Revised Duty Drawback Rates (All Industry) for 2016-17; Review for GST Framework

All Industry Duty Drawback Rates (2016-17)

Revised Duty Drawback Rates for 2016-17 (w.e.f. 15 Nov. 2016), as notified by Govt. from time to time (including vide Circular No. 02/2017-Customs dt. 13 Jan. 2017 applicable w.e.f. 15 Jan. 2017). Further, CBEC has invited comments from stakeholders on All Industry Duty Drawback Rates under proposed GST Framework.

A. CBEC invites comments from stakeholders on Duty Drawback Rates under GST Framework

The “Drawback Committee” of CBEC has invited suggestions, from Export Promotion Councils (EPCs)/ Commodity Boards/ Trade & Industry Associations/ Chambers of Commerce, on All Industry Rates (AIRs) of duty drawback under the proposed framework of GST which is proposed to be implemented w.e.f. 1 Jul. 2017. Suggestions may be sent to CBEC at email latest by 15 Mar. 2017.

CBEC Communication dt. 23 Feb. 2017

B. Revised Duty Drawback Rates for 2016-17

B1. Amendments w.e.f. 15 Jan. 2017

1. The Government considered representations, feedback and data related to the All Industry Rates (AIR) of Duty Drawback that took effect on 15.11.2016 and has notified certain changes vide Notification No. 03/2017-Customs (N.T.) dated 12.01.2017. These changes take effect from 15.01.2017. The notification should be downloaded from and perused. The changes made, inter-alia, include –

(a) Tariff entry for ‘Surimi Fish Paste’ under tariff item 160401 has been shifted to 030402 and description of tariff item 160401 has been amended to read as ‘Surimi Analogue Product’ to address classification issue;

(b) Drawback cap is being increased for tariff item 500799 (other Silk fabric);

(c) Drawback rates/caps are being changed for Man-made fibre floor coverings covered under tariff items 570104, 570203, 570303, 570402 & 570503 and for babies garments covered under tariff items 611101 & 620901;

(d) Drawback rates are being decreased for Gold jewellery, Silver jewellery and silver articles covered under tariff items 711301, 711302 and 711401.

2. The amendments in the First Schedule to the Customs Tariff Act, 1975 notified in Section 141 of the Finance Act, 2016 regarding the changes from the WCO Harmonized System Nomenclature 2012 edition to the 2017 edition have been implemented with effect from 01.01.2017. As the tariff items and description of goods in the AIR Drawback Schedule are aligned with the tariff items and description of goods in the First Schedule to the Customs Tariff Act at the Four Digit Level, the tariff items and description of goods in the AIR Drawback Schedule have been accordingly amended. The changes made, inter-alia, include –

(a) Descriptions of tariff items 1211, 2206, 2853, 2939, 6907, 8205, 8308, 8442, 8466, 8473, 8439 and 8541 are amended;

(b) Tariff items 690701, 690702, 690703 and 690799 have been created to cover both glazed and unglazed tiles. Tariff item 6908, 690801, 690802 and 690899 for glazed tiles have been deleted.

(c) Tariff items 2848 and 8469 are omitted.

(d) New entry with AIR is being created separately for “Monopods, bipods, tripods and similar articles” under tariff item 9620;

3. Notes and conditions No. 3 (ii) of the AIR Notification No. 131/2016-Cus (N.T.) has been amended so that the parts or components of agriculture equipment (of tariff item 8432, 8433 and 8436) remain classifiable under respective tariff items only.

CBEC Circular No. 02/2017 dt. 13 Jan. 2017 Amendment DBK Rates 2016-17

B2. Amendments w.e.f. 15 Nov. 2016

The Central Government has revised Duty Drawback Rates for 2016-17, i.e. All Industry Rates (AIRs) of Drawback, vide Notification No. 131/2016- Customs (N.T.) dated 31.10.2016 which comes into force on 15.11.2016. These AIRs take into account relevant broad average parameters including, inter alia, prevailing prices of inputs, input output norms, share of imports in input consumption, the rates of central excise and customs duties, incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, incidence of duty on HSD/ furnace oil, value of export goods, etc.  Some of the changes are highlighted below –

(a) AIRs have been provided to certain worked articles under chapters 45, 46 and 68;

(b) Certain products, earlier with all customs AIRs, have been provided composite rates. These include rubber parts (for automobile or other machinery) of chapter 40 and children’s picture, drawing/colouring books, etc. of chapter 49;

