Department of Revenue Notified Revised All Industry Rates of Duty
Drawback – Effective from 1 October 2011
·
DEPB
Items Incorporates under Drawback Schedule
[CBEC
Circular No. 42 dated 22nd September 2011]
Subject: All Industry Rates of Duty Drawback, 2011-12.
The Ministry has announced the revised All Industry Rates (AIR) of Duty
Drawback 2011-12 vide Notification No. 68 / 2011- Cus. (N.T.), dated
22.09.2011. The rates of duty drawback are effective from 01.10.2011.
The Notification may please be downloaded from CBEC website www.cbec.gov.in and perused for
details.
2. As in previous years, the
drawback rates have been determined on the basis of certain broad parameters
including, inter alia, the prevailing
prices of inputs, Standard Input Output Norms (SION), share of imports in the
total consumption of inputs, FOB value of export goods and the applied rates of
duty. The incidence of duty on HSD/Furnace Oil has been factored in the
drawback calculations. The incidence of service tax paid on taxable services
which are used as input services in the manufacturing or processing of export
goods has also been factored. The Commissioners may ensure that the exporters
do not avail of the refund of this tax through any other mechanism while
claiming the All Industry Rates of duty drawback.
3. The drawback schedule this
year incorporates items which were hitherto under the DEPB scheme. Thus, the
total number of items in the drawback schedule now number approximately
4000. While incorporating these DEPB
items in the Drawback schedule, care has been taken to classify them at the
appropriate four digit level. However,
there may be some doubts about the classification of these DEPB items in the
drawback schedule notified. Be that so as it may, it may please be noted that
the rates of drawback as specified for these items in the drawback schedule is not to be denied in all such
cases. For easy reference, a
list of all the DEPB items falling under a particular product code and serial
number with the corresponding drawback tariff item has also been separately
hosted on the CBEC website. All field
formations are requested to inform the Board about specific item/s (if any) on
which there are doubts regarding the classification.
4. Broadly speaking, most of the
items which are already covered under the duty drawback schedule will suffer a
minor reduction in the existing drawback rates. The reduction is mainly on
account of the reduction in basic customs duty on crude petroleum as well as a
reduction in central excise duty on diesel.
5. In respect of items covered
under the DEPB Scheme, major exporters operating under the DEPB Scheme are
mainly from the Engineering sector including the auto and auto component
industry, Chemicals, Pharmaceuticals, Textiles and the marine sector. It has
been decided to provide a smooth transition for items in these sectors while
incorporating these in the drawback schedule.
As a transitory arrangement, these items will suffer a modest reduction
from their DEPB rates, ranging from 1% to 3% for most items.
6. Presently, the DEPB rates are
available for two wheelers, three wheelers, commercial vehicles and tractors.
Appropriate duty drawback rates have been provided for these items in the
proposed schedule without any value cap. Exporters of passenger cars are
presently opting for brand rate of duty drawback. Government has received
requests from these exporters; appropriate All Industry Rate of duty drawback
for export of Passenger Cars has been provided in this year’s Drawback
Schedule.
7. As a general policy, it has
been decided that there will be no value cap on items in the drawback schedule,
where the composite duty drawback rate is less than or equal to 3%. Further,
there are certain goods especially in engineering and chemicals sectors where
because of the wide variation in prices, no value cap has been assigned. You
may like to exercise due diligence to prevent any misuse consequently. At the
same time, it may also be ensured that the process of scrutiny of such items
does not result in hardship to the exporters and the export consignments are
not held up.
8. Doubts have been raised as to
the eligibility of exporters to claim the composite rate of duty drawback in
situations covered under Para 15(ii) of Notification No. 84/2010-
Customs(N.T.) in the light of the
expression “when no Cenvat facility has been availed for the goods under
export” being mentioned in the said para,
. The doubt has apparently arisen because Para 15(i) ibid mentions the
words “that no Cenvat facility has been availed for any of the inputs or input
services used in the manufacture of the export product”. It is hereby clarified
that drawback is reimbursement of input duties suffered in the manufacture of
export goods and as long as no Cenvat credit has been availed for any of the
inputs or input services used in the manufacture of the export product, the
composite rate of drawback is permissible on export of such goods. The
expression “When Cenvat facility has not been availed”, in Para 15 of the above
mentioned notification, as far as the drawback provisions are concerned, has
always meant Cenvat facility on inputs and input services, and is to be
understood as such .The drawback notification has been suitably amended to further clarify the
matter.
