Q.5 What is the procedure for filing Duty Drawback Claim against physical exports?
Ans: Your attention is invited to Notification No.54196 Cus.& CE(NT) DT.31.10.1996 and Notification No.31199 [N.T.] Dt.20.05.99 which provide the detailed procedures for filing a claim for Drawback. It provides that a copy marked "Triplicate Copy" of the Shipping Bill for exports, will be considered as a copy for Drawback Claim Purpose. A claim for drawback shall deem to be a claim for drawback filed on the date on which the proper officer of Customs makes an order permitting clearance and loading of goods for exportation under Section 51 and said claim for drawback shall be retained by the proper officer making such order. The claim has to be accompanied by documents specified in sub-rule (2) of Rule 13. Any claim, which is incomplete, is returned to the exporter with a deficiency memo within ten days of its receipt. Where the exporter complies with the requirements specified in the deficiency memo, the same is to be treated as a claim filed
afresh. 

As per Rule 13(2) the exporter shall now be required to present his shipping bill for export complete with the following documents: 

1.Copy of export contract or letter of credit, as the case may be.

2.Copy of Packing List. 

3.Copy of AR-4 form, wherever applicable.

4.Insurance certificate, wherever necessary. 

5.Copy of communication regarding rate of Drawback where the drawback claim is for a rate 
determined by the Central Government under Rule 6 to 7 of these Rules.

Q.6 What is the time limit for filing the Duty Drawback Application?
Ans. Normally an exporter is required to file the application as early as possible immediately after the export is completed and relevant documents are available. However, in practice it is observed that the exporters take time to file this application due to various reasons. Time period of three months is granted to make the application. However, in case an exporter is unable to file the same within the prescribed period then a request for extension should be made to the Assistant Commissioner of Customs. He will consider the case on merit and shall grant or reject the application of extension. 


Q.7 How much time it takes for exporter to receive the Drawback amount?
Ans. It is difficult to generalise the specific period of the payment. However the experience of different exporters differs at different Customs houses. Complete documentation, regular follow-up and availability of the fund with the department are important factors to determine the payment time. However, the general experience of the trade & industry is that in the month of January, February & March of every year the payments from the department are either slow down or stopped. 

On the other hand many a time the department undertakes "Clearance Drive" and disposes of
several cases. The Finance Ministry has disbursed Rs.902 crore as duty drawback to exporters during its drive to clear arrears. According to an official release, over 1,75,000 cases of duty drawback have been finalized, of which 93,000 were settled in Mumbai, 29,5000 cases in Chennai and 55,000 in Delhi. 

Between May 15, and July 14,2000 drawback claims were finanlised expeditiously and efforts 
were made to settle such claims before the statutory deadline for payment of interest. 

In terms of the Customs and Central Excise Duties Drawback Rules 1995 and in consonance 
with the internationally accepted practice of providing relief from input taxation, duty drawback is paid so that export becomes competitive in the world market. 

Q.8 What are the different categories of Duty Drawback rates?
Ans. 
a] All industry rates
b] Brand Rate
c] Special Brand rates


Q.9 What are the differences between these three categories?
Ans: A] All industry rates are announced by the government on the basis of available data  collected from industries. These rates are normally announced every year on 1" June and are kept valid till next rates are announced. This is most widely used and found it most convenient and easy for most of the exporters since the rates are declared by the government and the exporter is not required to submit the document like Bill of Entry, Excise get pass etc. as an evidence of duty paid. However, wherever it is called for, the exporter is required to submit non-availment of motivate certificate.
These rates are published in this book after the question answers are over.

Most of the rates are advalorum, they represent certain percentage of FOB value of the exports. In some cases the Duty Drawback is fixed on weight basis e.g. the brass content in the export product. Here the weight of the product is taken as a base instead its value. In very few cases the drawback is fixed based on number of pieces exported. 

To prevent any n-iisuse of duty drawback, in several cases the cap is also introduced so that department does not loose the revenue more than what was collected. 

Majority of the exporters are using this category of duty drawback. 

