Regarding ted & deemed export drawback - dgft

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 December 2013 Hello Experts,

I would request yourgoodself to clarify for following.

Please assume THAT
Advance authorisation holders wants to procure the goods from Domestic Supplier against ADVANCE RELEASE ORDER ( ARO).

1) What are the benefits available to Domestic supplier ? ( I guess TED & Deemed Export Drawback)

I would appreciate you to give me an example which starts from domestic supplier procures material then process it and sale it to Advance authorisation holder, and then advance authorisation holder manufacture finished goods and export it.

Here excise duty are involved in two place
1) When domestic supplier procures from local source.

2) When Advance Authorisation holder procures from Domestic Supplier against ARO.

Now, who will get what benefits against a shipment?

Here, i am giving the first steps and expect you to tell me second and others steps to claim benefits which will be good for both i.e. AA & dOMESTIC SUPPLIER.

Please give me example in case of following scenerio
1) if supplier take cenvat credit.
2) If supplier do not take cenvat credit.
3) If Advance authorisation holder issue Annexure II to domestic supplier to declarating cenvat credit will not be taken.
4) If Advance Authorisation holder get Annexure III from supplier stating cenvat credit will not be claimed , what are the benefits available to domestic supplier ?
5) If domestic supplier wants to claim Deemed Export Drawback - how it is done ? and what AA will get ?

I am trying to find out answer for all above listed queries.

Please help.

Regards,
Senthil

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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17 December 2013 must read:-

https://www.caclubindia.com/share_files/files_display_list_by_member.asp?member_id=308651&offset=5#.UrAoztIW35M

regards

Querist : Anonymous

Querist : Anonymous (Querist)

18 December 2013 Dear Sir,
I tried but i cannot understand. Let me put the same here in simple.
This question is with respect to, “when Advance Authorisation holders buy goods against ARO from domestics supplier TED & Deemed Exports Drawback shall be available “
I have following question.
1) Which steps to be followed by domestic supplier in terms of excise duty paid on Raw material to get Deemed Exports Drawback?
1a) Do domestic supplier needs to get certificate from his supplier stating “they have not taken cenvat credit on Input which were used to manufacture the finished products that they have supplied to them”?
1b) if yes, isn’t it lose of excise duty credit (cenvat credit) available to his supplier? How his supplier gets back?
2) If Advance Authorisation wants to claim Deemed Export Drawback, should he need to provide declaration from Domestic Supplier stating cenvat credit for input used for manufacture of material supplied were not taken?
2a) If yes, Don’t Advance Authorisation holders get the Deemed Export drawback for the excise duty paid on Raw material (Finished products for domestics supplier) purchased from domestics supplier?
3) Which steps to be followed by domestic supplier in terms of excise duty PAID on finished products { Raw material for Advance authorisation (AA)} to get TED refund?
3a) Do AA needs to give declaration in Annexure II saying he won’t take cenvat credit?
3b) if yes, isn’t lose to AA? How he gets back?
4) Do AA get benefits of excise duty if he buys from Domestic supplier?
5) Do AA get TED refund?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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18 December 2013 in first condition admissible the TED / deemed dbk refund from concerned R.J.D.G.F.T. office, ASK CONSIGNEE TO PRODUCE DISCLAIMER CERTIFICATE @time of application submission.

Querist : Anonymous

Querist : Anonymous (Querist)

18 December 2013 Dear Rameshji,

My questions are not answered.Please give your phone number i can explain you in details.

Regards,
Senthil

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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20 July 2025 This is a complex topic involving excise duty, CENVAT credit, deemed exports, and Advance Authorization (AA) schemes under DGFT. Let me break down the key points and examples for each scenario you asked about, so both the domestic supplier and the Advance Authorization holder can optimize benefits.

