DRAWBACK RULES: -

DEFINITION AND OBJECTIVES

The term drawback is applied to a certain amount of duties of Customs/central excise, some times the whole, some times only a part remitted or paid by Government on
the exportation of the commodities on which they were levied. To entitle goods to drawback, they must be exported to a foreign port, the object of the relief afforded by the
Drawback being to enable the goods to be disposed of in the foreign market as if they had never been taxed at all. For Customs purpose drawback means the refund of
duty of customs and duty of central Excise that are chargeable on imported and indigenous materials used in the manufacture of Exported goods.

GOODS ELIGIBLE FOR DRAWBACK

This scheme applies to

a.       export goods imported into India as such
b.      export goods imported into India after having been taken for use
c.       export goods manufactured / produced out of imported material
d.      export goods manufactured / produced out of indigenous material
e.       Export goods manufactured /produced out of imported or and indigenous materials.  

TYPES OF DRAWBACK
There are two types of drawback. One is called drawback under Section 74 of the Customs Act, 62 which allows drawback of duty paid on goods originally imported on
payment of duty and subsequently re-exported. The manner and time limit for filing the claims are governed by "Re- export of Imported Goods (Drawback of Customs
duties) Rules, 1995.
      1.      The other scheme is payment of drawback under Section 75 and Rules made thereunder at specified rated on export of goods manufactured in India. The manner
and time limit for filing the claims are prescribed under the Customs and Central Excise Duties Drawback Rules 1995 as amended from time to time.
      2.      The Central government notifies the Drawback rates for various products either on a general basis ( all industry rates) or for individual exporters( brand rates) as
the case may be. Drawback sanctioned under section 75 has a two tier system involving (i) fixation of rates by the Directorate of Drawback in the Central Board of Excise
and Customs and (ii) disbursement of drawback amount by the Customs Houses and/ Central Excise Commissionerate

DUTIES REBATED UNDER DRAWBACK SCHEME

Under the drawback scheme, the relief is given from the burden of duty incidence of Customs & Central Excise on basic inputs like raw materials. Components,
Intermediates and packing materials used at various stages of production / manufacture. No relief of drawback is extended to duties suffered on capital goods, fuels and
consumables used in relation to the manufacture of the export goods. It may also be noted that no relief of Sales Tax or Octroi or any other indirect tax is given by way of
drawback. The finished stage of excise duties on the export product is also not reimbursed under this scheme and there are separate provisions for rebate of such
finished stage duties under the Central Excises and Salt Act 1944 and the Rules framed thereunder.
 DRAWBACK UNDER SECTION 74 – IMPORTED GOODS RE-EXPORTED
SCOPE
In this category, two types of cases are covered viz.,
      1.      Imported goods exported as such i.e. without putting into use – 98% of duty is refunded and
      2.      Imported goods exported after use – the percentage of duty is refunded according to the period between the date of clearance for home consumption and the date
when the goods are placed under Customs control for exports. The percentage of duty drawback is notified under Notification. No 19 Cus, dated 6 th Feb, 1965 as
amended from time to tim

ELEMENTS NECESSARY FOR DRAWBACK UNDER SECTION 74

The elements necessary to claim drawback are;

1.      The goods on which drawback is claimed must have been previously imported;
2.      Import duty must have been paid on these goods when they were imported;
3.      The goods should be entered for export within two years from the date of payment of duty on their importation (whether provisional or final duty). The period can be
further extended to three years by the Commissioner of Customs on sufficient cause being shown.
4.      The goods are identified as the goods imported.
5.      The goods must be capable of being identified as imported goods.
6.      The goods must actually be re-exported to any place outside India.
7.      The market price of such goods must not be less than the amount of drawback claimed.
8.      The amount of drawback should not be less than Rs. 50/- as per Section 76-(1) (c) of the Customs Act.

PROCEDURE TO CLAIM DRAWBACK UNDER SECTION 74

Drawback claims under Section 74 of the Customs Act are now being processed manually. To claim drawback under Section 74, the exporter should file the shipping bill
under claim for drawback in the prescribed FORM and after assessment the goods are to be examined by the Customs officers for purposes of physical identification.
After shipment, the claim is filed in the department, for sanction of drawback. The pre-receipted drawback payment order has to be forwarded to the drawback department
upon which cheque is issued. If the information submitted by the exporter is insufficient to process the claim, a deficiency memo will be issued to the exporter seeking
further information or documents to process the claim. On compliance the claims will be processed in the usual manner.

