duty draw back

This query is : Resolved 

10 April 2009

Our company imported some raw material from other county. we paid custom duty,exice duty etc. this raw material is processed and made into finished product
when we export can we claim custom duty draw back ? under which section we can claim ?

with regards
R. Purna Ch. Achary
Jr. Finance officer

CA CS CIMA* Prakash Somani (Expert)
10 April 2009

Customs duty applicable on import of goods into India consists of four components,
basic customs duty (BCD),
additional customs duty (ACD) in lieu of excise duty levied on similar products manufactured in India,
education cess of customs, and
special additional duty (SAD) in lieu of value added tax (VAT) levied on similar products sold in India.

Cenvat credit of BCD and education cess of customs is not available under any circumstances.

In case of manufacturers of excisable products, cenvat credit of ACD and SAD paid on imports can be availed and adjusted against the output excise duty liability.

CA CS CIMA* Prakash Somani (Expert)
10 April 2009

The customs laws in India provide for a refund of customs duty paid on imported goods under the duty drawback scheme. Under this scheme, a specified percentage of the customs duty paid can be claimed as drawback at the time of re-export of the goods.

The percentage of drawback that can be claimed ranges between 95% and 60%, and is determined on the basis of whether the goods have been used in India and the duration of use.

The drawback claim can be filed along with prescribed documents with the customs authorities, once the goods are placed under their control for re-export.

Rajesh Kumar (Expert)
29 April 2009

Well, the opinion of Somani is very true if the goods are exported as such. In your case there is manufacturing, and hence that drawback procedure is not available.
You can get drawback under Custom & central excise duty drawback rules. If the product is covered under All Industry rate, you will get that rate. Otherwise, you can apply for fixing of brand rate.
The export benefit available, and the procedure depends on various factors like your raw material, whether you are taking cenvat, HSN classification of goods etc.

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