CBEC Notifications on All Industry Duty Drawback Rates Schedule (2017-18 and 2016-17)
The CBEC has notified the Revised Duty Drawback Rates Schedule for 2017-18 applicable w.e.f. 1 Oct. 2017, in respect of specified exports and subject to compliance with the procedural requirements notified from time to time, as under:
A. Revised Duty Drawback Rates for 2017-18 (w.e.f. 1 Oct. 2017)
G.S.R… (E). – In exercise of the powers conferred by sub-section (2) of section 75 of the Customs Act, 1962 (52 of 1962) and sub-section (2) of section 37 of the Central Excise Act, 1944 (1 of 1944), read with rules 3 and 4 of the Customs and Central Excise Duties Drawback Rules, 2017 (hereinafter referred to as the said rules) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 131/2016-Customs (N.T.), dated the 31st October, 2016, published vide number G.S.R. 1018(E), dated the 31st October, 2016, except as respect to things done or omitted to be done before such supersession, the Central Government hereby determines the rates of drawback as specified in the Schedule annexed hereto (hereinafter referred to as the said Schedule) subject to the following notes and conditions, namely :-
Notes and conditions. –
(1) The tariff items and descriptions of goods in the said Schedule are aligned with the tariff items and descriptions of goods in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) at the four-digit level only. The descriptions of goods given at the six digit or eight digit or modified six or eight digits in the said Schedule are in several cases not aligned with the descriptions of goods given in the First Schedule to the Customs Tariff Act, 1975.
(2) The general rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 shall, mutatis mutandis, apply for classifying the export goods listed in the said Schedule.
(3) Notwithstanding anything contained in the said Schedule, –
(i) all art-ware or handicraft items shall be classified under the heading of artware or handicraft (of constituent material) as mentioned in the relevant Chapters;
(ii) any identifiable ready to use machined part or component predominantly made of iron, steel or aluminium, made through casting or forging process, and not specifically mentioned at six digit level or more in Chapter 84 or 85 or 87, except those classifiable under heading 8432 or 8433 or 8436, may be classified under the relevant tariff item (depending upon material composition and making process) under heading 8487 or 8548 or 8708, as the case may be, irrespective of classification of such part or component at four digit level in Chapter 84 or 85 or 87 of the said Schedule;
(iii) the sports gloves mentioned below heading 4203 or 6116 or 6216 shall be classified in that heading and all other sports gloves shall be classified under heading 9506.
(4) The figures shown in column (4) in the said Schedule refer to the rate of drawback expressed as a percentage of the free on board value or the rate per unit quantity of the export goods, as the case may be.
(5) The figures shown in column (5) in the said Schedule refer to the maximum amount of drawback that can be availed of per unit specified in column (3).
(6) An export product accompanied with a tax invoice and forming part of project export (including turnkey export or supplies) for which no figure is shown in column (5) in the said Schedule, shall be so declared by the exporter and the maximum amount of drawback that can be availed under the said Schedule shall not exceed the amount calculated by applying ad-valorem rate of drawback shown in column (4) to one and half times the tax invoice value.
(7) The rates of drawback specified against the various tariff items in the said Schedule in specific terms or on ad valorem basis, unless otherwise specifically provided, are inclusive of drawback for packing materials used, if any.
(8) Drawback at the rates specified in the said Schedule shall be applicable only if the procedural requirements for claiming drawback as specified in rule 12, 13 and 14 of the said rules, unless otherwise relaxed by the competent authority, are satisfied.
(9) The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is –
(a) manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962);
(b) manufactured or exported in discharge of export obligation against an Advance Authorisation or Duty Free Import Authorisation issued under the Duty Exemption Scheme of the relevant Foreign Trade Policy :
Provided that where exports are made against Special Advance Authorisation issued under paragraph 4.04A of the Foreign Trade Policy 2015-20 in discharge of export obligations in terms of Notification No. 45/2016-Customs, dated 13th August, 2016, the rates of drawback specified in the said Schedule shall apply as if in the said Schedule, the entries in columns (4) and (5) against the Tariff items in the said Schedule below all Chapters, except Chapter 61 and 62, are NIL, and those in Chapters 61 and 62 are as specified in the Table annexed hereto;
(c) manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit in terms of the provisions of the relevant Foreign Trade Policy;
(d) manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones;
(e) manufactured or exported availing the benefit of the notification No. 32/1997-Customs, dated 1st April, 1997.
