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Important Clarifications

With reference to which place the value of the goods will be calculated i.e. whether the value is its value in India or abroad

The value is reckoned to be the value at the place of dispatch even in case of third Country goods, the value would be that of the country of dispatch. For example, if the goods are manufactured in Taiwan and is being sent from UK as a sample to India, the value in UK is to be taken. However, the cost of freight, postal charges, courier charges are not to be added.

How the machineries which are costing more than Rs. 5,000/- but below Rs. 10,000/- are defaced to enable them to be brought without payment of duty?

Machinery, which are prototypes of engineering goods, imported either for further manufacturing of the said goods or to be used as capital goods for export production or in connection of securing further export orders can also be imported duty free if the value does not exceed Rs. 10,000/-. The said goods are normally defaced or made unsalable by punching, cracking, marking with indelible

Drawback Duty - Procedure & general definitions

The term drawback is applied to a certain amount of duties of Customs/central excise, some times the whole, some times only a part remitted or paid by Government on the exportation of the commodities on which they were levied.

  • To entitle goods to drawback, they must be exported to a foreign port, the object of the relief afforded by the Drawback being to enable the goods to be disposed of in the foreign market as if they had never been taxed at all. For Customs purpose drawback means the refund of duty of customs and duty of central Excise that are chargeable on imported and indigenous materials used in the manufacture of Exported goods.
  • Drawback rates for standard and common type of products are pre-notified (All Industry Drawback Rate Schedule) and updated every year after the Budget.
  • For products not figuring in the All Industry Schedule or where the All the Industry rate is below 80% of the exporterís claimed rate, the exporter has to get a brand rate fixed by furnishing the prescribed data.
  • Anti-dumping duty is rebatable only by way of special brand rate of drawback provided the input used has actually borne this duty. Drawback for inputs is permissible not only in case of manufacture but also for processing or other operations for export of goods.
  • For imported products re-exported as such, 98% refund of customs duty paid, including anti-dumping duty, is available as Drawback. Drawback is payable only if the amount of drawback exceeds Rs. 500/- or it is 1% or more of the export FOB value. In case of export by post or export is discharged of export delegation, the minimum limits Rs. 50/-.
  • Regarding payment of excise component of All Industry Rates of Drawback, a certificate of non- availment of Modvat facility may become necessary. Excise component will not be paid in the case of goods procured for export from open market by merchant exporters, such goods being treated as having availed the Modvat facility. Where goods are unconditionally exempt from excise duty, Customs officers may not insist on such certificate for paying the drawback.

No separate application or claim for payment of drawback need be filed. The drawback shipping bill (green colored) is automatically treated as a claim. It should be accompanied, inter- alias , by the following documents :-

  • Copy of export contract or letter of credit as the case may be
  • Copy of packing list
  • AR4 form, wherever necessary>
  • Copy of brand rate sanction order, where applicable

In respect of claims filed on or after 8/1/1999 , Customs should pay the drawback within two months of export of pay interest thereon for the period of delay.

  • Draw back option is open to merchant exporters as well.
  • Imports for repair, jobbing etc. free of duties subject to bond for their re-export with 10% value addition. No. CCP is required now.

Interest on delayed payment of duty or on delayed refund/drawback of duty :

Section 27A, 28AA and 75A of Customs Act, 1962 introduced in1995 Budget provide for changing of interest on delayed payment of customs duty and payment of interest on delayed refunds/drawback of duty.

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