The finance ministry has revised the declarations to be furnished by exporters who manufacture export goods by using inputs procured from domestic sources without payment of excise duty or under claim of rebate of excise duty paid on them. The amendment aims to remove an unnecessary difficulty that exporters face.
Till September 17, 2010, the notifications governing duty drawback at All Industry Rates (AIR) provided that the rates of drawback in the drawback schedule would not be applicable to products manufactured or exported by availing the rebate of the central excise duty paid on materials used in the manufacture of export goods in terms of Rule 18 of the Central Excise Rules, 2002, or if such raw materials were procured without payment of central excise duty under Rule 19(2) of the Central Excise Rules, 2002. The exporters were required to give a declaration in form ARE-2 (the form they are required to fill out before removal of export goods manufactured from inputs they had procured without payment of excise duty or under claim of rebate of excise duty paid on them) that they shall not claim any drawback.
Exporters said they were being denied the Customs component of the AIR drawback although the manufacturers had taken only the rebate of central excise duties in respect of their inputs/procured the inputs without payment of central excise duties, and that the Customs duties which remained unrebated should be provided through the AIR drawback route.
Since September 17, the notifications granting duty drawback at AIR allow Customs component of AIR drawback even if the rebate of central excise duty paid on raw material used in the manufacture of export goods has been taken in terms of Rule 18 of the Central Excise Rules, 2002, or if such raw materials were procured without payment of Central Excise duty under Rule 19(2) of the Central Excise Rules, 2002.
However, this benefit did not accrue to exporters as the declarations the exporters had to give in the ARE-2 form remained un-amended. They had to either forego the customs portion of the drawback or pay the duty on the inputs used in the manufacture of the export product. Now, after almost six years the government has removed that difficulty by amending the declaration prescribed in the ARE-2 form.
The Central Board of Excise and Customs (CBEC) has issued a detailed circular explaining the position. It says that when diesel is procured without duty payment as an input or where input stage rebate is claimed on diesel, no drawback will be available because a part of the excise duty is already factored into the Customs component of the drawback.
The CBEC has also clarified that when export oriented units supply their manufactured goods without duty payment to advance authorisation holders, the duty exempted on their inputs need not be recovered. It is again a useful clarification that has come about after a lot of delay.
In the meantime, the Director General of Foreign Trade has notified 2901 more items for benefits under Merchandise Exports from India Scheme and raised the duty credit entitlement rates for 575 items under the scheme.
Overall, last week was a good one for exporters.
E-mail: tncrajagopalan@gmail.com
