO, ADC, APEDA, etc. wherever applicable.
After filing of EGM and printing of EP Copy the shipping bills automatically move online to Drawback Queue in the EDI System for sanction. It may be noted that unless EGM is filed and EP Copy is printed, the shipping bills do not move online to Drawback Queue and such claims cannot be said pending with the department for drawback purpose.
The drawback claims are processed through the system on first come first served basis. Superintendent is the competent authority for sanctioning drawback up to Rs. one lakh and Assistant Commissioner for above one lakh. Superintendent has to confirm whether the goods under drawback claim have been properly classified or not. He can change the classification of the goods and on changing classification; the system recalculates drawback amount.
The status of Shipping Bills and sanction of drawback claim can be ascertained from the EDI Service Centre or Drawback Helpdesk. Status of S/Bill and query can also be ascertained online through automatic email by sending e-mail to firstname.lastname@example.org and mentioning the subject of the mail as exp:dbkpend:sbno:SB1,SB2,SB3 or exp:dbkpend:iec:
, to get status of drawback claims for particular SBs or of all drawback claims, as provided under facility notice no. 10/2008 dated 18.01.2008.
On raising of a query the claim moves out of drawback queue to Exporter queue in the System. Such claims are not regarded pending with the Department and are deemed to have been returned to the exporter with query or deficiency memo as per Rule 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. As per this Rule where the exporter resubmits the claim for drawback after complying with the requirements specified in the deficiency memo, the same will be treated as a claim filed under sub-rule (1) of Rule 13 for the purpose of Section 75A of the Customs Act, 1962. The exporter or his authorised representative may obtain a printout of the query/deficiency from the Service Centre if he so desires. The claim will come in Queue of the system as soon the reply is entered.
Shipping Bills in respect of goods under claim for drawback against brand rates would also be processed in the same manner, except that drawback would be sanctioned only after the original brand letter is produced to AC Export and is entered in the system. The exporter should specify the S.S No 98.01 for such provisional claims.
All the claims sanctioned during a particular period will be enumerated in a scroll and transferred to the Nominated Bank through the system. The Bank will credit the drawback amount in their respective accounts of the exporters on the next day. Bank will send a fortnightly statement to the exporters of such credits made in their accounts.
The facility of Payment of Drawback in the Exporter's Core Banking Enabled Bank Account in any Branch of any Bank anywhere in the Country has also been introduced vide Circular No. 01/2008-Systems dated 24.06.08. It has been pointed out that when the Core banking branches forward the statement to the exporters, the Shipping bill details are being omitted owing to certain limitation in the banking software employed for NEFT/RTGS due to which the exporters are facing difficulty in correlation of the Drawback claimed and that received. The issue has already been taken up with RBI, since these transactions are governed by guidelines issued by the RBI in this regard from time to time.
4.In cases where the Rate of Drawback is not fixed what is the procedure to claim Drawback?
In cases where the amount or Rate of Drawback has not been determined, as per Rule 6 of the Drawback Rules 1995, the exporter should apply in writing to the to the Commissioner of Central Excise having jurisdiction over the manufacturing unit for determination of the amount or Rate Drawback within 60 (sixty) days from the date of Ã¢â‚¬Å“Let Export OrderÃ¢â‚¬Â given by the proper officer of Customs on the relevant Shipping Bill. The Commissioner of Central Excise may allow a further period of 30 (thirty) days if it is satisfied that the manufacturer or exporter was prevented by sufficient cause from filing the application within sixty days.
The amount of Rate of Drawback determined in such cases is commonly known as Ã¢â‚¬Å“Brand Rate of DrawbackÃ¢â‚¬Â. This amount or Rate of Drawback so determined is applicable to the specified goods exported by a particular exporter during a particular period as mentioned in the order issued by the Central Excise.
If the exporter desires, the Commissioner of Central Excise may grant Drawback provisionally, on specific application of exporter in writing, without waiting for verification of the data furnished by the exporters and authorise the Commissioner of Customs at the Port of Export to pay provisional amount subject to execution of a bond with Surety or Security for a suitable amount undertaking to refund the excess amount paid, if any
5. In cases where the amount or Rate of Drawback is already determined is found low by the exporter what is the procedure to be followed to get the correct amount or rate fixed?
