The finance ministry has made useful amendments to the Duty Drawback Rules, allowing the exporters more time to file their claims. The longer period will be available under the rules made under Section 74, as well as Section 75 of the Customs Act, 1962 (CA62).
Section 74 of the CA62 allows drawback of the duties paid on imported goods upon their re-export in the same form. While 98 per cent of the duties are given back to importers if they re-export the imported goods without putting them to use, reduced rate of drawback is available upon re-export of imported goods after putting them to use, depending on the period of use. The Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995, specifies the procedure to be followed for claiming the drawback.
These rules mandated filing the drawback claim within three months from the date of ‘let export’ order by the Customs. The latest amendment allows a further period of nine months for filing the claim, subject to payment of a nominal fee.
In exercise of the powers conferred by Section 75 of the CA62, Section 37 of the Central Excise Act (CEA44), 1944, and Section 93A read with Section 94 of the Finance Act (FA94), 1994, the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, have been notified, allowing drawback of the Customs and excise duty paid on the materials used in the manufacture of the export product and service tax paid on input services. The rules allow the fixation of brand rate (where the All Industry Rate (AIR) is not notified for a particular export product) and special brand rate (where the AIR notified does not cover even 80 per cent of the actual duty incidence).
The rules prescribed a time limit of 60 days from the date of export for filing the brand rate and special brand rate application with the jurisdictional Central Excise authorities. This time limit is now extended to three months and can be further extended by 15 months, subject to the payment of a nominal fee.
These rules allowed filing a supplementary claim within three months of export, which could be extended by nine months. Now, further extension of six months can be granted and all extensions will be subject to payment of nominal fee.
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These rules allow recovery of drawback paid to the exporter, in case he fails to realise the export proceeds. The rules allowed repayment of the amount recovered, if the exporter produced evidence of realisation of the export proceeds, within one year of such a recovery. This time limit is now changed to three months from the date of realisation of export proceeds, provided the realisation was within the period permitted by the Reserve Bank of India. But, the commissioner could grant further nine months’ time, subject to the payment of a nominal fee.
These amendments signify a change in the thinking of the finance ministry that a nominal fee should be collected for delay, but export benefits should not be denied. The Director General of Foreign Trade (DGFT) allows two years’ time after the expiry of the last date for filing the claim. Moreover, no discretion is given to DGFT officers to reject the claim, if the exporter pays the late fee. The finance ministry can consider more such liberal dispensations.
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