(10) Whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials on the basis of a self-declaration to be furnished by the exporter to this effect and in case of doubt or where there is any information contrary to the declarations, the proper officer of customs shall cause a verification of such declarations.
(11) The term ‘article of leather’ in Chapter 42 of the said Schedule shall mean any article wherein (a) 60% or more of the outer visible surface area; or (b) 60% or more of the outer and inner surface area taken together, excluding shoulder straps or handles or fur skin trimming, if any, is of leather notwithstanding that such article is made of leather and any other material.
(12) The term “dyed”, wherever used in the said Schedule in relation to textile materials, shall include yarn or piece dyed or predominantly printed or coloured in the body.
(13) The term “dyed” in relation to fabrics and yarn of cotton, shall include “bleached or mercerised or printed or melange”.
(14) The term “dyed” in relation to textile materials in Chapters 54 and 55 shall include “printed or bleached or melange”.
(15) In respect of the tariff items in Chapters 60, 61, 62 and 63 of the said Schedule, the blend containing cotton and man-made fibre shall mean that content of man-made fibre in it shall be more than 15% but less than 85% by weight and the blend containing wool and man-made fibre shall mean that content of manmade fibre in it shall be more than 15% but less than 85% by weight. The garment or made-up of cotton or wool or man-made fibre or silk shall mean that the content in it of the respective fibre is 85% or more by weight.
(16) The term “shirts” in relation to Chapters 61 and 62 of the said Schedule shall include “shirts with hood”.
(17) In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for adult shall comprise the following sizes, namely : –
(a) French point or Paris point or Continental Size above 33;
(b) English or UK adult size 1 and above; and
(c) American or USA adult size 1 and above.
(18) In respect of the tariff items appearing in Chapter 64 of the said Schedule, leather shoes, boots or half boots for children shall comprise the following sizes, namely :-
(a) French point or Paris point or Continental Size upto 33;
(b) English or UK children size upto 13; and
(c) American or USA children size upto 13.
(19) The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall apply only to goods exported by airfreight, post parcel or authorised courier through the Custom Houses as specified in para 4.72 of the Hand Book of Procedures, 2015-2020 published vide Public Notice No. 1/2015-2020, dated the 1st April, 2015 of the Government of India in the Ministry of Commerce and Industry, after examination by the Customs Appraiser or Superintendent to ascertain the quality of gold or silver and the quantity of net content of gold or silver in the gold jewellery or silver jewellery or silver articles. The free on board value of any consignment through authorised courier shall not exceed rupees twenty lakhs.
(20) The drawback rates specified in the said Schedule against tariff items 711301, 711302 and 711401 shall not be applicable to goods manufactured or exported in discharge of export obligation against any Scheme of the relevant Foreign Trade Policy of the Government of India which provides for duty free import or replenishment or procurement from local sources of gold or silver.
(21) “Vehicles” of Chapter 87 of the said Schedule shall comprise completely built unit or completely knocked down (CKD) unit or semi knocked down (SKD) unit.
2. All claims for duty drawback at the rates of drawback notified herein shall be filed with reference to the tariff items and descriptions of goods shown in columns (1) and (2) of the said Schedule respectively. Where, in respect of the export product, the rate of drawback specified in the said Schedule is Nil or is not applicable, the rate of drawback may be fixed, on an application by an individual manufacturer or exporter in accordance with the said rules. Where the claim for duty drawback is filed with reference to tariff item of the said Schedule and it is for the rate of drawback specified herein, an application, as referred under sub-rule (1) of rule 7 of the said rules shall not be admissible.
3. The amount referred in sub-rule (3) of rule 7 of the said rules, relating to provisional drawback amount as may be specified by the Central Government, shall be equivalent to the drawback rate and drawback cap shown in column (4) and (5) in the said Schedule for the tariff item corresponding to the export goods, if applicable, and determined as if it were a claim for duty drawback filed with reference to such rate and cap.
4. This notification shall come into force on the 1st day of October, 2017.
A2. 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 were to be submitted latest by 15 Mar. 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 www.cbec.gov.in 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.
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%.
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.