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING DRAWBACK CLAIM UNDER SECTION 74

a.       Triplicate copy of the Shipping Bill bearing examination report recorded by the proper officer of the customs at the time of export.
b.      Copy of the Bill of entry or any other prescribed documents against which goods were cleared for importation.
c.       Import invoice.
d.      Evidence of payment of duty paid at the time of importation of goods.
e.       Permission from the Reserve Bank of India for re-exports of goods, wherever necessary.
f.        Export invoice and packing list.
g.       Copy of the Bill of Lading or Airway bill.
h.       Any other documents as may be specified in the deficiency Memo. 
FORM  FOR CLAIMING DRAWBACK ON RE-EXPORT OF DUTY PAID GOODS UNDER SECTION 74 OF CUSTOMS ACT, 1962

PROCEDURE FOR CLAIMING DRAWBACK ON EXPORT OF BAGGAGE UNDER SECTION 74

If duty paid goods are to be exported as baggage under claim for drawback, a Formal declaration has to be filed by the passenger which is deemed to be an entry for
export and thereupon an order permitting clearance of the goods for export is made by proper officer. The following procedure to be followed
Passengers intending to re-export goods imported and cleared as baggage item under a claim for drawback of duty should furnish with Supdt. of Customs Airport, a
declaration in the prescribed FORM, in duplicate. Passengers should also produce at the time of re-export of the goods duty payment documents relating to goods
cleared by them as baggage.
The goods are examined by the Supdt. of Customs and on being satisfied with the identity of the goods he will permit export and also recommend drawback of duty due
on the goods by making suitable endorsement on the examination and also make a suitable note on the duty payment documents produced by the passengers.
The duplicate copy of the declaration cum examination export along with duty payment document is returned to the passenger and the original copy transmitted to the
Asst./Deputy Commissioner drawback Section.
If the payment is to be made to a person other than the passenger, an authority letter as included in the declaration  FORM should be furnished by the passenger duly
authenticated before the Supdt. Customs: a pre – receipt on a revenue stamp should also be tendered by him.
The passenger or his authorised agent should file his/her drawback claim along with the copy of the declaration at (a) above and the duty payment document the office of
the Asst./ Deputy Commissioner of Customs, Drawback Section. The cheque granted as draw back of duty is sent to the specified address.

PROCEDURE FOR CLAIMING DRAWBACK ON GOODS EXPORTED BY POST UNDER SECTION 74:

Where goods are to be exported by post under a claim for drawback, the outer packing carrying the address of the consignee shall also carry in bold letters the words
"DRAWBACK FOR EXPORTS". The exporter shall deliver to the Postal Authorities along with the parcel or package a claim in the FORM in quadruplicate duly filled in.
The date of receipt of the aforesaid claim FORM by the proper officer of Customs from the postal Authorities shall be deemed to be date of filing of drawback claim by the
exporter for the purpose Section 75 A. . The proper officer of Customs shall give an intimation of the same to the exporter in the prescribed form.
In case the aforesaid claim for is not complete in all respects, the exporter shall be informed of the deficiencies therein within fifteen days of its receipt from postal
authorities by a deficiency memo in the prescribed FORM and such claim shall be deemed not to have been received.
When the exporter complies with the requirements specified in the deficiency memo, within thirty days of receipt of the deficiency memo, he shall be issued an
acknowledgement by the proper officer in the prescribed FORM. The date of acknowledgement shall be deemed to be date of filing the claim for the purpose
of Section 75A.

