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Export of excisable goods

(Guest)

Please help...Cant seem to connect them all.

Firstly, there are two options for export of excisable good.

1 under rebate (Rule 18 of Centreal excise Rules)

2. without payment of duty (Rule 19)

Are any of the two option above available on specified or notified goods? Or at the free will of the exporter.

Then, if an exporteris eligible for rebate or export without duty(which are the only 2 options available) how does the question of refund of input come into being?(cenvat credit rule 5)

Finally, please link duty drawback under custome to this..

I understand all of these provisions seperately, but am unable to link them all.

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10 Replies

CA Saiyum khan (Practicing CA) (690 Points)
Replied 17 March 2011

Duty Drawback under custom is an additional export incentive and it has nothing to do with any of the earlier part of your question.

Under Rule 18, one can claim rebate if excise duty had been levied on final product while it was being removed from the factory gate after providing all the proof of export.

Under Rule 19 Finished Goods can be removed without payment of duty.

Both the above options are available at the free will of the exporter.

Cenvat Credit of input/input sevices use in the process of manufacturing of exported finished goods can be claimed either against the excise duty payable on the finised goods removed for home consumption or can be claimed as refund.

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 18 March 2011

export under rule 19 makes u eligible to take input credit as credit balance or refund under rule 5 of cenvat credit rules .

duty drawback is entitled only if u have not claimed any rebate under rule or cenvat credit on inputs.

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(Guest)

Thanks a lot

Got it...

if you claim rebate you have obviously utilised cenvat credit you are not eligible for refund...
but if its exported under duty free (rule 19) then we apply for refund for the inputs used...

Thanks for clarifying that there are no restriction on use for either rule 18 or 19... That is they are used on all goods.

Drawback has no connection,

asked to confirm, to be safe, if there was a connection and i'm missing the point.

Thanks for your time:-)

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 19 March 2011

duty drawback or any export incentive is barred if input credit is utilized at any stage for excise / customs.

duty drawback is the process of notional replenishment of duties and indirect taxes suffered at manufacturing point without availing input credit.

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CA Saiyum khan (Practicing CA) (690 Points)
Replied 20 March 2011

@ U S Sharma

Duty Drawback or export incentive is NOT barred EVEN if input credit is utilised at any stage of excise / custom.

Manufacturer is eligible to claim the duty drawback no matter whether he exports the goods under rule 18 or 19 if the said product is qualified for the duty drawback @ rate prescribed by the central government. Moreover he would also be eligible for claiming the cenvat credit on the input or input services.

Actually Drawback is the notional replenishment of duties and indirect taxes sufferred in manufacturing process of FG (i.e. wastages which is cleared as scrap at the payment of duty for home consumption) and it does not bar the manufacturer to claim the cenvat credit on input.

The link of the relevant notificaiton has been given below, it would clear your doubt. If u r still having different view kindly share.

https://www.cbec.gov.in/customs/cs-circulars/cs-circulars03/108-2003-cus.htm

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 20 March 2011

(8) 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-

(a) manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962);

(b) manufactured or exported in discharge of export obligation against an Advance Licence or Advance Authorisation issued under the Duty Exemption Scheme of the relevant Export and Import Policy or the Foreign Trade Policy:

Provided that where exports are made against Advance Licences issued on or after the 1st April, 1997, in discharge of export obligations in terms of notification No. 31/97 - Customs, dated the 1st April, 1997, or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 48/2000-Customs, dated the 25th April, 2000, or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 46/2002-Customs, dated the 22^nd April, 2002, or against Duty Free Replenishment Certificate Licence issued in terms of notification No. 90/2004-Customs, dated the 10^th September, 2004, drawback at the rate equivalent to Central Excise allocation of rate of drawback specified in the said Schedule shall be admissible subject to the conditions specified therein;

(c) manufactured or exported by a unit licensed as hundred per cent. Export Oriented Unit in terms of the provisions of the relevant Export and Import Policy and the Foreign Trade Policy;

(d) manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zones;

(e) manufactured or exported by availing the rebate of duty paid on materials used in the manufacture or processing of such commodity or product in terms of rule 18 of the Central Excise Rules, 2002;

(f) manufactured or exported in terms of sub-rule (2) of rule 19 of the Central Excise Rules, 2002;

(g) manufactured or exported availing of the facility under the Duty Entitlement Pass Book Scheme as contained in paragraph 7.14, read with paragraph 7.17 of the Export and Import Policy 1997-2002 or manufactured or exported availing of the facility under the Duty Entitlement Pass Book Scheme as contained in paragraph 4.3 of the Export and Import Policy 2002-2007, notified under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), read with paragraph 4.37 of the Hand Book of Procedures (Volume 1) issued in pursuance of the provisions of paragraph 2.4 of the said policy or manufactured or exported availing of the facility under the Duty Entitlement Pass Book Scheme as contained in paragraph 4.3 of the Foreign Trade Policy 2004-2009, notified under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), read with paragraph 4.37 of the Hand Book of Procedures (Volume 1) issued in pursuance of the provisions of paragraph 2.4 of the said policy.

https://www.cbec.gov.in/customs/cs-act/notifications/notfns-2k8/csnt103-2k8.htm

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CA Saiyum khan (Practicing CA) (690 Points)
Replied 21 March 2011

It means duty drawback can not be claimed if the goods have been exported under rule 18 i.e. removal of goods after payment of duty and claiming rebate after providing the proof of export.

But if the same product has been removed for export without payment of duty under rule 19 then exporter would be eligible for duty drawback as well as cenvat credit on input.

