F.No. 609/82/2011-DBK
Government =
of=20
India
Ministry of =
Finance
(Department =
of=20
Revenue)
Central =
Board of=20
Excise & Customs
Circular=20
No. - 42 /=20
2011-Cus.,
New=20
Delhi, dated 22nd September, 2011
To
All=20
Chief Commissioners of Customs / Customs (Prev.).
All=20
Chief Commissioners of Customs & Central Excise / Central=20
Excise.
All=20
Director Generals under CBEC.
All=20
Commissioners of Customs / Customs (Prev).
All=20
Commissioners of Customs & Central Excise / Central=20
Excise.
Subject: All Industry Rates of Duty =
Drawback,=20
2011-12 - Reg.
Sir/=20
Madam,
The=20
Ministry has announced the revised All Industry Rates (AIR) of Duty =
Drawback=20
2011-12 vide Notification No. 68 /=20
2011- Cus. (N.T.), dated 22.09.2011. The rates of duty drawback are =
effective=20
from 01.10.2011. The Notification may please be downloaded =
from=20
CBEC website www.cbec.gov.in and =
perused for=20
details.
2. =20
As in previous years, the drawback rates have been determined on =
the=20
basis of certain broad parameters including, inter alia, the prevailing =
prices of=20
inputs, Standard Input Output Norms (SION), share of imports in the =
total=20
consumption of inputs, FOB value of export goods and the applied rates =
of duty.=20
The incidence of duty on HSD/Furnace Oil has been factored in the =
drawback=20
calculations. The incidence of service tax paid on taxable services =
which are=20
used as input services in the manufacturing or processing of export =
goods has=20
also been factored. The Commissioners may ensure that the exporters do =
not avail=20
of the refund of this tax through any other mechanism while claiming the =
All=20
Industry Rates of duty drawback.
3. =20
The drawback schedule this year incorporates items which were =
hitherto=20
under the DEPB scheme. Thus, the total number of items in the drawback =
schedule=20
now number approximately 4000. While incorporating these DEPB =
items in=20
the Drawback schedule, care has been taken to classify them at the =
appropriate=20
four digit level. However, there=20
may be some doubts about the classification of these DEPB items in the =
drawback=20
schedule notified. Be that so as it may, it may please be noted that the =
rates=20
of drawback as specified for these items in the drawback schedule is not to be denied in all =
such=20
cases. For easy =
reference, a=20
list of all the DEPB items falling under a particular product code and =
serial=20
number with the corresponding drawback tariff item has also been =
separately=20
hosted on the CBEC website. All=20
field formations are requested to inform the Board about specific item/s =
(if=20
any) on which there are doubts regarding the classification.=20
4. =20
Broadly speaking, most of the items which are already covered =
under the=20
duty drawback schedule will suffer a minor reduction in the existing =
drawback=20
rates. The reduction is mainly on account of the reduction in basic =
customs duty=20
on crude petroleum as well as a reduction in central excise duty on =
diesel.=20
5. =20
In respect of items covered under the DEPB Scheme, major =
exporters=20
operating under the DEPB Scheme are mainly from the Engineering sector =
including=20
the auto and auto component industry, Chemicals, Pharmaceuticals, =
Textiles and=20
the marine sector. It has been decided to provide a smooth transition =
for items=20
in these sectors while incorporating these in the drawback =
schedule. As a transitory arrangement, =
these items=20
will suffer a modest reduction from their DEPB rates, ranging from 1% to =
3% for=20
most items.
6. =20
Presently, the DEPB rates are available for two wheelers, three =
wheelers,=20
commercial vehicles and tractors. Appropriate duty drawback rates have =
been=20
provided for these items in the proposed schedule without any value cap. =
Exporters of passenger cars are presently opting for brand rate of duty=20
drawback. Government has received requests from these exporters; =
appropriate All=20
Industry Rate of duty drawback for export of Passenger Cars has been =
provided in=20
this year=92s Drawback Schedule.
7. =20
As a general policy, it has been decided that there will be no =
value cap=20
on items in the drawback schedule, where the composite duty drawback =
rate is=20
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,=20
no value cap has been assigned. You may like to exercise due diligence =
to=20
prevent any misuse consequently. At the same time, it may also be =
ensured that=20
the process of scrutiny of such items does not result in hardship to the =
exporters and the export consignments are not held =
up.
8. =20
Doubts have been raised as to the eligibility of exporters to =
claim the=20
composite rate of duty drawback in situations covered under Para 15(ii) =
of=20
Notification No. 84/2010- Customs(N.T.) in the light of the expression =
=93when no=20
Cenvat facility has been availed for the goods under export=94 being =
mentioned in=20
the said para, . The =
doubt has=20
apparently arisen because Para 15(i) ibid mentions the words =93that no =
Cenvat=20
facility has been availed for any of the inputs or input services used =
in the=20
manufacture of the export product=94. It is hereby clarified that =
drawback is=20
reimbursement of input duties suffered in the manufacture of export =
goods and as=20
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=20
drawback is permissible on export of such goods. The expression =93When =
Cenvat=20
facility has not been availed=94, in Para 15 of the above mentioned =
notification,=20
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=20
drawback notification has been=20
suitably amended to further clarify the matter.