FORM  FOR CLAIM OF DRAWBACK UNDER SECTION 74 OF THE CUSTOMS ACT 1962 ON GOODS EXPORTED BY POST  ( Rule 3 of Re-export of Imported goods
(Drawback of Customs Duties) Rules, 1995
TIME – LIMIT UNDER SECTION 74
In order to claim drawback under Section 74 the goods should be entered for export within two years from the date of payment of duty on the importation thereof.
Provided that in any particular case the period of two years may on sufficient cause shown be extended by the by the Central Board of Customs and Central Excise by
such period as it may deem fit.
The time limit have to be computed from the date of payment of duty up to the date of entry of goods for export under Sec 50 of the Customs Act for export by air or sea,
under Section 77 for baggage items and Under Section 83 of the Customs Act for export by post
The claims should be filed in the manner prescribed under Rule 5 of Re-export of Imported Goods(Drawback of Customs Duties) Rules,1995, read with Public Notices
issued by the Custom Houses. The time limit for filing the claim is three months from the date of let export order. If the exporter was prevented by sufficient cause from
filing the claims within three months, the Asst. Commissioner of Customs can relax the time limit by three months. .
 NOTIFICATION ISSUED UNDER SECTION 74 OF THE CUSTOMS ACT
Notification No.19/65-Customs, dated 1965, Notification No.1117-Customs, dated 10-6-1881.
NotificationNo. 19/65-Customs, dated 1965
Notification No. 1117-Customs, dated 10-6-1881 
RE-EXPORT OF IMPORTED GOODS (DRAWBACK OF CUSTOMS DUTIES) RULES 1995.   
DRAWBACK UNDER SECTION 75 OF THE CUSTOMS ACT 1962
SCOPE
This is an export promotion incentive payable for goods manufacture in India with duty paid inputs whether indigenous or imported.

ALL INDUSTRY RATES

The rates of drawback are announced by the Govt. of India, Ministry of Finance for various categories of goods and are indicated in the schedule appended to the
Customs and Central Excise Duties Drawback Rules, 1995. The schedule of rates is normally announced on the 1st of June every year or 3 months after the budget. The
rates mentioned in the schedule are called all-industry rates of drawback. They are applicable to manufacturer exporters as well as merchant exporters. The all industry
rates of drawback are fixed under Rule 3 and can be revised by the Govt. under Rule 4. The all industry rates of drawback are worked out on the basis of broad averages
of consumption of inputs, duties suffered, quantity of wastage, f.o.b. prices of the export products etc.
Except where specifically authorised the all – industry rates of drawback are not applicable where an export product has been-
      a.       exported in discharge of export obligation against an Advance Licence issued under Duty Exemption Scheme vide the relevant Import and Export Policy.
      b.      manufactured partly or wholly in bond under Section 65 of the Customs Act, 1962,
      c.       exported by a unit licensed under any 100% Export Oriented Schemes (100%EOY/EHTP/STP/Agriculture/aquaculture etc)
      d.      exported by a Unit situated in a Free trade zone/ Export processing Zones
      e.       manufactured and exported in terms of Rule 12(1) (a) of the Central of the Central Excise Rules 1944; and
      f.        manufactured and exported in terms of Rule 13(1) (a) of the Central Excises Rules, 1944; and
      g.       manufactured and exported availing the facility under the Import and Export Pass Book schemes of he relevant Exim policy
The restrictions as mentioned in the above clauses are not applicable where payment of drawback at a particular rate/amount has been specifically authorised thereunder
any sub serial number in the All industry table subject to such terms and conditions as may be specified thereunder.
 BRAND RATES

If any category of goods all industry rates is not available, the exporter can approach the Directorate of Drawback for fixation brand rates. Brand rates are fixed under
Rule 6 for specific manufacturer exporter. Even if all industry rates are available for the produce and if the manufacturer desires to have higher rates of drawback because
of higher duty paid inputs, such manufacturer can apply for special brand rates under Rule 7.
For fixation of Brand rates, the manufacturer has to submit the application to Directorate of Drawback within 30 days of their first shipment. The application and data in
duplicate should be submitted to the Ministry with copies to the concerned Central Excise Commissionerate or the Custom House. The brand rates are fixed by the
Commissioner Drawback on the basis of report sent by the jurisdictional Commissionerate after verification of data submitted by the manufacturer exporter.
The rates fixed under all industry categories in most cases are percentage of fob value of goods. . If the pricing of goods is on CIF basis, the insurance and freight bills are
required be produced to arrive at the fob value. The rates are operative in terms of Section 16 read with Section 51 of the Customs Act. That is the crucial date for
application of the rate of drawback in force is the date of ‘let export order’ given by the appraiser. The all industry rates of drawback are payable subject to restriction and
prohibitions mentioned in the General Notes to the Drawback Schedule.

