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PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
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SCHEDULE OF ALL INDUSTRY RATES OF DUTY DRAWBACK (2011-12) TO BE NOTIFIED SOON;
ADDITIONAL 1100 NEW
LINE ITEMS TO BE INCORPORATIED RAISING THE NUMBER OF SUCH
LINE ITEMS TO 4000
New Delhi: Bhadrapada 25, 1933
September 16, 2011
The Government of India will shortly be notifying the schedule of AIR (All
Industry Rates) of duty drawback for the year
2011-12. In this regard, the
Government had constituted a Committee in January 2011 under the chairmanship of
Shri
Saumitra Chaudhuri, Member, Planning Commission for formulation of AIR of
Duty Drawback. In view of the
Government’s
decision to bring the DEPB scheme to
an end by 30th September this year, the Committee had also been entrusted with
the added responsibility of recommending drawback rates for those commodities
which have traditionally been exported
under DEPB (Duty Entitlement Passbook)
Scheme . The Committee has had wide ranging discussions with various export
councils to gain a better understanding of the issues involved. A number of
export councils and associations have
submitted data to the Committee which has
been carefully examined and considered. The Committee has since
submitted its
report to the Government along with a Schedule of recommended Drawback rates.
The recommendations
of the Committee form the basis for the rates being
notified.
The DEPB Scheme has been in existence since 1997. Presently, there are 2130 line
items covered under this scheme.
Incorporating these items within the drawback
schedule and assigning appropriate duty drawback rates for these items
was a
challenge both from a product classification perspective as well as from a
drawback rate perspective.
Consequently, the new Drawback Schedule will
incorporate an additional 1100 line items(approx.) which are being
taken from
the DEPB list. With this, the total number of items in the drawback schedule
will number approximately
4000 line items, as against the present 2835 line
items.
Broadly speaking, most of the items which are already covered under the duty
drawback schedule will suffer a minor
reduction in the existing drawback rates.
The reduction is mainly on account of the reduction in basic customs duty on
crude
petroleum from 5% to Nil as well as a reduction in central excise duty on diesel
from Rs 4.40 per litre.to Rs 2.40
per litre. Crude petroleum enters into the
product chain of various products as petrochemical inputs and diesel is also
consumed in captive DG power plants in a majority of industries. Further, there
has been a steep reduction in import
duty on silk yarn from 30% to 5%. This has
resulted in an adverse impact on the duty drawback rates for the silk fabric,
silk garments and silk carpet industries for which imported silk yarn is the
main input. The extent of reduction has been
limited to 30% to 50% . While,
there would be a minor reduction in duty drawback rates for most other items,
due care
has been taken to ensure that this reduction is capped at 10% of
existing duty drawback rates, wherever the reduction
in percentage terms
actually works out to be much more, so as to minimize the hardship faced by
exporters. In certain
items namely leather garments and leather bags, the duty
drawback rates have actually increased.
In respect of items covered under the DEPB Scheme, it was observed that the
major exporters operating under the
DEPB Scheme were mainly from the Engineering
sector including the auto and auto component industry, Chemicals ,
Pharma
Sector, Textiles and the marine sector. Since the DEPB Scheme will not continue
beyond September 30,2011,
it has been decided to provide a smooth transition for
these items while incorporating these in the drawback schedule.
As a transitory
arrangement, these items will suffer a modest reduction in the existing DEPB
rates , to the extent of
1% to 3%, which represents the ad-hoc rates of DEPB
introduced in 2007. Further, the appropriate duty drawback
rates for the items
under DEPB have been recomputed taking into account the prevailing customs duty
rates. It has
been observed that for most of the items under DEPB, the
recomputed rate works out to be far lower than the existing
DEPB rates, even
after removal of the ad-hoc element, ranging from 1 to 3%. In order to ensure
that this transition
does not adversely affect exporters who were operating
under the DEPB Scheme, the Government has decided that
the drawback rate shall
be capped at 5.5% for many items. However, there are 340 line items where , even
after
reduction of the ad-hoc rates (1 to 3%) from the existing DEPB rates, the
recomputed rate works out to more than
5.5%. Some of these items are listed
below as an illustration:
o Worsted woollen yarn
o Blanket, etc
o Nylon twine
o Cut polished chat stones
o Lacquer coated polyester film
o Hermetically sealed compressors
o Polyester metallised film
In such cases, Government has decided to provide the recomputed duty drawback
rates. Further, for certain products in
the marine products sector, namely
frozen and chilled meat products, it has been decided to provide a transitional
duty
drawback rate , taking into account the large volumes of exports of these
products in the DEPB and also considering the
fact that a large number of
exporters in these sectors are from the Medium and Small Scale Sector.
Presently, the DEPB rates are available for two wheelers, three wheelers,
commercial vehicles and tractors. Drawback
rates have been provided in the
proposed schedule. However, exporters of passenger cars are presently opting for
brand rate of duty drawback. Government has received requests from these
exporters through SIAM (Society of Indian
Automobile Manufacturers)for inclusion
under the AIR drawback schedule and the same has been accepted. Consequently,
the drawback schedule will now provide AIR rate of duty drawback for Passenger
Car Exporters also. Further, Government
has also decided not to impose any value
cap on the transport sector. With these measures, it is hoped that the auto
sector
which are the primary beneficiaries under DEPB would be able to make a
smooth transition into the drawback scheme.
In respect of overlapping items, (i.e. items which figure in both the DEPB
Schedule as well as the drawback schedule)
Government has decided that to the
extent possible the drawback rates be aligned so as to provide uniformity to
exporters
who have been operating under either of these schemes.As a general
policy, it has been decided that there will be no value
cap for all items, where
the duty drawback rate is less than or equal to 3%.
DSM/SS/GN
Source : finmin.nic.in