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Restriction on Grant of Drawback

Certain limitation have been laid by law in the matter of admissibility if drawback even though the commodity might have been notified and covered in the Drawback Table . These are:

  1. The amount or the rate of drawback should work out 2% or more of the f.o.b. value of the product except in cases where the amount of drawback exceeds Rs5000/- per shipping Bill.
  2. The f.o.b. value of the product should not be less than the value of all imported materials used in the manufacture of that product. In other words the value addition in respect of the particular product should not be negative
  3. No drawback is admissible where the amount of the drawback worked out is higher than the present market value of the goods export (Section 76(1) of the Customs Act)
  4. Drawback is not admissible where the total amount of drawback is less than Rs 50/-(Section 76(1 )( b) of the Customs Act,1962
  5. No drawback is admissible in case of goods exported by land to any place in Burma , Tibet or Bhutan as specified in the Ministry of finance Notification 208 cus . dated 1/10/1977

Recovery of Erroneously Paid Drawback Amount.

Rule 16 of the Drawback Rules empowers the department to recover any erroneous payment of drawback without any time limit and can initiate recovery proceedings under Sec 142 of the Customs Act 1962

Fixation of Brand Rates Under Simplified Scheme

This scheme envisages reimbursement of Customs and Central Excise duties suffered on inputs used in the manufacture and packing of finished exports product. The brand rates are determined for specific export products exported by specific exporters.

The simplified Brand rate Fixation scheme will be available to all manufacturer exporters who have a regular production of the product for which brand rate is being sought and who are corporate bodies having a detailed accounting system which is normally subject to statutory audit under the Company Law.

Under this procedure, the manufacturer exporter including those who have exported through the trading Houses or Star trading Houses has to simply file his brand rate application in prescribed Performa along with an indemnity bond. The data will have to be supported by certificate from an independent Chartered Engineers, Chartered Accountant/Cost accountants in relation to the data furnished in Statements I. II & III submitted along with the application. Taking into account the data the Directorate of Drawback will fix the brand rates without insisting upon the pre verification. The data submitted will, however be subject to post verification by the department and the applicant should also take steps to assist and ensure quick post verification. If post verification reveals that the data furnished was incorrect in any way then the Brand rates will be suitable revised and the applicant have to pay back any excess amount claimed. Furthermore. If the applicant fails to arrange for the post verification of data within three months. The facility under the scheme will be withdrawn for his subsequent application.

Request for extension time limit for filing an application for brand rate under Rules 6 & 7 of the Drawback Rules, inclusion of Subsequent shipments in the Brand rate letter, extension of validity period of the brand rate letter and or quantity enhancement can be considered Drawback Directorate under special circumstances. For details see guidelines for fixation of Brand rates under simplified and Normal Procedure.


Contravention of the provisions of customs law and also of the connected import/export and foreign exchange laws are punishable departmentally by way of confiscation of goods and imposition of penalty. Such adjudication is done by officers of and above the rank of and Assistant Commissioner, powers being delegated to them on the basis of duty involved.


If a person is aggrieved by the orders of customs authorities he can file an appeal to the Commissioner of Customs (Appeals). A second appeal lies to the Appellate Tribunal (CEGAT).


In addition to departmental action, prosecution in court of law is often resorted to in cases of customs contraventions. In case of outright smuggling or for habitual offenders, it is launched as a matter of course. In appraising cases (such as those relating to mis -declaration of quantity, description of value of goods), it is resorted to the mensrea is involved and value of goods is sufficiently high. Punishments are quite server, going up to imprisonment for seven years and fine.

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