(c) Changes in certain tariff items description have been made for dispute prevention or enhancing simplification. These relate, inter-alia, to packaged rice, rubber parts, certain leather items, leggings, frocks, bicycles, protective sports gear, etc;

(d) For better product differentiation, separate tariff lines have been provided by carving out from (or replacing) certain existing tariff items. These include surimi fish paste (chapter 16), belts (chapter 39), leather woven/braided hand-bag (chapter 42), hand-bags/wallets etc of plastic and/or textile material (chapter 42), wrist bands/tie-pins/necklaces made of leather (chapter 42), fishnets/sports nets made of different materials (chapter 56/95), kurta and salwar/salwar suits/salwar-kameez/churidar-kameez, with or without dupatta (chapter 61 and 62), blankets etc of blend containing cotton and MMF (chapter 63), glass artware/handicrafts with chatons (chapter 70), tube or pipe fittings of alloy/stainless steel (chapter 73), motor cars, based on four categories of engine capacity each with sub-categories of manual or automatic transmission (chapter 87), cycle frames made of aluminum (chapter 87), soft toys (chapter 95);

(e) In the notes and conditions of the notification, the term article of leather in chapter 42 of the Drawback Schedule has been expanded to include any article wherein 60% or more of the outer and inner surface area taken together is of leather. This is in the light of newer design and commercial practices;

(f) Residuary rate (customs) provided to items across various chapters has been reduced from 1.9% to 1.5% and from 1.4% to 1.1%.

Revised Duty Drawback Rates Schedule 2016-17 applicable w.e.f. 15 Nov. 2016

CBEC Notification No. 131/2016 Customs (NT) dt. 31 Oct. 2016 Revised Duty Drawback Rates

CBEC Notification No. 132/2016 Customs (NT) dt. 31 Oct. 2016 Drawback Amendment Rules 2016

CBEC Circular No. 50/2016 dt. 31 Oct. 2016 Amendment in Duty Drawback Rates

B3. Amendments w.e.f. 11 Feb 2016

The Government considered representations, feedback and data related to the All Industry Rates (AIR) of Duty Drawback that took effect on 23.11.2015 and has notified certain changes vide Notification No. 22/2016- Customs (N.T.) dated 08.2.2016. These changes take effect from 11.02.2016. The changes made, inter-alia, include –

(a) AIR of drawback is being provided to rice packed in PP/HDPE bags;

(b) Separate tariff entries with AIRs (including caps) are being created for “hair-on” varieties of mats/carpets and other articles under heading 4303; for yarns of cotton blended with MMF under heading 5206; fabrics of MMF blended with wool under heading 5515; jackets/blazers of cotton containing 1% or more by weight of elastane under headings 610302/610402/620302/620402; blankets of MMF under heading 6301; flat-rolled products of stainless steel of thickness of 0.25 mm or less under heading 7220; hollow drill bars and rods of non-alloy steel under heading 7228; cages under heading 8482;

(c) Sub-headings under four digit heads of 8409, 8413, 8481 and 8708 are being restructured to distinguish drawback caps for products exported;

(d) Descriptions of certain tariff items are being amended to include certain products, for example, „notebooks‟ are being included in tariff items 482006 and 482007. The tariff items 610403 and 620403 are being expanded to include „dresses, skirts, undivided skirts‟. In tariff items 741998 and 741999, „bushes‟ are being also shown to address classification issue.

(e) Drawback rates/caps are being increased for tariff items 560802 (fishing nets) and 950610 (sports nets). All footwear of headings 6401 and 6402 is being provided with composite AIRs.

(f) Drawback caps are being increased for certain existing tariff lines like 42020301 and 42020401 (leather articles); 5508 (sewing thread of MMF); 551505, 551506, 551603 and 551604 (MMF fabrics); 640301 and 640305 (leather footwear); 7310 (steel tanks, cans etc.); 8701 (tractors). Caps are being raised for certain carpets made of wool, silk, MMF and cotton of Chapter 57 and certain parts/components of Chapter 84-85. In respect of certain items of stainless/alloy steels of Chapter 72, the caps are being adjusted.

CBEC Circular No. 06/2016-Customs dt. 9th Feb 2016

CBEC Notification No. 22 / 2016 – CUSTOMS (N.T.) dt. 8th Feb., 2016

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