Duty Drawback where importer and exporter are different

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Aawhaan Mahapatra (Querist)
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07 January 2023 Suppose there is a company X, in japan who sold his product to Y in india and y paid the import duty for the product. Further Y sold the product to Z in india and made some changes in it. Can Z while exporting the product to Canada claim duty drawback whereas the import duty for the product was paid by Company Y?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 In the scenario described:

**Import Duty Paid by Company Y**: Company Y in India imported the product from Company X in Japan and paid the import duty for it.

**Product Sold to Company Z**: Company Y sold the product to Company Z in India, which made some changes to the product.

**Export by Company Z to Canada**: Company Z intends to export the modified product to Canada and wants to claim duty drawback.

Here’s how duty drawback typically works in such cases:

- **Duty Drawback Eligibility**: Duty drawback is a refund of customs duties paid on imported goods or materials used in the manufacture of exported goods. It is generally applicable when imported goods are re-exported or used in the manufacture of goods that are subsequently exported.

- **Conditions for Claiming Duty Drawback**:
- **Re-Export**: If Company Z is exporting the modified product to Canada, it may be eligible to claim duty drawback on the customs duties paid by Company Y when the product was imported into India. This is because the product is effectively being re-exported out of India.

- **Documentation and Requirements**: Company Z would need to provide documentation and evidence to support the claim, including proof of payment of import duties by Company Y, details of the export transaction to Canada, and compliance with all regulatory requirements specified under the Duty Drawback Scheme.

- **Modified Product**: It’s important to note that if Company Z has significantly modified the product after purchasing it from Company Y (such as substantial processing or value addition), the eligibility for duty drawback may depend on whether the modified product is still considered the same for duty drawback purposes.

- **Procedure**:
- Company Z would typically need to file a claim for duty drawback with the Indian customs authorities.
- The claim should include relevant documentation such as invoices, shipping documents, proof of payment of import duties by Company Y, and any other supporting documents required by the customs department.

- **Professional Advice**: It’s advisable for Company Z to seek professional advice from a customs consultant or chartered accountant specializing in customs and international trade to ensure compliance with all regulatory requirements and optimize the duty drawback claim process.

In summary, yes, Company Z may be able to claim duty drawback on the imported product if it meets the conditions under the Duty Drawback Scheme, particularly since the product is being re-exported to Canada after modifications in India. Proper documentation and adherence to customs procedures are essential for a successful duty drawback claim.