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| The exporters welcomed the move as they would not have to approach the Duty Drawback Department every time they wanted the brand rates to be notified. But, they were soon disillusioned. |
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| The Central Excise field formations do not have either the understanding of how the export promotion schemes work or the motivation for trade facilitation. |
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| A number of complaints surfaced and the CBEC had to concede in its latest circular (No. 89 dated 6.10.2003) that the field formations are confused. |
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| It said the central excise allocation of duty drawback should be permitted only if Cenvat credit or rebate or facility of removal without duty payment of input stage duties had not been availed. |
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| Moreover, brand rates could be fixed in respect of shipments made against advance licenses, Duty Free Replenishment Certificate Scheme (DFRC) and duty Entitlement Passbook Scheme (DEPB), subject to certain conditions. |
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| The latest circular emphasises that the duty drawback scheme is aimed at neutralising the input stage duties of Customs and Central Excise suffered in respect of various inputs used in the manufacture of the export products. |
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| It follows clarifications issued three weeks back (circular no. 83/2003 dated 18.9.2003) in regard to fixing of the brand rates for leather articles and passenger buses. |
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| It is unlikely that the recent CBEC circulars will make life any easier for exporters for the simple reason that the CBEC has been sufficiently confusing the matters since quite sometime and even the latest circulars do not take a holistic view at how the trade functions. |
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| Under the DFRC scheme, there ought to be no restriction on grant of excise allocation of drawback so long as the exporter has used inputs on which he has paid excise duty or additional duty of customs and he has not taken rebate or Cenvat credit of the same. |
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| But the CBEC restricts brand rate of duty only to those exporters who manufacture their export product by using the material imported against a DFRC. |
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| In the DEPB scheme, the CBEC restricts the brand rate fixing only to the additional duty of customs paid in cash on inputs imported under DEPB scheme used in export products and excise duty paid on indigenous inputs not specified in relevant SION and used in export product. |
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| The Duty Drawback Rules are so framed that any rebate or removal without payment of duties of excise on inputs used in the manufacture of export product will result in the denial of even the customs allocation of duty drawback. |
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| The exporters find it difficult to get rebate of duties paid on final products exported under advance license scheme because the relevant customs exemption notification is not explicit that any restriction comes into play only in respect of rebate of duty paid on the inputs. |
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| The CBEC is fully aware of the problems that exporters face due to its illogical restrictions. The exporters would be better off demanding implementation of Kelkar Committee recommendations that All-Industry Rates of duty drawback must be notified for all the export products which standard norms have been notified. |
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| Email: tncr@sify.com |
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