We have imported certain materials under Advance Authorisation without duty payment. We have already fulfilled the export obligation. Can we now export goods manufactured from such duty free materials under claim of duty drawback at All Industry Rates under the new notification no. 68/2011-Cus (NT) dated 22nd September 2011?
As per note no. 8(b) of the above mentioned notification, “the rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is manufactured or exported in discharge of export obligation against an Advance Licence or Advance Authorisation or Duty Free Import Authorisation.” Therefore, if you have already fulfilled the export obligation against an advance authorisation and then use the duty free goods procured against that authorisation for further exports, you can file drawback shipping bill and claim drawback at notified All Industry Rates for such exports. In fact, CBEC Circular no. 24/2001-Cus dated 20.04.2001 clarifies that “as a matter of rule, no evidence of actual duties suffered on imported or indigenous nature of inputs used, even if the All Industry Rate has customs portion, should be insisted upon by the field formations along with declaration filed by exporters under Rule 12(1)(a)(ii) of the Customs & Central Excise Duties Drawback Rules, 1995.”
The reason is that the All Industry Rate is based on the concept of averages, wherein the drawback rate itself, as well as its customs and excise portions, are based on weighted averages of consumption of imported/indigenous inputs of a representative cross-section of exporters and the average incidence for duties suffered on such inputs. These rates have no relation to the actual input consumption pattern and actual incidence suffered on inputs of a particular exporter or individual consignments exported by any particular exporter under the All Industry Rate drawback claim.
Under the new Duty Drawback scheme that replaces the Duty Entitlement Passbook scheme, is there any implication of Present Market Value?
As per Section 76(1)(b) of the Customs Act, 1962, “no drawback shall be allowed in respect of any goods the market-price of which is less than the amount of drawback due thereon.” So, the declaration of market value is a part of the standard declaration to be furnished for the drawback claim. The CBEC Circular 7/2003 dated 5.2.2003 says that “in cases of specific information that the FOB value declared is inflated or there is prima facie evidence to suggest such over-valuation, the field formations should resort to market verification to ascertain the correct market price of the goods.
In addition to the above, market verification can also be initiated on the basis of intelligence or where the intelligence is gathered in respect of consignments entered for export to sensitive destinations and/or where the goods are sub-standard and it appears that the acceptance of the declared value would result in accrual of substantial unintended drawback benefits.” However, market verifications should not be resorted to in a routine manner, says the CBEC.
Business Standard invites readers’ SME queries related to excise, VAT and exim policy. You can write to us at smechat@business-standard.com
