Duty Drawback

Introduction

Duty drawback refers to the refund of customs duties and internal taxes paid while importing goods, which in turn are used to manufacture final products exported from India. For instance, refund of custom duties and taxes paid on machinery imported that is used to manufacture textile products.

Documents Required for AD Code Registration

All Industry Rate (AIR): Industry Rate (AIR) is essentially an average rate based on the average quantity and value of inputs and duties (both Excise & Customs) borne by them and Service Tax suffered by a particular export product.

Brand Rate.

Goods Eligible for 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.

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.