Q:1 What is Duty Drawback?
Ans: Duty Drawback is a scheme introduced by the Government of India, whereby the Customs 
duties and Excise duties paid on inputs, like raw materials, components, intermediates, consumables and packing materials, are refunded, when the finished goods or products are exported. For e.g.: If you import silk fabrics from China for Rs. 100/- and pay Rs. 30/- by way of Customs duty; you spend Rs. 50/- for manufacturing of a shirt, you add Rs 25/- as your profit. In that case, you are ready to sell the shirt for Rs. 205/-. Now if you find a buyer from Dubai, who is ready to pay Rs 205/-, the net effect of the transaction will be that, it is the Dubai buyer who has suffered the incidence of customs duty of Rs.30/- which you paid on import of fabric. These 30/- Rs. are received by the government of India as the import duty. Internationally, it is not appropriate for us to charge the duty to a foreign national. Under the circumstances, the Government of India has introduced a scheme of refunding these duties, which are paid on inputs. This is known as duty drawback scheme.

Q:2 Where do we get detail provisions of duty drawback in Exim Policy?
Ans: Many people make mistake and refer Exim Policy to find out details about duty drawback scheme. Please understand that exim policy is announced by the Ministry of Commerce where  as the Duty Drawback Scheme is within the preview of Ministry of Finance.

Q:3 What are different types of Duty Drawback?
Ans: Mainly there are 3 types of Duty Drawback 

1.Drawback allowable on re-export of duty-paid goods.
2.Drawback on imported materials used in the manufacture of goods which are exported
3.Deemed Exports Drawback. 

Q:4 Can you give more details of each type of Duty Drawback?
Ans: Drawback allowable on re-export of duty-paid goods : Under sec.74 of Customs Act, 1962 it
is provided 
1] When any goods capable of being easily identified which have been imported into India and upon which any duty has been paid on importation.:-

(a) are entered for export and the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51; or 
(b) are to be exported as baggage and the owner of such baggage, for the purpose of clearing it, makes a declaration of its contents to the proper officer under section 77 (which declaration shall be deemed to be an entry for export for the purposes of this section) and such officer makes an order permitting clearance of the goods for exportation; or 
(c) are entered for export by post under section 82 and the proper officer makes an order permitting clearance of the goods for exportation, ninety-eight percent, of such duty shall, except as otherwise hereinafter provided, be repaid as drawback; 

(a) if the goods are identified to the satisfaction of the [Assistant Commissioner of Customs] as the goods which were imported; and
(b) the goods are entered for export within two years from the date of payment of duty on the importation thereof: 

PROVIDED that in any particular case the aforesaid period of two years may, on sufficient cause being shown, be extended by the Board by such further period as it may deem fit. 

2) Notwithstanding anything contained in sub-section [1], the rate of drawback in the case of goods which have been used after the importation thereof shall be such as the Central Government, having regard to the duration of use, depreciation in value and other relevant circumstances, may, by notification in the Official Gazette, fix. 

3) The Central Government may make rules for the purpose of carrying out the provisions of this section and, in particular, such regulations may-

(a) provide for the manner in which the identity of goods imported in different consignments which are ordinarily stored together in bulk, may be established; 
(b) specify the goods which shall be deemed to be not capable of being easily identified and 
(c) provide for the manner and the time within which a claim for payment of drawback is to be filed.

4) For the purposes of this section-

(a) goods shall be deemed to have been entered for export on the date with reference to which the rate of duty is calculated under section 16; 
(b) in the case of goods assessed to duty provisionally under section 18, the date of payment of the provisional duty shall be deemed to be the date of payment of duty. 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 5 1 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 Regulation Act,1973 (46 of 1973), 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 to enable such authorized officer to inspect the processes of manufacture, process or any other operation carried out and to verify by actual cheek or otherwise the statements made in support of the claim for drawback. 

(d) For the manner and the time within which the claim for payment of drawback may be filed; 

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. 

DEEMED EXPORTS DRAWBACK

Exim Policy Para 10.3b provides this benefits to the Deemed Exports. The procedure for the same is given in Chapter 10 of Handbook of Procedures Vol.1 as amended upto 31" March 2000. Para 10.15 of Handbook iv,v,vi provides as follows:- 

[iv] Where no All Industry Rate of Drawback is available or the same is less than 4/5th of the duties paid on the materials or components issued in the production or manufacturer  of the said goods, the exporter may apply for fixation of brand rate in the form given at Appendix- 17 to the Directorate General of Foreign Trade with a copy to the Licensing Authority concerned. The application for fixation of brand rate shall be filed within a period of six months from the date of last supply covered under a single contract relating to an individual order or project. The application for claim of Drawback under brand rate shall be filed within a period of six months from the date of issuance of payment certificate. The provision of late cut as given in paragraph 15.16 shall also be applicable under this sub paragraph. 

[v] Subject to the procedure laid down in this Handbook, the Customs and Central Excise Duty Drawback Rules, 1995 shall apply mutates-mutants to deemed exports. 

[vi] Regional Licensing Authorities may consider provisional payment to the extent of 75% of the Drawback claim in the case of private companies and 90% in the case of Public Sector Undertakings, pending fixation of Brand Rate. 

The application is required to be made in Appendix-17 as per Handbook of Procedure.
following documents are required to be enclosed with the application. 
- Appendix- 1 in duplicate.
- Supply Invoice certified by project authorities and self certified.
- Payment certificate issued by project'authority as per 14b
- DBK 1 duly certified by a Chartered Engineer.
- DBK 11, IIA, 111 & 111-A, duly certified by a Chartered Accountant along with non-
   availment of MODYAT Certificate from the jurisdictional Excise Authorities. 
- Photocopies of Bill of Entries along with relevant Import Invoices. 


Note : In case of public sector undertaking, the DBK statements may be signed/certified by the Head of Production and Head of Finance department.