9. There has been some confusion regarding the eligibility of
drawback rates for tufted bath mats
made of cotton. A new entry has been created under the 4-digit category 5703
which specifies the applicable rate for tufted floor-coverings etc. made of
cotton. It is understood that in previous years, exporters of this item were
given DBK at the residuary rate corresponding to 570399 @ 2.5%. This was not
the intention. In fact the heading 570501 in the previous Schedule qualified
for the same rate as that of woven cotton floor coverings falling under heading
(570204) @8.9%. It is clarified that the benefit of the rate as existing at the
relevant point for 570501 is to be allowed to all exports of tufted cotton
bathmats. In all such cases wherever the assessments are not provisional, the
exporters shall be allowed to file supplementary drawback claims and the claims
shall be processed accordingly.
10. In 2010-11, the description “ENA” (Extra Neutral Alcohol) was
incorporated in the heading 2207. There has been some confusion that claims
made prior to the notification of last year were not covered under the new
description and there was a request for clarification. It is clarified that
“ENA” is otherwise covered under the heading 2207 as ethyl alcohol and would
cover all periods, including those prior to 20th, September 2010.
11. Under the heading 8307, the description has been amended to provide
drawback on flexible tubing whether or not coated with PVC. It is clarified
that the rate under the heading 8307 is applicable to the flexible tubing whether or not coated with PVC, and
the rate would be applicable even for past periods, prior to the amendment.
12. It was clarified vide circular
no. 25/2007 dated 16th July 2007, that drawback is to be allowed for
articles under tariff items 7323 of the drawback schedule without making any
deduction towards the lids, handles etc. provided they retain the character of
iron or steel articles classifiable under the said tariff item. It is clarified
that the same logic shall also be applicable for the goods falling under tariff
items 8211 and 8215 of the drawback schedule.
13. There has been a dispute
regarding classification of FIBC (Flexible intermediate bulk containers). It
has been represented that the field formations are classifying the FIBCs under
Chapter 39 whereas the FIBC finds a specific mention under tariff item 630502
of the drawback schedule and the exporters are being denied drawback mentioned
against the heading 630502 in the Drawback Schedule. It is hereby clarified
that FIBCs which are made of manmade textile material would be classifiable
under drawback tariff item 630502. FIBCs which are big or bulk bags or super
sacks made of polymers of ethylene and other plastic material would however, be
classifiable under chapter 39 of the drawback schedule.
14. Benefits under the DEPB scheme
are available only upto September 30, 2011. Thus, all exports under DEPB scheme
upto and including September 30, 2011, where the “Let Export Order”(LEO) has
been issued by the Customs officer shall be eligible for the issue of DEPB
Scrips. Since, export consignments with ‘Let Export
Order’ after this date would no longer
be eligible for benefits under the DEPB scheme, it is likely that there may be
a rush of DEPB export consignments before this date causing extra load on the EDI system. All
Custom officers posted at ports under your jurisdiction may be directed to take
due care and ensure that DEPB export consignments are accorded priority and
processed/cleared expeditiously. Further, officers handling export
assessment/examination with specific regard to DEPB Shipping Bills must ensure
that the bills in the EDI queue are cleared expeditiously. If for any valid
reason, the LEO cannot be given on the EDI on the said date, then the
Commissioner of Customs may allow an endorsement of the LEO on the DEPB
shipping bills manually. However, this may only be allowed as an exception.
Suitable Public Notices/Standing Orders may be issued in this regard.
15. The Notification and the new
Drawback Schedule may be perused carefully to note the changes made therein.
Though all care has been taken, the possibility of inadvertent errors/omissions
cannot be ruled out. It is requested that any error/omission noticed during the
implementation of the rates be brought to the notice of the Board immediately
for suitable corrective action.
16. The Public Notice and Standing
Order for guidance of the trade and staff may be issued. Difficulties faced, if
any in implementation of the changes may be brought to the notice of the Board
at once.
F.No. 609/82/2011-DBK
<Duty
Drawback Schedule 2011-12>
<List
of DEPB Items with Corresponding Tariff Items in the Drawback Schedule
2011-12>