{"id":40116,"date":"2022-02-14T11:52:07","date_gmt":"2022-02-14T06:22:07","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=40116"},"modified":"2022-02-14T11:53:51","modified_gmt":"2022-02-14T06:23:51","slug":"duty-drawback-scheme-for-indian-exporters-and-importers","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/","title":{"rendered":"Duty Drawback Scheme for Indian Exporters and Importers"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Duty Drawback Scheme (DBK) is a\ngovernment-based initiative that allows the exporter to avail rebate on the\ninput used in the production of exportable goods. The admissible duty drawback\nis forwarded to exporters in their registered bank account. Section 75 of the\nCustoms Act, 1962 &amp; Section 37 of the Central Excise Act, 1944, enable the\ngovernment to render such duty drawbacks. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Role_of_Customs_Central_Excise_Duties_Drawback_Rules\" >Role of Customs &amp; Central Excise Duties Drawback Rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Categories_of_Duty_drawback\" >Categories of Duty drawback<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#How_does_the_Duty_Drawback_scheme_work_for_exporters\" >How does the Duty Drawback scheme work for exporters?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#How_to_Avail_Refunds_under_the_Scheme\" >How to Avail Refunds under the Scheme?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Documents_Required_for_Processing_Drawback_Claim\" >Documents Required for Processing Drawback Claim<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Limitations_on_Drawback_Admissibility\" >Limitations on Drawback Admissibility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Important_statutory_provisions_and_rules_pertaining_to_drawback\" >Important statutory provisions and rules pertaining to drawback<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/duty-drawback-scheme-for-indian-exporters-and-importers\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_Customs_Central_Excise_Duties_Drawback_Rules\"><\/span>Role of Customs &amp; Central Excise Duties Drawback Rules<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Customs\n&amp; Central Excise Duties Drawback Rules, 1995 encloses the procedure for\ngranting of duty drawback (for both kinds of duties imposed) by the central\nauthorities processing documents of export. Under the said scheme, an exporter\ncan choose either the brand rate of Duty Drawback Scheme or All Industry Rate\n(AIR) of Duty Drawback Scheme.<\/li><\/ul>\n\n\n\n<ul><li>A\nmajor percentage of duty drawback is paid via AIR DBK which primarily renders\ncompensation to exporters of various exportable goods for the average incidence\nof central excise and customs duties imposed on the input used in their\nproduction. <\/li><li>Brand\nrate of duty drawback is conferred under rules &amp; 7 of Customs and Central\nExcise Duties Drawback Rules, 1995 in events where the exportable goods do not\nhave any AIR or duty drawback rate, or where the AIR duty drawback prompted is\nconsidered by the exporter inadequate to compensate for Customs\/Central Excise\nduties on imported goods used in the production of exportable products. <\/li><li>For\ncommodities having an AIR, the facility of brand rate to exporters is only\naccessible if it is determined that the compensation by AIR is lower than 80\npercent of the actual duties addressed in the production of the exportable\ngoods. <\/li><li>Duty\ndrawback on re-export of duty paid commodities is also accessible under Section\n74 of Customs Act, 1962. Under this scheme, a certain part of customs duty\naddressed at the time of importation is remitted on re-export of the\ncommodities subject to identification &amp; standard procedure being followed. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Categories_of_Duty_drawback\"><\/span>Categories of Duty drawback<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are ranges of categories of Duty\ndrawback, but the two widely-known categories are; Manufacturing and unused\nmerchandise<\/p>\n\n\n\n<p>Manufacturing duty drawback comes into\nplay when you import a product that is then used in the production of different\ngoods. <\/p>\n\n\n\n<p>For instance, if you import bike tires\nand export finished motorcycles, then you can get the duty you paid for the\nbike tire refunded when you ship the finished bike. On the other hand, unused\nmerchandise duty drawback comes into play when you import something, and then\nexport it in unused condition. <\/p>\n\n\n\n<p>If you import bike tires and then export\nthe same without any value addition, then you can avail of the refund for the\nduty paid when you export the tires.