REGIONAL TRAINING INSTITUTE,

KOLKATA
• Training Programme on
• REVENUE AUDIT EXAMINATION-2018

• [SECTION 74 TO 76 of Customs Act 1962]

• Santanu Banerjee
• AAO/CRAD/DGAC(KOL)
 Chapter X – Drawback

• Section 74 Drawback on re-export of duty paid goods

• Section 75 Drawback on imported materials used In the

manufacture of goods which are exported.

• Section 75A Interest on drawback

• Section 76 Prohibition and regulation of drawback In
certain cases.
 Drawback
• Duty drawback means refund of duties (of customs
/(Central Excise/Service Tax) now integrated tax
/Cess on taxable services etc,) suffered on the
inputs (like raw materials, components,
intermediates, packing materials and input services
etc) used in production of the export goods.
 Purpose of paying drawback is to make the price
(of the export goods) competitive in international
market.
 Section : 74
Drawback allowable on re-export of duty paid
imported goods

In case of goods which were earlier imported into

India on payment of customs duty and are later
sought to be exported within a specified period, duty
paid on import, with certain cuts, can be claimed as
Duty drawback at the time of export of such goods.

Such drawback is granted in terms of Section 74 of

the CA’62, r/w Re-export of Imported Goods
( Drawback of Customs Duty), 1995.
 Conditions for drawback u/s 74

Goods were imported & Import duty had been paid.

Entered for export & the ‘proper officer’ makes an order

permitting clearance for exportation under Section 51.

The goods are identified to the satisfaction of the AC/DC of

customs as the goods which were imported.

Time limit for export: 2 years. [which on sufficient cause can

be extended by the BOARD by such further period as it may
deem fit].
 Quantum of drawback
 1) where the goods are not put into use after
import, 98% of duty drawback is admissible
under Section 74 of the Customs Act, 1962.

 2) In cases the goods have been put into use

after import, duty drawback is granted on a
sliding scale basis depending upon the extent
of use of the goods. The rates are as follows:-
2) where such goods have been used after
importation
Period between date of clearance of home Percentage of import duty to be paid
consumption and date of placing under customs as drawback
control for export

Not more than 3 months 95%

More than 3 months but not more than 6 months 85%

More than 6 months but not more than 9 months 75%

More than 9 months but not more than 12 months 70%

More than 12 months but not more than 15 months 65%

More than 15 months but not more than 18 months 60%

More than 18 months Nil

 Drawback on imported materials used in the
manufacture of exported goods (Sec. 75)
Conditions to be satisfied:-
• Import of specified goods
• Import duty has been paid
• Goods entered for export manufactured in India
• Imported goods were used in manufacture of the
goods exported
• Export value shall not be less than the value of
imported materials
• Money repatriation
 Types of Drawback Rate
ALL INDUSTRY RATE – AIR is notified for export products every year by
the Govt after an assessment of average incidence of Customs, [Central
Excise duties and Service Tax (now GST)] suffered by the export
products.The rates include drawback on packing materials.

The AIR is fixed

As % of FOB price of export products or
at Specific rate or
as % of FOB price with value cap (to obviate the possibility of over- invoicing ).

Notification No. 89/2017-Cus(NT) dated 21-09-2017 (effective from 01-10-

2017) is relevant for ascertaining the current AIR (DBK Schedule 2017-18).

• The drawback table gives allocation of the drawback allowed now under only
one head (previously two heads, namely - Customs and Central Excise).
(previously duty drawback of customs portion was only paid if exporter has
availed Cenvat credit, as Cenvat credit is only of excise duty and CVD).
 Brand rate of duty
• If the exporter is not satisfied with the AIR then he
may claim Brand rate of drawback to the Principal
Commissioner of Customs or Commissioner of
Customs.
• The procedure of determining rate (or amount) of
duty drawback on the basis of actual amount of
duty suffered is known as Brand Rate of duty
drawback.
• in cases where the export product does not have
any AIR duty drawback rate or If the AIR is less than
80% of the actual payment of duty then only the
brand rate of duty drawback can be considered.
 Procedure for claiming Duty Drawback:
The Duty Drawback on export goods (whether AIR or
Brand Rate) is to be claimed at the time of export and
requisite particulars filled in the prescribed format of
Shipping Bill/Bill of Export under Drawback. In case of
exports under electronic Shipping Bill, the Shipping Bill
itself is treated as the claim for Drawback. In case of
manual export, triplicate copy of the Shipping Bill is
treated as claim for Drawback. The claim is to be
accompanied by certain documents as laid down in the
Drawback Rules 2017. If the requisite documents are not
furnished or there is any deficiency, the claim may be
returned for furnishing requisite information/documents.
 Documents to be furnished with application

• Triplicate copy of shipping bill

• Copy of export contract or letter of credit
• Invoice
• Copy of packing list
• Copy of ARE-1/2 form, wherever applicable
• Insurance certificate , wherever necessary
• Copy of brand rate letter( rule 6 or 7), if applicable
 Time limits for drawback claims
• Brand rate claim : within 3 months from the date of LEO. This time
limit may be extended by 3 months by the AC/DC and by another 6
months by the Principal Commissioner or Commissioner.
• Supplementary claim : within 3 months from the date of publication
of AIR of drawback or from the date of communication of the brand
rate of drawback. This period may be extended by 3 months by the
AC/DC and by another 6 months by the Commissioner.
• Drawback on re-export of imported goods : within 3 months from
the LEO. The period may be extended by 3 months by the AC/DC
and by another 6 months by the Principal Commissioner or
Commissioner.
• Extensions are subject to conditions and payment of requisite fee as
provided in the Drawback Rules, 1995.
 
 Inadmissibility of Drawback
• Duty drawback is not admissible if :
• The exported goods have been manufactured out of articles on which no duty is paid
at the time of import;
• The amount of drawback entitlement is less than Rs. 50;
• Product is manufactured partly or wholly in bond u/s 65 of the Customs Act 1962;
• Product is manufactured and/or exported by a unit licensed as 100% EOU;
• Product is manufactured and/or exported by any of the units in the FTZ/EPZ;
• Product is manufactured and/or exported in terms of Rule 18 & 19(2) of Central
Excise Rules,2002 as these rules provide for rebate of duty and export in bond on
goods on which duty has not been paid;
• Goods exported to Burma, Nepal , Bhutan, Tibet or Sinkiang subject to certain
conditions;
• Amount of drawback is less than 1% of FOB value except where the amount of
drawback is more than Rs. 500;
• The value addition is negative;
• Market value is less than the amount of drawback.
 Section 75A—Interest on Drawback

• (1) Where any drawback payable under section 74 or section 75

is not paid within a period of one month from the date of filing
a claim for payment of such drawback, there shall be paid to
that claimant in addition to the amount of drawback, interest at
such rate (not below 5% and not exceeding 30% p.a.) is payable
u/s 27A of CA’62 from the date after the expiry of one month till
the date of payment of such drawback. (currently 6%)

• (2) If it is erroneously paid to the claimant or otherwise

recoverable it should be refunded by the claimant within two
months of demand along with interest at such rates (not below
10% and not exceeding 36%) fixed U/S 28AA from the date of
payment of such drawback. (currently 15%)
Section 76-Prohibition and regulation of drawback

As per Section 76 in the following cases drawback

should not be allowed :-
• Where market price of the eligible goods is less
than the amount of drawback due thereon
• Where the amount of drawback due is less than
Rs. 50
• Where the Central Govt. is of the opinion that
such goods are likely to be smuggled back into
India
Thank you