PROCEDURE FOR CLAIMING DRAWBACK UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE MANUAL SYSTEM:

For the purpose of claiming drawback, the exporter is required to file a drawback-shipping bill in the prescribed Format as required under Rule 13 along with the
necessary declaration. The goods after assessment are examined by the officers posted in the Examination Shed as required for each individual case. The examination
report will indicate the nature of goods in terms of drawback schedule for classification and application of correct rate. Samples may have to be drawn for testing by lab in
respect of chemicals, synthetic fabrics’ etc as specified from time to time to confirm the declarations in the export documents. The triplicate Copy if the drawback shipping
bill which contain the examination report is the claim copy

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING THE CLAIM.

      1.      Triplicate of the Shipping Bill
      2.      Copy of the Bank Certified Invoices.
      3.      Copy of the Bill Lading / Airway Bill
      4.      Sixtuplicate Copy of AR-4 wherever applicable
      5.      Freight and Insurance certificate wherever the contract is CIF / C&F
      6.      Copy of the Test report where the goods are required to be tested
      7.      Copy of the Brand rate letters where the drawback claim is against the Brand rate
      8.      Mate receipt
      9.      Copy of the Contract or Letter of credit as the case may be
      10.  Modvat Declaration wherever applicable
      11.  Any declaration required as per foot note of the Drawback schedule
      12.  Work sheet showing the drawback amount claimed
      13.  DEEC Book and licence copy where applicable.
      14.  Transshipment certificate where applicable
      15.  Proof of foreign agency commission paid if any
      16.  Blank acknowledgement card in duplicate
      17.  Pre – receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue stamp
The claims are settled and passed by the appraiser if the amount sanctioned is below Rs 1,00,000/- and by the Assistant Commissioner, if the amount of drawback
exceeds Rs1.00.000/-. After pre-audit, the cheques are issued to the designated banks for credit to the exporters account or handed over to the authorized representative
of the exporter. For further details refer to the Public Notices issued by the concerned Custom Houses/ Central Excise Commissionerate.

FORM FOR CLAIM OF DRAWBACK UNDER SECTION 75 OF THE CUSTOMS ACT 1962 READ WITH RULE 13 OF CUSTOMS AND CENTRAL
EXCISE RULES 1995