9. =20
There has been some confusion regarding the eligibility of =
drawback rates=20
for tufted bath mats made of=20
cotton. A new entry has been created under the 4-digit category =
5703=20
which specifies the applicable rate for tufted floor-coverings etc. made =
of=20
cotton. It is understood that in previous years, exporters of this item =
were=20
given DBK at the residuary rate corresponding to 570399 @ 2.5%. This was =
not the=20
intention. In fact the heading 570501 in the previous Schedule qualified =
for the=20
same rate as that of woven cotton floor coverings falling under heading =
(570204)=20
@8.9%. It is clarified that the benefit of the rate as existing at the =
relevant=20
point for 570501 is to be allowed to all exports of tufted cotton =
bathmats. In=20
all such cases wherever the assessments are not provisional, the =
exporters shall=20
be allowed to file supplementary drawback claims and the claims shall be =
processed accordingly.
10. =
In=20
2010-11, the description =93ENA=94 (Extra Neutral Alcohol) was =
incorporated in the=20
heading 2207. There has been some confusion that claims made prior to =
the=20
notification of last year were not covered under the new description and =
there=20
was a request for clarification. It is clarified that =93ENA=94 is =
otherwise covered=20
under the heading 2207 as ethyl alcohol and would cover all periods, =
including=20
those prior to 20th, September 2010.
11. =
Under=20
the heading 8307, the description has been amended to provide drawback =
on=20
flexible tubing whether or not coated with PVC. It is clarified that the =
rate=20
under the heading 8307 is applicable to the flexible tubing whether or not coated with =
PVC, and=20
the rate would be applicable even for past periods, prior to the=20
amendment.
12.=20
=
It was=20
clarified vide circular no. 25/2007 dated 16th July 2007, =
that=20
drawback is to be allowed for articles under tariff items 7323 of the =
drawback=20
schedule without making any deduction towards the lids, handles etc. =
provided=20
they retain the character of iron or steel articles classifiable under =
the said=20
tariff item. It is clarified that the same logic shall also be =
applicable for=20
the goods falling under tariff items 8211 and 8215 of the drawback=20
schedule.
13. =
There has=20
been a dispute regarding classification of FIBC (Flexible intermediate =
bulk=20
containers). It has been represented that the field formations are =
classifying=20
the FIBCs under Chapter 39 whereas the FIBC finds a specific mention =
under=20
tariff item 630502 of the drawback schedule and the exporters are being =
denied=20
drawback mentioned against the heading 630502 in the Drawback Schedule. =
It is=20
hereby clarified that FIBCs which are made of manmade textile material =
would be=20
classifiable under drawback tariff item 630502. FIBCs which are big or =
bulk bags=20
or super sacks made of polymers of ethylene and other plastic material =
would=20
however, be classifiable under chapter 39 of the drawback=20
schedule.
14. =20
Benefits under the DEPB scheme are available only upto September =
30,=20
2011. Thus, all exports under DEPB scheme upto and including September =
30, 2011,=20
where the =93Let Export Order=94(LEO) has been issued by the Customs =
officer shall=20
be eligible for the issue of DEPB Scrips. Since,=20
export consignments with =91Let Export Order=92 after this date would no longer be =
eligible for=20
benefits under the DEPB scheme, it is likely that there may be a rush of =
DEPB=20
export consignments before this date causing extra load on the EDI =
system. All=20
Custom officers posted at ports under your jurisdiction may be directed =
to take=20
due care and ensure that DEPB export consignments are accorded priority =
and=20
processed/cleared expeditiously. Further, officers handling export=20
assessment/examination with specific regard to DEPB Shipping Bills must =
ensure=20
that the bills in the EDI queue are cleared expeditiously. If for any =
valid=20
reason, the LEO cannot be given on the EDI on the said date, then the=20
Commissioner of Customs may allow an endorsement of the LEO on the DEPB =
shipping=20
bills manually. However, this may only be allowed as an exception. =
Suitable=20
Public Notices/Standing Orders may be issued in this=20
regard.
15. =
The=20
Notification and the new Drawback Schedule may be perused carefully to =
note the=20
changes made therein. Though all care has been taken, the possibility of =
inadvertent errors/omissions cannot be ruled out. It is requested that =
any=20
error/omission noticed during the implementation of the rates be brought =
to the=20
notice of the Board immediately for suitable corrective =
action.=20
16.=20
=
The=20
Public Notice and Standing Order for guidance of the trade and staff may =
be=20
issued. Difficulties faced, if any in implementation of the changes may =
be=20
brought to the notice of the Board at once.
Kindly acknowledge =
receipt of this=20
Circular.
(Najib=20
Shah)
Joint=20
Secretary (Drawback)