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Drawback refers to the rebate of duty chargeable on any imported materials or excisable
materials that is used in manufacture or processing of goods which are manufactured
in India and taken out of the country.
Since supply of stores for use in vessel or aircraft proceeding to foreign port
is treated as ‘export’ as per section 89 of Customs Act, it is also covered here.
Duty Drawback is equal to (a) customs duty paid on imported inputs including SAD
plus (b) excise duty paid on indigenous inputs. Duty paid on packing material is
also eligible. However, if inputs are obtained without payment of customs/excise
duty, no drawback will be paid. If customs/excise duty is paid on part of inputs
or rebate/refund is obtained, only that part on which duty is paid and on which
rebate/refund is not obtained will be eligible for drawback. No drawback is available
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Types of Drawback Rates
All Industry Drawback rates are fixed by Directorate of Drawback, Dept. of Revenue,
Ministry of Finance, Government of India. The types of rates are as follows:
All Industry Rate - This rate is fixed under rule 3 of Drawback Rules by considering
average quantity and value of each class of inputs imported or manufactured in India.
Average amount of duties paid is considered.
Brand Rate - It is possible to fix All Industry Rate only for some standard products.
It cannot be fixed for special type of products. In such cases, brand rate is fixed
under rule 6.
Special Brand Rate – Since the All Industry rate is fixed on average basis, a manufacturer
may find that the actual duty paid on inputs is higher than All Industry Rate fixed
for his product. In such case, he can apply under rule 7 of Drawback Rules for fixation
of Special Brand Rate, within 30 days from export.
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