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Government of India
Ministry of Finance, Department of Revenue
Central Board of Excise & Customs
Circular No. 50/2016-Customs
New Delhi, dated 31st October, 2016
To
Principal Chief Commissioners / Principal Directors General,
Chief Commissioners / Directors General,
Principal Commissioners/Commissioners,
All under CBEC
Subject: All Industry Rates of Drawback and other Drawback
related changes -reg.
Madam/Sir,
The Central Government has revised 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. The notification may be
downloaded from Board‟s website and carefully perused for details of the
changes. 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%.
2. The notification also specifies the alternative AIRs on garment
exports made against the Special Advance Authorization (para 4.04A of
FTP 2015-20) in discharge of export obligations in terms of
Notification No. 45/2016-Customs dated 13.8.2016. For claiming these
alternative AIRs, the relevant tariff item has to be suffixed with
suffix „C‟ or suffix „D‟ for the situation when Cenvat facility has not
been availed or when Cenvat facility has been availed, respectively,
instead of the usual suffix „A‟ or suffix „B‟. The procedure in
Circular No. 37/2016-Customs is to be applied.
3. Para 3 of the notification specifies the amount for payment as
provisional drawback by proper officer of Customs in terms of
sub-rule (3) of Rule 7 of
Customs, Central Excise and Service Tax Drawback Rules, 1995. This
is equivalent to the Customs component of AIR corresponding to the
export goods, if applicable, and subject to the same conditions as
applicable to a claim for that component. The procedure for such claim
remains as in
Annexure 1 of Circular No. 29/2015-Customs which also applies for
garment exports against Special Advance Authorization with the variation
in declaration as prescribed in
Circular No. 37/2016-Customs. The amount paid as provisional
drawback under this dispensation shall be taken into account for
authorizing further provisional drawback (where necessary) by Central
Excise authorities who are expected to continue the facilitation in
terms of
para 5A to 5C of
Instruction No. 603/01/2011-DBK dated 11.10.2013 in
brand rate cases.
4. In connection with export of packaged rice under claim for AIR it
is clarified that – (a) where master packs made of any material contain
rice packaged in material and pack size of the type specified in the
tariff line, the drawback rate eligible is the drawback rate of the pack
size; and (b) where smaller packs made of packaging material other than
that described in the tariff line are packed in larger master packs made
of the material specified in the tariff line, the drawback rate eligible
shall be the drawback rate appropriate to the size of the master pack.
5. It is noted that field formations intermittently raise the issue,
with exporters, of admissibility of drawback on parts of machinery under
individual drawback tariff lines where the AIR is provided at 4-digit
level but the 4-digit description does not specifically indicate the
word “parts”. In the Drawback Schedule‟s notification‟s notes and
conditions it is specified that the tariff items and description of
goods in the Drawback Schedule are aligned with the tariff items and
description of goods in the First Schedule to the Customs Tariff Act
1975 at the 4-digit level and that the general rules for interpretation
of the First Schedule to the Customs Tariff Act 1975 shall mutatis
mutandis apply for classifying the export goods listed in the Drawback
Schedule. However, notwithstanding this position in the Drawback
Schedule, certain parts are classifiable in terms of the notes and
conditions 3 (ii). This means that if parts of machinery fall under a
tariff item in the First Schedule to the Customs Tariff Act 1975 at the
4-digit level, then in the Drawback Schedule too they would be covered
under that 4-digit tariff item, unless otherwise specified in the notes
and conditions.
6. Apart from revisions in the AIRs, the Central Government has also
amended the Customs, Central Excise and Service Tax Drawback Rules, 1995
vide
Notification No. 132/2016-Customs (NT) dated 31.10.2016 for the
purpose of deleting sub-rule (1) of rule 8 which did not allow AIR or
Brand Rate drawback to exports (other than postal exports or exports
under advance authorization) if the amount of drawback is less than 1%
of F.O.B. value of export, except where the amount of drawback per
shipment exceeded Rs. 500. This deletion takes effect from 15.11.2016.
7. The Commissioners are expected to ensure due diligence to prevent
any misuse. The shipping bills with parameters considered to be
sensitive should be handled with adequate care at the time of export.
Further, in case of claim of the composite (higher) rate of AIR, the
processing should specifically ensure availability of „Non-availment of
Cenvat certificate‟ etc. at the export stage itself. In the case of AIR
claim against tariff item numbers 711301, 711302 or 711401 the
availability of exporter‟s declaration as per
Circular
No.30/2016-Customs should be ensured and recorded at the Let Export
Order stage by the Customs officer.
8. There is also need for continued scrutiny for preventing any
excess drawback arising from mismatch of declarations made in the Item
Details and the Drawback Details in a shipping bill. It may continue to
be ensured that exporters do not avail of the refund of service tax paid
on taxable services which are used as input services in the
manufacturing or processing of export goods through any other mechanism
while claiming AIR.
9. With trade facilitation in view, tenure of the Drawback Committee
constituted by the Central Government has been extended to expeditiously
look into issues arising from the changes made. Accordingly, exporters
of products at revised residuary rates of 1.1% and 1.5% may immediately
come forward with data, if any, for higher than residuary rates.
10. Suitable public notice and standing order should be issued for
guidance of the trade and officers. Any inconsistency, error or
difficulty faced should be intimated to the Board. The Commissioners may
also inform, with appropriate data, the details of specific products
where drawback cap needs to be imposed.
(Rajiv Talwar)
Joint Secretary
Tel:23341079
F. No. 609/83/2016-DBK
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