Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs, New Delhi
Circular No. 35/2010-Cus.,
New Delhi dated: 17.09.2010
To
All Chief Commissioners of Customs / Customs (Prev.).
All Chief Commissioners of Customs & Central Excise/ Central Excise.
All Director Generals under CBEC, CDR (CESTAT).
All Commissioners of Customs / Customs (Prev).
All Commissioners of Customs & Central Excise/ Central Excise.
Subject: All Industry Rates of Duty Drawback,
2010-11 - Reg.
Sir/ Madam,
The Ministry has announced the revised All Industry Rates (AIR) of Duty
Drawback vide Notification
No. 84/2010-Cus. (N.T.), dated 17/09/2010. The rates
of drawback have been made effective from 20.9.2010. The Notification may please
be downloaded from CBEC website www.cbec.gov.in and perused for details.
- Like in previous years, the drawback rates have been determined on the
basis of certain broad parameters including, inter alia, the prevailing prices
of inputs, Standard Input Output Norms (SION), share of imports in the total
consumption of inputs and the applied rates of duty. The incidence of duty on
HSD/Furnace Oil has been factored in the drawback calculations. The incidence of
service tax paid on taxable services which are used as input services in the
manufacturing or processing of export goods has also been factored. The
Commissioners may ensure that the exporters do not avail of the refund of this
tax through any other mechanism while claiming the All Industry Rates of duty
drawback.
The Drawback Schedule includes some new entries such as Denim Fabric and
cotton garments containing 1% or more by weight of Spandex / Lycra / Elastane,
garments of blend containing wool & Man Made Fibre(MMF), woven carpets and floor
coverings of jute, knotted carpets and floor coverings of MMF, brass parts of
ball or roller bearings and silk embroidery. The Schedule may please be perused
for details.
The drawback rates have undergone changes in line with the changes in the
prices of inputs, duties etc. Thus the drawback rates have been changed in most
cases. The more important changes are discussed below:-
- Leather and Leather Articles (Chapters 41, 42 & 64)
The Drawback rates for all the goods falling in the Chapters 41, 42 and 64
have been decreased by 5% - 15% approximately. The caps have also been revised
downwards. It may be noted that value cap for headings 420501 and 420502 has
been changed from Rs. 585 per piece to Rs. 15 per sq. ft. This change was
necessitated because of representations received from the field formations and
the trade in respect of Leather Sofa cover being exported in SKD/CKD condition
which was being denied drawback rate as ‘per piece’.
- Textiles and Textile Articles (Chapters 50-63)
- Silk:
The drawback rate for silk fabric has been increased from 9.8% with
a drawback cap of Rs. 295 to 11% with a drawback cap of Rs. 330/kg. The rate for
fabric of noil silk has also been revised upwards.
- Wool:
In the case of wool tops, woollen yarn and fabrics the drawback rates
have been decreased by 5% - 20% approximately. The caps have also been revised
downwards.
- Cotton Yarn and Fabrics:
The drawback rates for grey cotton yarn and dyed
cotton yarn continue to be Nil for the present. As for cotton fabrics, the new
rate is 3.7% (grey)/4.2% (dyed) with a drawback cap of Rs. 12 per kg (grey)/Rs.
14 per kg (dyed). In case of denim fabrics the new rate is 4.3% with a cap of Rs.
16.2/kg. The new entry for Denim Fabric with 1% or more by weight of Spandex /
Lycra / Elastane has been created with a drawback rate of 4.6% and value cap of
Rs. 17.4 per Kg.
- Man-made Filaments and Man-made Staple Fibres:
The Drawback rates for most
of the goods falling in the Chapters 54 and 55 have been marginally reduced.
- Carpets and Floor Coverings:
The Drawback rates for most of the goods except
for silk carpets, falling in the Chapter 57 have been decreased by 10%
approximately. For silk carpets, there is no change. New entries have been
created for carpets and floor coverings of Jute and Coir under heading 5702 with
drawback rates of 3.5%.
A new entry for carpets and floor coverings of cotton has been created under
heading 5702 to cover cotton woven durries/rugs etc. Earlier these goods were
being classified under the heading 570501. Representations were received that
these goods were correctly classifiable under the heading 5702. Accordingly, the
change has been made in this Drawback Schedule. As regards the past
consignments, no demands may be raised as the intention was always to allow
these goods the rate specified under heading 570501.
There has been a dispute about the heading 570301 as to whether the existing
description “hand tufted carpets” covers hand- held gun tufted carpets or not.
In order to resolve this dispute, the word “hand” has been deleted from this
heading and the description now reads only “tufted woollen floor coverings, all
sorts”.
- Ready Made Garments & Made Ups:
In the readymade garment sector, except
for silk garments, drawback rates have been decreased by 10% - 15%
approximately. The caps have also been revised downwards. The new drawback rate
for cotton garment is 7.5% as against the earlier rate of 8.8%. For garments of
blend containing cotton and (MMF), the new drawback rate is 8.6% as against the
earlier rate of 9.8%; for garments of MMF the new drawback rate is 9.5% as
against the earlier rate of 10.5%; for readymade garments made of silk and of
wool, the rates are 10% and 7.5% respectively. The new entries for garments of
blend containing wool and MMF and for those made of cotton with 1% or more by
weight of Spandex/Lycra/Elastane have been created with drawback rates of 8.6%
and 8% respectively.