In cases where the amount or Rate of Drawback is already fixed for any goods is found by the exporter that the amount or Rate already determined is less than four-fifth (4/5) of the duties paid on the materials or components used in the production or manufacture of the export goods, as per Rule 7 of the Drawback Rules 1995, the exporter should apply in writing to the Commissioner of Central Excise for determination of the amount of Rate of Drawback within 60 (sixty) days from the date of Ã¢â‚¬Å“Let Export OrderÃ¢â‚¬Â given by the proper officer of Customs on the relevant Shipping Bill. The Commissioner of Central Excise may however, allow a further period of 30 (thirty) days if it is satisfied that the manufacturer or exporter was prevented by sufficient cause from filing the application within sixty days.
The amount or rate of drawback determined in such cases is commonly known as Special brand Rate of Drawback. This amount or Rate or Drawback so determined is applicable to the specified goods exported by a particular exporter during the particular period as mentioned in the order issued by the Central Excise.
6. What are the precautions that the exporters should take so that Drawback claims are not held up and are sanctioned expeditiously?
It has been noticed that the exporters/CHA are not furnishing the essential documents such as CENVAT Certificate, Self Declaration, Leather Declaration etc. which are required to be filed for processing of drawback claims. As a result, queries are being raised by drawback section for want of aforesaid documents. This leads to delay in processing the drawback claim as well as causing hardship to the exporters. In order to avoid queries and subsequent delay in processing and auditing Drawback claims, the exporters/CHA are advised to ensure that all the required documents are produced at the time of examination of the cargo.
The rates of drawback under S.S. Nos. are dependent upon conditions mentioned against them in the Drawback Schedule. To enable the EDI system to process the claims correctly exporters are advised to give the correct S.S. No. applicable to their case. If the relevant declarations are not filed along with the Shipping Bill the system will not process the drawback claims.
The Drawback rates under several sub-headings mentioned in the Drawback Schedule are dependent on the condition that CENVAT facility has not been availed. In order to claim drawback under such sub-headings, the exporters are required to file a self-declaration known as Annexure 1 at the time of examination. The information with regard to the Central Excise registered manufacturer exporters or the merchant exporters who have purchased goods from the Central Excise registered manufacturers, is obtained from the ARE-I form submitted at the time of examination.
Please ensure that details such as Rotation No, Bank A/c No., description, quantity, currency, value, drawback sub serial number etc. are correctly indicated at the time of filing of S/Bills. At the time of filing of shipping bill a check list is generated and is to be signed by the exporter/ CHA after checking correctness of all details. Therefore, responsibility of any such errors and consequent delays lies squarely on the CHA/ exporter
In case the drawback rate is dependent on % composition of the constituent material, please ensure that the samples are drawn and sent for test or valid previous test report is produced at the time of examination and entered in the comments in the system by the E.O./ Superintendent.
Ask your CHA to provide you EP Copy of Shipping Bill. The payment of drawback under the online EDI System cannot take place unless EP Copy is generated and printed.
Please reply to the queries relating to processing drawback claim without delay. Status of S/Bill and query can be ascertained online through automatic email by sending e-mail to email@example.com and mentioning the subject of the mail as exp:dbkpend:sbno:SB1,SB2,SB3 or exp:dbkpend:iec:
, to get status of drawback claims for particular SBs or of all drawback claims, as provided under facility notice no. 10/2008 dated 18.01.2008 or from the Service Center at JNCH. Contact EDI Service Center for obtaining printout of the query and submission of your reply.
Submit Brand Rate letters without delay.
In case drawback received is less than due, for whatsoever reason, a supplementary claim under Rule 15 OF THE DRAWBACK Rules, 1995 is required to be filed in the prescribed form (Appendix III) within the prescribed time limit of 3 months. Maximum delay of 9 months can be condoned by AC/Drawback on sufficient cause being shown. Therefore, in case of delay the supplementary claim should be accompanied with a request for condontion of delay and reasons for delay. It may be noted that there is no provision to sanction the differential drawback amount on the basis of letters/ representations, without a supplementary claim.
In case of EGM errors, non-filing of EGM, provisional assessments, pendency of test reports, non-printing of EP copies, amendment of the S/Bills for currency, quantity, unit, value, etc., please contact AC(Export) of the concerned CFS from where the goods were exported. Drawback section has no role in such matters.
In case of suspension of S/Bills owing to alert from investigating agencies, please pursue the matter with concerned investigating agencies and obtain NOC from them.
7.What is the time limit to pay Drawback by the department when the goods are exported? Is there any provision to pay interest when there is delay in payment of Drawback? If so, at what rate is it paid?
