Chapter: 2.8 Customs Duty Drawbacks

Customs Duty Drawbacks

The term 'drawback' refers to the amount of duties of Customs and Central Excise, whether in whole or in part, levied on the inputs of goods exported, which is remitted or paid back by Government on export of commodities. The goods to be entitled for drawback, they must be exported to a foreign port. The object of the relief provided by the drawback provision is to enable the goods to be disposed of in a foreign market as if they had never been taxed on account of Customs and Central Excise duties. Drawback for Customs purposes means, the refund of duty of customs and duty of Central Excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods. Drawback, as the name itself suggests, is procedure to relieve export goods of duties suffered by them at various stages of manufacture. Sections 74 to 76 and notifications issued there under provide for the quantification of the amounts of and the procedure to claim drawback. The drawback is in respect of duties paid on:

a. Imported goods which are exported as such (without use)
b. Imported goods which are exported after use
c. Imported materials used in the manufacture of goods exported. According to Finance Act, 2003, exporters may be able to claim refund of duty and interest paid by him, if he has not passed on the incidence of such duty and interest to any other person. Section 27 of the Customs Act is amended for the purpose. Section 75A of the Customs Act has been amended so as to reduce the period from two months to one month beyond which interest is payable to the claimant, after filing a drawback claim.