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Government of India
Ministry of Finance
(Department of Revenue)
(Central Board of Excise & Customs)
Circular No. 1047/35/2016-CX
New Delhi, the 16 September, 2016
To
The Principal Chief Commissioners/Chief Commissioners of Customs Central Excise
& Service Tax (All);
The Principal Chief Commissioners/Chief Commissioners of Customs (All);
The Director Generals/Directors of Customs, Central Excise & Service Tax (All);
Webmaster, CBEC
Subject: Rebate of duties paid on raw materials used in manufacture or
processing of export goods and admissibility of duty drawback in such cases -
reg.
Madam/Sir,
Representations have been received from trade regarding difficulty in
simultaneously availing drawback of Customs portion and rebate of duties of
excise on raw material used in the manufacture or processing of goods exported.
Declaration (d) of the Form A.R.E.2 viz. "we further declare that we shall not
claim any drawback on export of the consignment under this application." leads
to cases of denial of Customs portion of drawback even when input stage rebate
of only excise portion is claimed. The issue was discussed in last Tariff
Conference where it was recommended that to put an end to the litigation on the
subject, declaration (d) in Form ARE 2, relating to availment of drawback, needs
to be reviewed.
2.1. The issue has been examined. Board has already vide
circular no.
35/2010-Cus dated 17.09.2010 clarified that as per
notification no
84/2010-Customs (N.T.) dated 17.09.2010, Customs component of AIR drawback shall
be available even if the rebate of Central Excise duty paid on raw material used
in the manufacture of export goods has been taken in terms of Rule 18 of the
Central Excise Rules, 2002, or if such raw materials were procured without
payment of Central Excise duty under Rule 19(2) of the Central Excise Rules,
2002. The
circular no. 35/2010-Cus dated 17.09.2010 continues to be in operation
and Customs portion of drawback so available are specified as per rates and caps
under column (6) & (7) of the drawback schedule.
2.2. Further, s.no. (11) of notes and conditions of the drawback schedule
notified vide
notification no. 110/2015-Customs (N.T.) dated 16.11.2015 states
that the rates and caps of drawback specified in columns (4) and (5) of the said
schedule shall not be applicable to export of a commodity or products if rebate
of duty on materials used in the manufacture or processing of such commodity or
products is availed under rule 18 of Central Excise Rules, 2002 or if commodity
or product is manufactured or exported in terms of sub-rule (2) of rule 19 ibid.
However, drawback in such cases, as per rates and caps specified under columns
(6) and (7) of AIR of the drawback schedule is admissible.
2.3. The declaration (d) of Form ARE-2 and para 1.5 of part-V of Chapter of the
CBEC's Excise Manual of Supplementary Instructions, 2005 are at variance with
legal position as explained in para 2.1 and 2.2 above. Accordingly, the said
declaration (d) has been amended vide
notification no. 44/2016-C.E. (N.T.) dated
16.09.2016. Further, other consequential amendments in Form ARE-2 have also been
made for the purpose of harmonising the provisions as per above legal position.
3. In terms of legal position explained in para 2.1 and 2.2 above, rates and
caps as per column (4) and (5) of the drawback schedule are applicable only in
cases where none of the following benefits namely CENVAT credit or facility of
input stage rebate under rule 18 of the Central Excise Rules, 2002 or facility
of procurement of inputs under bond under sub-rule (2) of rule 19 ibid has been
availed.
4. A further exception to above clarification is that in cases where input stage
rebate on diesel is availed or diesel is procured without payment of Central
Excise duty under sub-rule (2) of rule 19 of the Central Excise Rules, 2002, no
drawback shall be available either with reference to column (6) and (7) or
column (4) and (5). The declaration (d) of Form ARE-2 has been amended to
incorporate the same. This is because a part of Excise duty on diesel, which is
non-cenvatable, is factored under Customs component of the drawback rates as per
rates and caps specified under column (6) and (7) of the schedule.
5. Accordingly, it is clarified that:-
(i) Where in respect of exports, CENVAT credit is not availed on inputs but
input stage rebate on excisable goods except diesel is availed under rule 18 of
the Central Excise Rules, 2002, drawback of Customs portion, as per rates and
caps specified in column (6) and (7) of the drawback schedule shall be
admissible;
(ii) Where in respect of exports, CENVAT credit is not availed on inputs but the
inputs except diesel, are procured without payment of Central Excise duty under
sub-rule (2) of rule 19 of Central Excise Rules, 2002, drawback of Customs
portion, as per rates and caps specified in column (6) and (7) of the drawback
schedule shall be admissible;
(iii) Where in respect of exports, input stage rebate on diesel under rule 18 of
Central Excise Rules, 2002 is availed or diesel is procured without payment of
Central Excise duty under sub-rule (2) of rule 19 of Central Excise Rules, 2002,
no drawback either under column (6) and (7) or column (4) and (5) of the
drawback schedule shall be admissible.
(a) Divisional Assistant/Deputy Commissioner, Central Excise, while sanctioning
the rebate claim should verify this aspect and in case of availment of any
drawback, where input stage rebate on diesel under rule 18 of Central Excise
Rules, 2002 is also availed shall deny the claim of rebate involved on diesel
out of the rebate claimed, for violation of the declaration (d) of the ARE 2.
(b) In cases where diesel is procured without payment of Central Excise duty
under sub-rule (2) of rule 19 of Central Excise Rules, 2002, and the goods are
exported under claim of drawback the Central Excise duty involved on diesel
shall be recovered for violation of the declaration (d) of the ARE 2, while
examining the proof of export.
6. Hindi version of the circular would follow. Difficulty, if any, in
implementation of the circular may be brought to the notice of the Board.
F. No. 268/01/2016-CX.8
(Rohan)
Under Secretary to the Govt. of India
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