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_the_Duty_Drawback_scheme_work_for_exporters\"><\/span>How does the Duty Drawback scheme work for exporters? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>AIRs\nare notified by the central government in the form of a drawback schedule\ndepending on the average quantity &amp; valuation of inputs and duties (both\ncentral excise and customs) encountered by the export products. The rates are\nprimarily an average depending on the evaluation of average incidence. These\nAIRs are underpinned by the drawback committee.<\/li><\/ul>\n\n\n\n<ul><li>The AIR might be fixed as a % of FOB i.e. Free onboard price of exportable products or as standard rates. FOB is used to imply whether the buyer or seller is accountable for goods that are physically damaged during transit. All claims relating to duty drawbacks are filed in accordance with the tariff items and descriptions of products given in the schedule. <\/li><li>In the Brand Rate fixation, an exporter can apply either where the exportable item has not been cited in the duty drawback schedule or if the exporter considers that AIR of duty drawback does not completely waived-off the duties encountered by his <a href=\"https:\/\/corpbiz.io\/iec-registration\"><strong>export product<\/strong><\/a>. <\/li><li>The exporter is fully compensated for duties relating to customs and central excise actually incurred by them. To use such a route, the exporter must furnish a form to the Directorate of Drawback within thirty days of the first transit of goods, along with a copy of the relevant authorities. <\/li><li>The commissioner-drawback shall fix the rate post verification. The documentation requisite is high here, as the exporter has to disclose the quantity of inputs and serviced used, in addition to the proof of duties paid.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Avail_Refunds_under_the_Scheme\"><\/span>How to Avail Refunds under the Scheme?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In order to avail refunds under the\nscheme, the exporter must file a DBK application with relevant custom authority\nvia electronic data interchange (aka EDI) for the export. Here, the exporter\nmust remember that the e-shipping bills will serve as a claim for drawback, and\nthus there is no requirement of filing separate drawback claims.<\/p>\n\n\n\n<p>All custom ports equipped with EDI\nfacility can process claims related to Duty drawback scheme in case of\nre-export of imported goods u\/s 74 of the Customs Act, 1962. <\/p>\n\n\n\n<p>Citing invalid bank information or not\nupdating account details can extend processing time for the Duty drawback\nscheme application. Likewise, entering the invalid serial no. of the drawback\nclaim in the shipping bill will also contribute to processing delay. Thus, it\nis advisable to identify an error in the first place before rushing for\napplication submission. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_Required_for_Processing_Drawback_Claim\"><\/span>Documents Required for Processing Drawback Claim<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Triplicate copy of the Shipping Bill<\/li><li>Copy of the Bill of entry<\/li><li>Invoice of the Import<\/li><li>Proof related to the payment of duty paid on the goods being imported <\/li><li>Approval granted by<strong> RBI<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/\"><strong>[1]<\/strong><\/a><\/sup> for re-exportation of goods<\/li><li>Copy of the Airway bill and bill of lading <\/li><li>Copy of bank attested invoices.<\/li><li>Sixtuplicate Copy of AR-4<\/li><li>Packing list as well as export invoice<\/li><li>Freight &amp; Insurance certificate<\/li><li>Copy of report pertaining to goods&#8217; testing <\/li><li>Modvat Declaration<\/li><li>A proof reflecting the drawback amount claimed<\/li><li>DEEC Book and license copy where applicable.