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Regarding Eligibility of Drawback on the Element of SAD
Customs
Circular No. 58 dated 12th September 2002
In
terms of Section 74 and 75 of the Customs Act, inter alia drawback of customs
duties suffered on inputs used in the manufacture of resultant export product is
allowed. The C&AG of India had raised objection that drawback was not
admissible on the element of SAD. It was, therefore, decided to seek opinion of
Ministry of Law in the matter, Ministry of Law, on examination of issue, had
given an opinion that in view of the wording of sub-section (4) of Section 3A of
the Customs Tariff Act, since the provisions of the Customs Act pertaining to
refunds and exemptions only applied for the purpose of levy of SAD in terms of
Customs Tariff Act and since this sub-section did not specifically provide for
grant of drawback on the element of SAD, drawback on the element of SAD was not
admissible. It was, therefore, decided to temporarily disallow drawback on the
element of SAD.
2.
However, various Associations and individual exporters kept on
representing that since Sections 74 and 75 of Customs Act and Customs &
Central Excise Duties Drawback Rules, 1995 clearly provide for grant of drawback
on the element of SAD it was unfair on the part of DOR to have stopped granting
such drawback. In this regard opinion of TRU was also sought as sub-section (4)
was inserted in Section 3A of Customs tariff act in the 1998 Finance Bill by TRU.
TRU has categorically opined that the intention of the Government has been to
allow drawback on the element of SAD.
3.
On re-examination of the issue, Chairman, CBEC and Secretary, Revenue,
have ordered that since Sections 74/ 75 of the Customs Act clearly provide for
grant of drawback on any customs duty (which includes SAD) drawback on SAD
should be allowed.
4.
It has, therefore, been decided that for the time being drawback on the
element of SAD should continue to be granted.
5.
Suitable standing order / public notice for the guidance of Departmental
Officers and Trade may be issued and wide publicity given to this circular.
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