Pls. share if your views differ.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 March 2011

Circular No. 781/14/2004-CX

23^rd March, 2004.

F.No. 267 /11/2002-CX-8

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Subject: Reversal of CENVAT Credit on clearance of goods under rule 19(2) of Central Excise Rules, 2002 under notification 43/2001-CE (NT) dated 26.6.2001- regarding.

I am directed to invite your attention to notification No. 43/2001-CE (NT) dated 26.6.2001 as amended issued under rule 19(3) read with rule 19(2) of Central Excise Rules, 2002 wherein procurement of excisable goods without payment of duty for the purpose of use in manufacture or processing of export goods and their exportation out of India has been provided subject to the conditions, safeguards and procedures mentioned therein. Doubts have arisen over application of sub-rule (1), (2) and (3) of rule 6 of CENVAT Credit Rules, 2002 relating to the clearances made by the supplier under notification No. 43/2001-CE (NT).

2. The mater has been examined by Board. As per sub-rule (1) of rule 6 of CENVAT Credit Rules, 2002, the credit is not available on inputs which are used in the manufacture of exempted goods. Sub-rule (2) and sub-rule (3) of the said rule gives an option to the manufacturer to maintain the separate inventory of inputs for use in exempted goods or pay an amount of 8% of the price of the exempted goods (barring the exceptions mentioned therein) in case he chooses to avail the credit on common inputs i.e. inputs used for both exempted and dutiable goods. Thus, the provisions of sub-rule (1), (2) and (3) are applicable to those manufacturers who manufacture both dutiable and exempted goods. Since notification No. 43/2001-CE (NT) has been issued under rule 19 of Central Excise Rules, 2002 which only prescribes conditions, safeguards and procedures, the goods procured under this notification does not attract the provisions of sub-rule (1), (2) and (3) of rule 6 of CENVAT Credit Rules, 2002.

3. However, a doubt was raised whether the exporter can claim Drawback in case the inputs are procured without payment of duty under the said notification and the resultant goods are exported under claim of drawback. It was also stated that since the exporter declares his intention while exporting the goods to avail duty drawback in Form ARE-2 {clause (d)}, the verification that whether the exporter has procured the inputs without payment of duty or not can take place only at the time of sanction of drawback. In this connection, your attention is invited to clause (ii) of the second proviso to rule 3(1) of the Customs and Central Excise Duties Drawback Rules, 1995 which states that no drawback shall be allowed if the export goods are produced or manufactured using imported materials or excisable materials in respect of which the duties have not been paid. Accordingly, the exporter at the time of claiming of drawback is required to give a declaration that the facility under sub-rule (2) of rule 19 of Central Excise Rules, 2002 has not been or shall not be availed of i.e. no inputs procured without payment of duty have been used in the export goods. In other words, the exporter cannot claim Drawback in case any of the inputs has been obtained without payment of duty except to the extent and in the manner explicitly permitted under Customs and Central Excise Duties Drawback Rules, 1995 .

4. Trade and filed formations may be informed suitably.

5. Receipt of the circular may be acknowledged.

6. Hindi version will follow.

Vijay Mohan Jain

Under Secretary to the Govt. of India

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 March 2011

3. Drawback. -

(1) Subject to the provisions of -

(a) the Customs Act, 1962 (52 of 1962) and the rules made thereunder,

(b) the Central Excises and Salt Act, 1944 (1 of 1944) and the rules made thereunder,

(bb) the Finance Act, 1994( 32 of 1994), and the rules made thereunder; and

(c) these rules,a drawback may be allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government:

Provided that where any goods are produced or manufactured from imported materials or excisable materials or by using any taxable services as input services, on some of which only the duty or tax chargeable thereon has been paid and not on the rest, or only a part of the duty or tax chargeable has been paid; or the duty or tax paid has been rebated or refunded in whole or in part or given as credit, under any of the provisions of the Customs Act, 1962 (52 of 1962) and the rules made thereunder, or of the Central Excise Act, 1944 ( 1 of 1944) and the rules made thereunder, or of the Finance Act, 1994 ( 32 of 1994) and the rules made thereunder, the drawback admissible on the said goods shall be reduced taking into account the lesser duty or tax paid or the rebate, refund or credit obtained:

Provided further that no drawback shall be allowed -

(i) if the said goods, except tea chests used as packing material for export of blended tea, have been taken into use after manufacture;

(ii) if the said goods are produced or manufactured, using imported materials or excisable materials or taxable services in respect of which duties or taxes have not been paid; or;

(iii) on jute batching oil used in the manufacture of export goods, namely, jute (including Bimlipatam jute or mesta fibre), yarn, twist, twine, thread, cords and ropes;

(iv) if the said goods, being packing materials have been used in or in relation to the export of -

(1) jute yarn (including Bimlipatam jute or mesta fibre), twist, twine, thread and ropes in which jute yarn predominates in weight;

(2) jute fabrics (including Bimlipatam jute or mesta fibre), in which jute predominates in weight;

(3) jute manufactures not elsewhere specified (including Bimlipatam jute or mesta fibre) in which jute predominates in weight.

(v) on any of the goods falling within Chapter 72 or heading 1006 or 2523 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
[Inserted vide Notification No. 64/2008-Customs (N.T.), dated 29-05-2008]

https://www.cbec.gov.in/customs/cs-act/formatted-htmls/cs-rulee.htm

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 27 December 2016

Dear Sir,

I also having a issue i.e. we are manufacturer of Sugal Mills Machineries parts and want to be export a tractors then which procedure have to followed by us. In this regard we need your assit.

Thanking you,