Under Section 75A(1) of the Customs Act, 1962, where any drawback payable to a claimant is not paid within a period of one month from the date of filing a claim, interest at the rate fixed under section 27A is payable from the date of expiry of 1 month till the date of payment of such Drawback. Therefore, under the EDI System, Drawback has to be paid within one month from the date of generation of EP Copy of the Shipping Bill, which is the deemed date of filing of the claim when the shipping bills moves online to Drawback Queue in the EDI System for sanction.
The rate of interest payable on delayed payments is 6 percent per annum in terms of Notification No. 75/2003-Cus (NT) Dated 12-09-2003.
8 Where an erroneous or excess payment of and interest is paid to an exporter, how does the department, recover it?
Under Section 75A(2) of the Customs Act, 1962, where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable 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. Interest at rate of 13% in terms of Notification No. 76/2003-Cus (NT) Dated 12-09-2003, is payable from the date of payment of drawback till the amount is recovered by the department.
9 In case of exports where the amount of Drawback has been paid but the sale proceeds in respect of such export goods have not been realized, what is the course of action?
In terms of the provisions of Section 75 (1) of the Customs Act, 1962 where any drawback has been allowed on any goods and the sale proceeds are not received within the time allowed under the Foreign Exchange Management Act, 1999, such drawback shall be deemed never to have been allowed. As per the prescribed under Rule 16A of the Drawback Rules, 1995, on receipt of relevant information from the Reserve Bank of India, the Assistant Commissioner / Deupty Commissioner of Customs shall cause notice to be issued to the exporter for production of evidence of realization of export proceeds within a period of thirty days from the date of receipt of such notice and where the exporter does not produce such evidence within the said period of thirty days the Assistant Commissioner / Deputy Commissioner of Customs shall pass an order to recover the amount of Drawback paid to the claimant and the exporter shall repay the amount so demanded within thirty days of the receipt of the said order
Provided that where a part of the sale proceeds has been realized, the amount of drawback to be recovered shall bear the same proportion as the portion of the sale proceeds not realized bears to the total amount of sale proceeds:
Where the sale proceeds are realized by the exporter after the amount of drawback has been recovered and the exporter produces evidence about such realization within one year from the date of such recovery, the amount of drawback so recovered shall be repaid.
10.What is the action required on part of the exporters for Systems Alert for Monitoring Realization of Export Proceeds in EDI as per the BoardÃ¢â‚¬â„¢s circular No. 5/2009-Cus. dated 2nd February, 2009?
Jawaharlal Nehru Custom House has issued Public Notice No. 11 /2009 to implement the BoardÃ¢â‚¬â„¢s circular No. 5/2009-Cus. dated 2nd February, 2009 the salient features of which are the following.
- (a) The exporters filing Shipping Bills (S/Bs) under drawback shall furnish a declaration to the Assistant Commissioner/Deputy Commissioner (Drawback) providing the details of all Authorized Dealers (AD), their codes and addresses through whom they intend to realize the export proceeds. Such a declaration shall be filed at each port of export through which the exporter exports his goods. In case, there is a new addition of AD, the same is to be intimated to the concerned Custom House at the port of export.
- (b) The system would generate on all Drawback Shipping Bills, the due date for submission of BRCs.
- (c) The exporter shall submit a certificate from the Authorized Dealer(s) in respect of whom declaration has been filed containing details of the shipments which remain outstanding beyond the prescribed time limit, including the extended time, if any, allowed by AD/RBI. Such a certificate can also be provided by a Chartered accountant in his capacity as a statutory auditor of the exporterÃ¢â‚¬â„¢s account. A proforma for furnishing such negative statement is enclosed as Annexure. Further, the exporters also have the option of giving a BRC from the concerned authorized dealer(s).
- (d) Such certificates shall be furnished by the exporters on a 6 monthly basis before the 7th day of January and July in respect of exports which have become due for realization in the previous 6 months. For example, for the six-monthly period of January- June 2008 (during which exports were effected), the statement/BRC needs to be submitted by the 7th July, 2009.
- (e) Such certificates shall be filed by the exporter AD wise at each port. The relevant date for filing certificates shall be the date of let export order (LEO) which is the date when the export goods are in effect permitted to be exported.
- (f) The software shall indicate list of the shipping bills under drawback where the BRC/negative statement has not been furnished by the exporter within the prescribed date. The Assistant Commissioner / Deputy Commissioner (Export) may peruse such lists either for the entire Customs port or for an individual exporter by entering the IE code of the exporter and accordingly initiate action to recover drawback.
