Excise rebate vs. duty draw back

If you are a manufacturer exporter then you should export the goods under LUT without payment of Excise Duty.In case you are  merchant exporter then obtain C.T-1 and procure the goods without payment of duty and export the same.

Its absolutely depend on your duty structure. If you buy locally and pay central excise duty and if you export without out payment duty (LUT/ Bond) your credit will be accumalated. It will affect your working capital. If you dont have domestic clearance again the duty credit accumalate every time you purchase inputs. So better you plan if your duty can recover under Rule 18 of Central Excise Rules (Rebate) so you can go ahead with Rule 18  otherwise you should work out Rule 5 of Cenvat Credit Rules Refund.

The procedure you are following is simple and easy to implement. However, if you are thinking to avail refund of Cenvat Credit under Rule 5- in that case it shall be better if you procure inputs without payment of Central Excise duty under notification 43/2001. In that case your working capital will not be stuck. The procedure is slightly tedious, but you can manage it easily once system is developed. It can be used in addition to Rule 5 which you can use for other credits taken for which Notification 43/2001 can be availed.

Going to AIR of Duty Drawback depends upon value addition in your manufacturing. If value addition is higher and decent drawback rate is there, it can be easiet way to take duty paid on inputs.