Background:
Advance Authorization (AA): Allows duty-free import of inputs required for export production.
Advance Release Order (ARO): Domestic supplier supplies goods duty-paid to AA holder, who provides ARO against which duty exemption is allowed.
Deemed Exports: Supply of goods that are considered as exports (like supplies to AA holders), allowing domestic suppliers to claim drawback or refund.
CENVAT Credit: Input Tax Credit on excise duty paid on inputs/raw materials used for manufacturing.
Scenario Explanation:
Common steps (in all cases):

Domestic supplier procures raw materials from local sources (excise duty involved here).
Supplier manufactures goods and sells to Advance Authorization holder (AA holder) against an ARO.
AA holder uses these goods as inputs in export goods manufacturing.
Final goods are exported.
1) If supplier takes CENVAT Credit
Supplier procures raw materials paying excise duty, but takes CENVAT credit on inputs/raw materials.
When supplier sells to AA holder against ARO, excise duty is paid on the finished product, but supplier can adjust duty paid on inputs.
Supplier cannot claim deemed export drawback since they have taken CENVAT credit.
The supplier can issue a declaration (Annexure II) stating that CENVAT credit will not be availed on inputs used in the supplied goods, to allow AA holder to claim benefit.
AA holder benefits by not paying duty on inputs and claiming duty exemption on inputs or finished goods.
Supplier passes on excise duty, which can be offset with credit on inputs.
Drawback claim by supplier is not available since CENVAT credit was taken.
2) If supplier does NOT take CENVAT Credit
Supplier pays full excise duty on inputs and finished goods.
Supplier is eligible to claim deemed export drawback on goods supplied against ARO to AA holder.
Drawback is a refund of excise duty paid on goods supplied.
Supplier claims drawback after export takes place.
AA holder gets goods duty-paid, but can claim exemption on inputs by showing proof of export under AA scheme.
This benefits supplier (refund via drawback) and AA holder (no duty on inputs).
3) If AA holder issues Annexure II (declaration that CENVAT credit will NOT be taken by supplier)
Supplier will not take CENVAT credit on inputs used in goods supplied.
Supplier becomes eligible for deemed export drawback claim.
Supplier supplies duty-paid goods to AA holder.
AA holder claims exemption from duty on inputs/final goods against AA scheme.
Both get benefits: supplier gets drawback refund, AA holder gets exemption.
4) If AA holder gets Annexure III from supplier stating that supplier WILL NOT claim CENVAT credit
This confirms supplier is supplying duty-paid goods without CENVAT credit.
Supplier can claim deemed export drawback on supply.
AA holder claims duty exemption against AA on inputs or finished goods.
Clear benefit for both parties.
5) How supplier claims deemed export drawback and what AA holder gets
Supplier files drawback claim with the customs/drawback authorities after export happens.
Drawback amount is refund of excise duty paid on goods supplied to AA holder.
AA holder gets duty exemption on inputs or finished goods under AA scheme by submitting export documents and ARO copies.
The process ensures that duty burden is removed from goods used in exports, either by refund to supplier or exemption to AA holder.
Summary Table:
Situation Supplier Benefit AA Holder Benefit
Supplier takes CENVAT credit No drawback claim possible Exemption on inputs/final goods under AA scheme
Supplier does NOT take CENVAT credit Can claim deemed export drawback Exemption on inputs/final goods under AA scheme
AA issues Annexure II (no CENVAT credit) Supplier eligible for drawback AA holder gets duty exemption
AA obtains Annexure III (supplier no CENVAT credit) Supplier can claim drawback AA holder gets exemption
Supplier claims drawback process Refund of excise duty on goods supplied Gets duty exemption on inputs/final goods
Practical Example:
Step 1: Supplier buys raw material paying Rs. 100 excise duty.
Step 2: Supplier manufactures and sells goods to AA holder at Rs. 1000 + Rs. 150 excise duty.
Step 3: If supplier took CENVAT credit on raw materials, no drawback is claimed; AA holder claims exemption of Rs. 150.
Step 4: If supplier did not take CENVAT credit, supplier claims Rs. 150 drawback post export.
Step 5: AA holder uses goods, exports finished product.

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