Notice from Customs for recovery of Drawback on Non-Realisation of Exports Proceeds

Lot many exporters have started receiving notice from Customs department for recovery of Drawback as below:

Notice Specimen

Sub: Non/Part Realization of Exports Proceeds for Drawback - reg.

1. While monitoring the realization of exports proceeds for shipping bills filed between 01.04.2014 to 31.03.2018 through ADVAlT / RBI BRC module of CBlC, it is observed that in respect of shipping bills filed by ______________________ (IEC _________) (hereinafter referred to as the exporter), export proceeds have not been realized or have been part realized within the time limit stipulated in terms of Foreign Exchange Management Act, 1999. As a consequence of such non/part realization of export proceeds, the exporter is not eligible for drawback amounting to Rs. _______ in respect of shipping bills filed during the said period.
2. Owing to non-realization /short realization of exports proceeds within the prescribed time Limit in terms of the Foreign Exchange Management Act, 1999 (as amended), the said drawback amount becomes ineligible and hence recoverable along with applicable interest in terms of Rule 16 A of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (as amended as Rule 18 of the Customs and Central Excise Duties Drawback Rules, 2017) read with section 75 of the Customs Act, 1962.
3. In this regard, your attention is invited to the PN no. 11/2017 dated 30.01.2017, PN No. 137/2018 dated 10.10.2018 issued by JNCH wherein it was mandated to use the online RBI BRC module for monitoring of realization of export proceeds in EDI for all the shipping bills where LEO was granted on or after 01.4.2014. Therefore, it is to inform mar no manual BRCs/Negative statements will be accepted. Accordingly, you are hereby advised to follow up with your authorized dealer bank for updating the export proceeds realization details in their bank's EDPMS system so that the data is transmitted to Customs for reconciliation.
4. A reply to this Consultative Notice, along with supporting documents, if any, may be submitted within 15 days of receipt of this Consultative Notice. You may also indicate whether you desired to be heard in person before issuance ot Show Cause Notice. failing which the recovery process in respect of ineligible drawback amount as envisaged under Rule 16A of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (as amended as Rule 1 8 of the Customs and Central Excise Duties Drawback Rules, 2017) read with Section 75 of the Customs Act, 1962 will be initiated along with penal action under section 117 of the Customs Act, 1962.
5. This Consultation Notice is issued taking into account the Pre-Notice Consultation Regulations. 2018. The Department reserves the right to proceed in terms of the relevant provisions including Rule 16 A of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (as amended as Rule 1 8 of the Customs and Central Excise Duties Drawback Rules, 2017) read with Section 75 of the Customs Act, 1962 or any other law for the time being in force.

Important points to be considered on receipt of such notice

1. Exporters get the benefits of Duty Drawback on value of exports sales made, this drawback is processed by the department after the goods are shipped irrespective of foreign exchange realized or not.
2. However, realization of foreign exchange is an important condition for entitlement of drawback.
3. Linking of FIRC/BRC with the shipping bill ensures the realization of foreign exchange.
4. e.f. 01-04-2014, monitoring of realization of export proceeds is required to be done online through the RBI-BRC Module and no manual BRCs/ Negative statements will be accepted.
5. However, shipping bills whose LEO was granted prior to 01.04.2014 would continue to be dealt with manual BRCs/ Negative statements from their Authorized Dealer/Chartered Accountant.
6. This Consultative Notice (pre-notice consultation) has to be responded within 15 days of receipt of notice, failing which officer will issue Show-Cause-cum-Demand Notice.
7. Once the Show-Cause-cum-Demand Notice is issued then the exporter needs to settle to matter with detailed submissions and the said case will close only after issuing a speaking order.
8. Incase, exporter fails to comply with both Consultative Notice and Show-Cause-cum-Demand Notice, then the customs department may invoke an Alert on IEC which will affect the smooth processing of Import and Export Consignments, also may start recovery proceedings.

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