In the made up category, the revised drawback rate for cotton made-ups is
7.1% with a cap of Rs. 60 per kg. The drawback rates and caps for made-ups of
MMF and of blend containing cotton and MMF have also been reduced.
- Base Metals and Articles of Base Metals (Chapters 72-83)
The duty drawback rate for stainless steel utensils falling under Chapter 73
and stainless steel cutlery falling under Chapter 82 has been reduced from 12.5%
to 8.8%. For other articles of iron and steel where there is a composite rate,
the same has been reduced by 25% to 30%. The drawback rate for handicrafts,
hardware and other items of brass has been decreased from 15% to 11%. The
drawback rates for hand tools have been decreased by 30% approximately. The caps
have also been revised downwards.
In order to resolve the dispute whether the description handicrafts/art ware
of galvanized iron with brass includes products which are coated/plated , the
entry ‘732603’ has been amended to read as “Handicrafts/ Art ware of Iron with
or without plating / coating, galvanized or otherwise, with Brass”.
- Machinery and Equipment (Chapters 84 and 85)
The new entry for brass parts of Ball or roller bearing has been created with
a drawback rate of 3% under heading 848202.
- Bicycle & Bicycle Parts (Chapter 87), Sports Goods (Chapter 95) and
Writing Instruments (Chapter 96)
The drawback rates for bicycles and bicycle parts have been revised
downwards. The new rate for complete bicycle is 9%. Further, a value cap of Rs.
10/- per Kg. has been introduced for the residuary entry ‘Others’ (871423). The
drawback rates for Sports Goods and Writing Instruments have also been revised
downwards by about 10% and 20% respectively.
- Miscellaneous
- In the earlier schedule, wooden artware and handicrafts were covered
under the heading 4420. On representations from the exporters that a number of
wooden handicraft items are not covered under the said heading, it has been
decided to have a uniform rate of 2.5% for wooden items of headings 4414, 4419
and 4420. A specific entry has also been created for wooden handicraft and
artware under the residuary head 4421 with a drawback rate of 2.5%.
- The description under heading 22071090 has been changed to read as “Ethanol
or Ethyl Alcohol, Rectified Spirit / ENA or otherwise containing more than 94.5%
Ethyl Alcohol”.
- References have been received seeking clarifications as to what should be
the minimum percentage of MMF in a garment or made-up for it to be considered as
a blended garment /made-up. The issue has been examined and the term ‘blend’ has
been explained in the Notification. It may be noted that the term ‘blend’ in
chapters 61, 62 & 63 refers to only two types of blends i.e. cotton & MMF and
wool & MMF. It shall mean that MMF shall be more than 15% but less than 85% by
weight in such garment or made-up. Further, the garment or made-up shall be
classified as of cotton or wool or MMF or silk or noil silk if the percentage of
the concerned fibre is 85% or more by weight in such garment or made-up.
- The earlier notification (No. 103/2008 Cus. (N.T.) dated 29.08.08 as
amended) provided that the rates of drawback in the Drawback Schedule would not
be applicable to products manufactured or exported by availing the rebate of
Central Excise duty paid on materials used in the manufacture of export goods 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. References have been received that exporters are
being denied 1% of drawback, which is the customs component of the AIR drawback,
on the basis of the above condition although the manufacturers had taken only
the rebate of Central Excise duties in respect of their inputs / procured the
inputs without payment of central excise duties; and the Customs duties which
remained unrebated should be provided through the AIR drawback route.
The issue has been examined. The present notification No. 84/2010-Cus. (N.T.)
dated 17.09.2010 provides that 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 earlier notification provided that the gold and silver jewellery
exports under the Drawback scheme would be examined by the Customs Appraiser/
Superintendent (Jewellery Expert). Problems have been reported since the
jewellery experts are not available at all ports. Accordingly, the notification
has been modified. Now such exports may also be examined by other
Appraisers/Superintendents who have not been recruited as jewellery experts. It
is however advised that officers may be posted to these positions after adequate
training. Efforts should also be made to provide electronic Carat Meters to
them.
- The earlier notification provided that the rates of drawback in the Drawback
Schedule shall not be applicable to products manufactured or exported by
availing the facility under the DEPB (Duty Exemption Pass Book) scheme.
References were received seeking clarification whether an exporter who
manufactured the export goods with raw material imported against DEPB scrips,
shall be eligible for drawback on such exports even if DEPB benefits is not
claimed. The doubt appeared to have arisen because the above mentioned
notification debarred benefit of AIR drawback if the export goods had been
‘manufactured’ availing the benefit of the DEPB scheme.
In order to resolve the matter, the word ‘manufactured’ has been deleted in
the present notification and the condition has been modified to read that the
drawback will not be available if the goods are ‘exported’ availing the benefits
of the DEPB scheme.
- The Notification and the new Drawback Schedule may be perused carefully to
note the changes made therein. Though all care has been taken, the possibility
of inadvertent errors/omissions cannot be ruled out. It is requested that any
error/omission noticed during the implementation of the rates be brought to the
notice of the Board immediately for suitable corrective action.
- The Public Notice and Standing Order for guidance of the trade and staff may
be issued. Difficulties faced, if any in implementation of the changes may be
brought to the notice of the Board at once.
Kindly acknowledge receipt of this Circular.
(Najib Shah)
Joint Secretary to the Government of India
F.No. 609/76/2010-DBK