All Industry Rates of Duty Drawback effective 21.09.2013 - Reg

Circular No. 37 / 2013-Customs

F. No. 609/115/2013-DBK

Government of India

Ministry of Finance, Department of Revenue

Central Board of Excise & Customs

New Delhi, dated 14th September, 2013

To

All Chief Commissioners of Customs/Customs (Prev.)

All Chief Commissioners of Central Excise/Customs & Central Excise

All Director Generals under CBEC

All Commissioners of Customs/Customs (Prev.)

All Commissioners of Central Excise/Customs & Central Excise

Subject:  All Industry Rates of Duty Drawback effective 21.09.2013 - Reg.

Ma’am/Sir,

The Ministry has notified the revised All Industry Rates (AIR) of Duty Drawback vide Notification No.  98/2013- Customs (N.T.), dated 14.09.2013. This notification comes into force on 21.09.2013.

2.         Some of the broad aspects, from amongst the changes notified with respect to AIR of duty drawback and entries in the Schedule, are the following –

(a)   As in previous years, the drawback rates have been determined on the basis of certain broad average parameters including, inter alia, prevailing prices of inputs, standard input output norms, share of imports in input consumption, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of duty on HSD/Furnace Oil, value of export goods, etc. Many items, but not all, that were already covered under the drawback schedule prior to incorporation of erstwhile DEPB items, shall see some reduction in AIR of duty drawback. Few items like gold and silver jewellery, silk yarn, silk fabric, silk garments and made-ups, wooden art-ware etc. shall see an increase in AIR.

(b)   The residuary AIR of 1% (composite) and 0.3% (customs) is being provided to hitherto Nil rated items under chapters 4, 15, 22, few items in chapter 24 and casein and its derivatives in chapter 35. AIR is being provided to articles of silver (silversmiths’ wares) subject to similar conditions as applicable to gold/silver jewellery and the Notes and Conditions (22)/(23) of the said Notification shall also have relevance.

(c)   The specific rate provided to Ethanol/ENA under tariff item no. 22071090 is being changed to ad valorem 1% (composite) and 0.3% (customs). Ad valorem rates are being provided to certain items of chapter 37 and imitation jewellery of chapter 71.

(d)   Though, the existing residuary rate of 1% ad valorem (composite) and 0.3% (customs) continues, the higher residuary rates are being reduced from 1.5% to 1.3% (customs) or from 2% to 1.7% (customs), as the case may be.

(e)   The process of realignment of rates, on items incorporated in the drawback schedule from the erstwhile DEPB scheme, is continued along with rationalizing these rates. In general, these items shall see a reduction in the AIR, including some to the applicable residuary rate. In the case of certain electronic goods of chapter 84, 85 or 93, the residuary rate is being provided at 1% (customs).

(f)    In the case of most tariff items with ad valorem all industry rates above 2%, the rates are being supplemented with drawback caps. 

(g)   Separate tariff entries are being created for cotton bags, grey and dyed knitted fabrics of cotton, of MMF, of blend where cotton predominates and of blends where MMF predominates, grey and dyed cotton fabrics with lycra, women’s/girls’ tops, embroidered fabrics of MMF, imitation jewellery of glass, multi-speed complete bicycle with geared hubs, cranks made of aluminum, single speed chain wheel and crank (crank made of aluminum), pillows/cushions/quilts/pouffles filled with poly-fil/polyfill, etc. A few tariff items are also being replicated with same rates and caps under different four digit levels and descriptions of certain tariff items are being modified to address classification issues.

(h)   AIR on wheat is being made Nil. Amendments vide Notification No. 97/2013- Customs (N.T.), dated 14.09.2013 shall also make the brand rate unavailable on export of wheat.

3.         For entries in the Schedule that are related to pharmacopeia, where the product descriptions bear suffix like IP and/or BP and/or USP, it is hereby clarified that the pharmacopeia standards IP, BP, USP, EP, JP shall be treated as inter-changeable.

4.         Commissioners are expected to ensure that the due diligence is exercised to prevent any misuse. As before, it may be ensured that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR. Moreover, there is need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill. For example, when quantities declared in Item details and Drawback details are same, but units of their measurement are different, or unit of measurement is same but quantities declared do not match or the 4-digit RITC in the Item Details and Drawback Tariff Item No. in Drawback Details are different.

5.         It is requested to download the notification with the revised Schedule of AIR effective 21.09.2013 from Board’s website (www.cbic.gov.in) and carefully peruse it and thereby take note of all the specific changes notified. While every effort has been made to avoid errors / omissions, these are not ruled out. If an error is noticed, please immediately inform the Board for appropriate corrective action. Difficulties faced, if any, in implementation of the changes may also be brought to Board’s notice. In cases where the drawback caps have not been provided against a particular tariff item, suggestions may be sent to the Board. In the case of export of articles of silver (silversmiths’ wares), which are high value items, there should be close monitoring and a monthly report indicating quantum of export and drawback availed may be sent to the Board for the next 12 months by the Commissioners having jurisdiction over the relevant Custom Houses. Suitable public notice and standing order may be issued for guidance of the trade and officers. Receipt of this Circular may be acknowledged.

(Rajiv Talwar)

Joint Secretary