10-Duty Drawback

The Duty Drawback Scheme (DBK) is a vital initiative that assists exporters in offsetting some of the
expenses incurred throughout the export process, especially in the supply or value chain. The dbk
scheme's main benefit is that it provides Customs and Central Excise refunds on any imported or excisable
materials used to create export-oriented items.

A refund of excise or import duty paid on exported products is a duty drawback. This reimbursement might
be in part or in full, depending on the amount paid by the merchant against the import charge, which
includes import taxes, excise taxes and just about any other refundable cost. Duty drawback is available for
recovery on import duties paid on materials used to make export-ready products.

Customs Act, 1962

The Duty Drawback provisions are described under Section 74 and Section 75 under the Customs Act,
1962. This Act laid down the various restrictions and conditions to claim drawback of duties under certain
situations.

 Section 74: As per section 74, if the re-exports of imported goods are identified quickly and within
two years from the date of payment of duty on the importation. Then an exporter can claim 98% of
the duty paid by him as a drawback under section 74.
 Section 75: As per section 75, if the export of goods manufactured or processed out of imported
material with value addition, a drawback of customs duties chargeable on any imported materials
of a class or description should be allowed. If sale proceeds are not received within the stipulated
period, a drawback is to be reversed or adjusted. Duty Drawback under section 75 can be claimed
either as a fixed percentage depending upon the value of goods exported.

The benefit of the Duty Drawback Scheme

 The Duty Drawback Scheme (DBK) is a crucial program to help exporters offset some of the costs
accrued during the export process, particularly in the supply or value chain.
 The key benefit of the scheme is that it gives rebates on Customs and Central Excise chargeable on
any imported or excisable materials used to manufacture goods meant for export.

Goods Eligible for Drawback

The following are the eligible goods for the duty drawback.

 To export goods imported into India

 To export goods imported into India after having been taken for use
 To export goods manufactured/produced out of imported material
 To export goods manufactured/produced out of indigenous material
 To export goods manufactured /produced out of imported or indigenous materials.

Eligibility Criteria
The below following are the minimum criteria to claim for processing drawback claims.

 Any individual must be the legal owner of the goods at the time the goods are exported.
  You must have paid customs duty on imported goods.
 Duty drawback is available on most goods on which customs duty was paid on importation and
which has been exported.

Documents Required
The below following are the documents required for processing drawback claims.

 Triplicate copy of the Shipping Bill

 Copy of the Bill of entry
 Import Invoice
 Proof of payment of duty paid on the importation of goods.
 Approval from the Reserve Bank of India for re-exports of goods
 Copy of the Bill of Lading or Airway bill.
 Copy of the Bank Certified Invoices.
 Sixtuplicate Copy of AR-4
 Export invoice and packing list.
 Freight and Insurance certificate
 Copy of the Test report of goods
 Modvat Declaration
 A worksheet showing the drawback amount claimed
 DEEC Book and license copy where applicable.
 Transshipment certificate, where applicable
 Blank acknowledgment card in duplicate
 Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue
stamp

Primary components of the Duty Drawback Scheme

The scheme, administered by the Department of Revenue, has two primary components:

 All Industry Rate (AIR)

 Brand Rate

One way to grant the duty drawback is to check the rates specified in the Schedule of All Industry Rate of
Drawback, usually announced on June 1 or three months after the budget.

If the product is not mentioned in the AIR schedule or the exporter claims it is inadequate, the exporter
can claim duty drawback by applying for Brand Rate fixation.

Duty Drawback Rates

The following are the drawback rates of which import duty with the fixed percentage shall be allowed in
respect of used goods after their importation and which have been out of customs control.

S. The period between the date of clearance and the date when Percent of drawback
No. the goods are placed under Customs control for export
 1. Not more than three months 95%

2. More than three months but not more than six months 85%

3. 6-9 months 75%

4. 9-12 months 70%

5. 12-15 months 65%

6. 15-18 months 60%

7. More than 18 months Nil

Procedure for Claiming Duty Drawback

An exporter has to file the shipping bill in an electronic data interchange (EDI) for the export.

 The electronic shipping bill itself will be treated as the claim for drawback, and there is no need to
file separate drawback claims.
 All ports with EDI can process these claims except for DBK claims relating to re-exporting imported
goods under Section 74 of the Customs Act, 1962.
 In the EDI system, exporters must open their accounts with a bank that is either nominated by a
customs house or has a core banking facility to transfer funds through NEFT/ RTGS.

This has to be done to enable direct credit of drawback amounts to their accounts, obviating the need for
the issue of cheques.

The exporters are required to indicate their account numbers in the declaration form, along with the
details of the bank through which the export proceeds are to be realized.