All industry rates are constructed based on changes which take in the budget proposal.

b] Brand Rate is covered under rule 6 which enable a particular manufacturer of a product for which all industry rates are not fixed to get drawback rate fixed for himself. It is like fixation of rates on case to case basis.

The manufacturer/exporter is required to provide all necessary information and details of the raw material used, consumption pattern, wastage, payment of the duty on inputs. 
He is also required to submit all necessary documents including manufacturing process, flow chart, worksheet to enable the department to determine the exact incidence of the duty suffered by the exporter. All the information so furnished is verified by Customs/Central Excise and a verification report in confidential manner, is send to 
                                   UNDER SECRETARY, 
                                      GOVT.OF INDIA, 
                               MINISTRY OF FINANACE, 
                                 DEPT. OF REVENUE, 
                      JEEVAN DEEP BLDG., NEW DELHI- 110001 
for the fixation of brand rate. 

Once the brand rate letter, is ready it is intimated to the concerned exporter and also to the customs department from where the payment of the drawback is going to be made. The letter so issued indicates the name of the exporter, who is entitled to this rate, the duty drawback rate, quantity of exports andlor the time period within which this letter is applicable. The rates so specified are ment only for the brand rate letter holder and no body else can use this rate for applying duty drawback.
This is a time consuming procedure and involves more documentation. 

C] Special Brand Rate can be applied by an exporter when the declared all-industry rates are grossly insufficient to compensate the duty incidence on inputs suffered by the exporter. Under rule 7 if the declared all industry rates are less than 80% of the actual duty incidence then an exporter can adopt special brand rate fixation application. 

Exporter will be required to provide with all the necessary details, data, duty paid documents to enable department to ascertain the extent of duty. This is also subject to verification of data.

Q.10 What is the minimum amount of drawback we can claim? 
ANS. NO drawback is allowed if the amount of the drawback is less than 1 %. However this 
restriction is not applicable if the export is by post, or goods exported are in discharge of export obligation against advance license.

If the export is by post or is in discharge of export obligation, the minimum amount is Rs.50/- 

Q.11 How the drawbacks are paid?
Ans. As it is a practice in most of the government departments, the payment of the duty drawback will also be made by a cheque in favour of exporter's bank account the name of the exporter. To enhance the efficiency of the repayment many custom houses have introduced a system of crediting specific account opened for this purpose in nominated bank. As soon as the department processes the claim, the account section arranges for transferring the fund in the exporter's account opened specifically for this purpose. The exporter receives a regular statement from his banker. 

This scheme of the crediting account was introduced with aim of efficient services and preventing the fraud. 

Q.12 Can you analysis the new rates declared by the Ministry of Finance on 1" June 2000? 
Ans: Approximately 406 items have remained unchanged. Drawback rates are reduced for 270 items. Drawback rates enhanced for 141 items for which also value cap is imposed.

Q.13 What happens if we export by post? 
Ans. Export by post is reducing day by day; however once upon a time it was considered as a regular method of exporting. Rule 11 of the Drawback Rules 1995 lays down the procedure  for claiming drawback on the goods exported by post. When goods are exported by post, the exporter shall endorse in bold letters the words "Drawback Export" on the outer packing 
carrying the address of the consignee.

For claiming drawback on goods exported by post, exporter will be required to file his claim at the time of booking with the postal authorities in the form prescribed in Customs Series Form No. 110. The Customs authorities in-charge of Foreign post office will be setting the claims for drawback. The new form is on the lines of D- Form, which was being presented with the parcel hitherto. The date of receipt of this Form from the postal authorities by the Customs authorities shall be treated as date of filing of claim by the exporter for the purpose of Section 75A of the Customs Act. Thus, drawback should be paid to the exporter within two months from the date of receipt of claim form from the postal authorities. On receipt of claim form, an intimation is also required to be given to the exporter. Where claim form is incomplete, a deficiency memo must be issued within fifteen 
days of its receipt from the postal authorities. The exporter can re-submit his form, after compliance with deficiencies within a period of 30 days. If such a claim is found to be in order, the same should be acknowledged and the period of two months for payment of interest in terms of Section 75A in such cases, shall commence from the date of such acknowledgment.