- (g) The system will indicate to the Assistant Commissioner/Deputy Commissioner (Drawback) all cases of Drawback Shipping bills with LEO date falling on or after 1.1.2008 if the BRC/negative statement in the prescribed Annexure is not submitted by the exporter within the prescribed period. Further, the exporters are required to furnish the BRCs/negative statement in the prescribed Annexure in respect of all the Drawback Shipping Bills having LEO dates from 1.1.2004 to 31.12.2007 (separately for each six month period) within a period of four months from the date of issue of the circular.
11.What is the drawback under Section 74 of the customs Act 1962?
When any goods imported on payment of duty are re-exported, the amount of duty paid on such goods at the time of import is refunded. Such refund is known as Drawback under Section 74 of The Customs Act 1962
12.Is it necessary to file a separate claim for drawback on the goods re-exported, other than by post? If so what is the time limit?
The exporter has to make a separate claim in the prescribed form, within three months from the date of order permitting clearance and loading of goods for export i.e., the date of Let Export OrderÃ¢â‚¬Â. The three months time limit may be extended by further three months by the Assistant Commissioner of Customs, if he is satisfied that the exporter was prevented by sufficient cause to file his claim within three months period.
13. Is the full amount of duty paid at the time of import, refundable when such goods are re-exported? What are the other conditions to claim Drawback under Section 74 of Customs Act 1962?
No. Full amount of duty paid on importation is not refundable, when such goods re-exported. If the goods were not taken into use after importation, 98 percent of the amount of duty paid at the time of import is refundable as Drawback. However, if the goods were taken into use after importation an before they were re-exported, Drawback is paid taking into consideration the period of usage of such goods, depreciation in value and other relevant circumstances. The Government fixes the rate of Drawback in such cases by issue of notification. As per the Notification No. 23/2008-Cus Dated 1/3/2008 presently in force, no drawback is payable if the period of usage is over 18 months.
13. What is the procedure for claiming drawback under Section 74 of Customs Act 1962 when the goods are re-exported other than by post?
In the case of re-exports other than by post the exporter has to file a Shipping Bill or Bill of Export in the prescribed form with the Customs and make a declaration on such document to the effect that Ã¢â‚¬â€œ
- i) The export is being made under a claim for drawback under Section 74 of the Customs Act.
- ii) That the duties of customs were paid on the goods imported.
- iii) The goods were not taken into use after importation.
The goods were taken into use.
As per Rule 5 of the Re-Export Of Imported Goods (Drawback Of Customs Duties) Rules, 1995, a claim for drawback under these rules shall be filed in the form at Annexure II within three months from the date on which an order permitting clearance and loading of goods for exportation under section 51 is made by proper officer of customs:
Provided that the Assistant Commissioner of Customs or Deputy Commissioner of Customs may, if he is satisfied that the exporter was prevented by sufficient cause to file his claim within the aforesaid period of three months, allow the exporter to file his claim within a further period of three months.
(2) The claim shall be filed alongwith the following documents, namely :-
- (a) Triplicate copy of the Shipping Bill bearing examination report recorded by the proper officer of the customs at the time of export.
- (b) Copy of Bill of Entry or any other prescribed document against which goods were cleared on importation.
- (c) Import invoice.
- (d) Evidence of payment of duty paid at the time of importation of the goods.
- (e) Permission from Reserve Bank of India for re-export of goods, wherever necessary.
- (f) Export invoice and packing list.
- (g) Copy of Bill of lading or Airway bill.
- (h) Any other documents as may be specified in the deficiency memo.
(3) The date of filing of the claim for the purpose of section 75A shall be the date of affixing the Dated Receipt Stamp on the claims which are complete in all respects, and for which an acknowledgement shall be issued in such form as may be prescribed by the Commissioner of Customs.
(4) (a) Any claim which is incomplete in any material particulars or is without the documents specified in sub-rule (2) shall not be accepted for the purpose of section 75A and such claim shall be returned to the claimant with the deficiency memo in the form prescribed by the Commissioner of Customs within fifteen days of submission and shall be deemed not to have been filed;
(b) Where exporter complies with requirements specified in deficiency memo within thirty days from the date of receipt of deficiency memo, the same will be treated as a claim filed under sub-rule (1).
(5) Where any order for payment of drawback is made by the Commissioner (Appeals), Central Government or any Court against an order of the proper officer of customs, the manufacturer exporter may file a claim in the manner prescribed in this rule within three months from the date of receipt of the order so passed by the Commissioner (Appeals) Central Government or the Court, as the case may be.