<\/li><li>Certificate of transshipment where applicable <\/li><li>Blank acknowledgment card in duplicate<\/li><li>Pre-receipt relating to drawback amount on the reverse of shipment bill signed on the Rs1\/- revenue stamp<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Limitations_on_Drawback_Admissibility\"><\/span>Limitations on Drawback Admissibility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Customs Act underpins certain\nconditions and limitations for exporters seeking a drawback-related claim for\ninputs. No drawback is admissible u\/s 75 if the market price is lower than the\ndrawback&#8217;s amount claimed. <\/p>\n\n\n\n<p>The drawback is also not allowed if the\nclaim is lower than Rs 50 on individual transits. GOI can reject or admit\ndrawback claims subject to conditions where there is a chance of goods shipped\nbeing smuggled back. <\/p>\n\n\n\n<p>Further, the government can also deny\ndrawback claims in a situation where the export of goods is less than the\nvaluation of input used in their production. If necessary, standard minimum\nvalue addition over the valuation of input can also be prescribed prior to\nrendering drawback. Please note that the drawback is allowed to incentivize\nexports and there must be export proceeds repatriation.<\/p>\n\n\n\n<p>Although prior repatriation of export realization isn&#8217;t a mandate, the law states that if sale proceeds are not received within the given timeline, the drawback paid shall be recoverable by the GOI as per the underlying procedure. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Important_statutory_provisions_and_rules_pertaining_to_drawback\"><\/span>Important statutory provisions and rules pertaining to drawback<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>I. STATUTORY PROVISIONS<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  S.NO\n  <\/td><td>\n  Section Nos\n  <\/td><td>\n  Subject\n  <\/td><\/tr><tr><td>\n  1\n  <\/td><td>\n  Section 74 of Customs\n  Act, 1962\n  <\/td><td>\n  Drawback on re-export\n  of imported duty paid goods\n  <\/td><\/tr><tr><td>\n  2.\n  <\/td><td>\n  Section 75 of Customs\n  Act, 1962\n  <\/td><td>\n  Drawback on input\n  materials\/services used for manufacture of export goods.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p>II. DRAWBACK RULES, 1995<\/p>\n\n\n\n<table class=\"table table-bordered\"><thead><tr><td>\n   S.NO.\n   <\/td><td>\n   Rule Nos\n   <\/td><td>\n   Subject\n   <\/td><\/tr><\/thead><tbody><tr><td>\n  1\n  <\/td><td>\n  Rule 5\n  <\/td><td>\n  Determination of date from which the\n  amount of drawback is to come to effect and the date of application of amount\n  of drawback.\n  <\/td><\/tr><tr><td>\n  2\n  <\/td><td>\n  Rule 8A\n  <\/td><td>\n  Upper Limit of Drawback money or rate\n  <\/td><\/tr><tr><td>\n  3\n  <\/td><td>\n  Rule 13\n  <\/td><td>\n  Procedure &amp; timeline for claiming\n  drawback on exportable goods other than by post\n  <\/td><\/tr><tr><td>\n  4\n  <\/td><td>\n  Rule 15\n  <\/td><td>\n  Supplementary claim\n  <\/td><\/tr><tr><td>\n  5\n  <\/td><td>\n  Rule 16\n  <\/td><td>\n  Repayment of invalid or extra payment\n  of drawback and interest.\n  <\/td><\/tr><tr><td>\n  6\n  <\/td><td>\n  Rule 16A\n  <\/td><td>\n  Recovery of amount of Drawback in case\n  of non-realization of export proceeds\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A duty drawback scheme refers to a rebate of any duty paid on imported materials that importers used to process or produce exportable products. It can be claimed by filing a prescribed application with relevant custom authority along with standard documents such as shipping bills. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/how-the-iec-for-startup-could-be-beneficial-in-india\/\">How the IEC for Startup could be Beneficial in India?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Duty Drawback Scheme (DBK) is a government-based initiative that allows the exporter to avail rebate on the input used in the production of exportable goods. The admissible duty drawback is forwarded to exporters in their registered bank account. Section 75 of the Customs Act, 1962 &amp; Section 37 of the Central Excise Act, 1944, enable [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":40121,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153],"tags":[2121],"acf":{"service_id":"16"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":10946,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40116"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=40116"}],"version-history":[{"count":18,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40116\/revisions"}],"predecessor-version":[{"id":40136,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40116\/revisions\/40136"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/40121"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=40116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=40116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=40116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}