Supplementary Claim 

PROCESSING OF DRAWBACK CLAIMS UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE EDI SYSTEM
Computerized processing of shipping bills is in vogue at over 19 ports in India. The shipping bills are processed under the Indian Customs EDI systems (ICES). Under the
system, there would be no processing of paper documents except statutory declarations and endorsements until ‘let export’ order stage. Till such time exporters / CHAs
are given access to file documents through the Service centre set up in the Custom Houses / Air Cargo complexes. Processing of drawback claims under the system will
be applicable for all exports except in respect of the claims under Section 74 of the Customs Act and those relating to EPZ/100% EOU. For the excluded categories the
export Shipping Bills will be filed manually and processed by AC Drawback, as hitherto. Under the EDI system there  is no need for filing separate drawback claims.
The shipping bill itself treated as drawback claim.
In the EDI system the exporters are required to open their accounts with the Bank nominated by the Custom Houses/ ACC. This has to be done to enable direct credit of
drawback amount to their accounts, obviating the need for issue of cheques.
For export of goods under claim for drawback, the exporters will file S.D.F declaration in Annexure B in lieu of GR –1  FORM. The declaration in Annexure C would also be
filed when the export goods are presented at the Export shed for examination and Let export. In addition they should file a declaration if any in the appendices applicable
to the goods mentioned in the Public Notices issued by the Customs Houses / ACC for processing Shipping Bills under the EDI system.
The rates of drawback under S.S Nos. are dependent upon conditions mentioned against them in the Drawback Schedule. To enable the EDI system to process the
claims correctly exporters are advised to give the correct Sl.No. of relevant appendix applicable to their case. If the relevant declarations are not filed along with the
Shipping Bill the system will not process the drawback claims. The exporters are therefore advised to file the declaration along with the Shipping Bills.
After actual export of the goods, the drawback claims will be processed through the system on first come first served basis. The status of Shipping Bills and sanction of
drawback claim can be ascertained from the query counter set up at the Service centre. If any query has been raised or deficiency noticed, the same will be shown on the
terminal provided there. The exporter or his authorised representative may obtain a printout of the query/deficiency form the Service Centre if he so desires. The claim will
come in Que. of the system as soon the reply is entered.
Shipping Bills in respect of goods under claim for drawback against brand rates would also be processed in the same manner, except that drawback would be sanctioned
only after the original brand letter is produced to AC Export and is entered in the system. The exporter should specify the S.S No 98.01 for such provisional claim
All the claims sanctioned on a particular day will be enumerated in a scroll and transferred to the Nominated Bank through the system. The Bank will credit the drawback
amount in their respective accounts of the exporters on the next day. Bank will send a fortnightly statement to the exporters of such credits made in their accounts.
The steamer agents / Airlines will transfer the EGM electronically to the system so that the physical Export of goods is confirmed. The system will process the claims only
on receipt of the EGM.
DECLARATION UNDER THE FOREIGN EXCHANGE REGULATION ACT 1973 –  FORM SDF
DECLARATION FOR EXPORT OF GOODS UNDER CLAIM FOR DRAWBACK
DATA TO BE ENTERED BY EXAMINING OFFICERS WHEN EXPORT GOODS ARE BROUGHT FOR EXAMINATION. 
DRAWBACK / DEEC DECLARATION      
DECLARATION TO BE FILED BY THE EXPORTERS CLAIMING ALL INDUSTRY DRAWBACK RATE 
PROCEDURE FOR CLAIMING DRAWBACK ON EXPORT BY POST- SECTION 75 OF THE CUSTOMS ACT
For claiming drawback on goods exported by post, exporter is required to file his claim at the time of booking parcel with the postal authorities in the form prescribed in
the Rules. The date of receipt of this form  from the postal authorities by the Customs Authorities shall be treated as date of filing claim by the exporter for the purpose
of Section 75 A of the Customs Act. Thus drawback is paid to the exporter within three months from the date of receipt of claim from the postal authorities. On receipt of
the claim form, intimation is to be given to he exporter. Where claim form is incomplete a deficiency memo is issued within fifteen days of its receipt  form the postal
authorities. The exporter can resubmit this form after compliance with deficiencies within a period of 30 days. If such a claim is found to be in order, the same is
acknowledged and the period of three months for payment of drawback in terms of Section 75 in such cases shall commence form the date of such acknowledgement.
FORM FOR CLAIM OF DRAWBACK FOR GOODS EXPORTED BY POST PARCEL (RULE 11)
TIME LIMIT UNDER SECTION 75
The claims should be filed in the manner prescribed under Rule 13, read with Public Notices issued by the Custom Houses. The time limit for filing the claim is three
months from the date of let export order. If the exporter was prevented by sufficient cause FORM filing the claims within three months, the Asst. Commissioner of
Customs can relax the time limit by three months and the Commissioner of Customs can relax the time limit for a period of nine months.
INTEREST PAYMENT
A new Section 75 A has been incorporated in the Customs Act to provide for payment of interest on delayed payment of drawback. Interest at the rate of 15% P.A. is
payable to the exporters if the claim is not settled within three months from the date of issue of acknowledgement by the department. Acknowledgement under Rule 13(I)
is issued only if the claim is complete in all respect. If the claim is deficient, the department within 15 days from the date of filing the claim will issue a deficiency memo.
The exporter is required to comply with the deficiency memo within 30 days from the date of receipt of deficiency memo. The time limit in these cases will be completed
after receipt of compliance and issue of acknowledgement card.
        Similarly, where an exporter has been paid erroneous or excess drawback and fails to repay the same within three months from the date of demand, he is liable to
pay interest at the rate of 20% P.A.

SUPPLEMENTARY CLAIM
If the exporter finds that the amount of drawback paid is less than what he is entitled to, there is a provision for claiming supplementary drawback claims in the
prescribed Format Under Rule 15 of the Drawback Rules, 1995. The time limit filing supplementary claim is three months from the date of original settlement.