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What is Duty drawback and cases when it is not applicable


What is Duty drawback and cases when it is not applicable. Find Complete details for Duty Drawback and Find cases details when it is not applicable. In this article you can find all details regarding What is Duty drawback and cases when it is not applicable like – Introduction for Duty drawback, What is Duty Drawback ??, Cases where Duty Drawback is not permissible. Now you can scroll down below and check more details for “What is Duty drawback and cases when it is not applicable”

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What is Duty drawback and cases when it is not applicable

Introduction :-

This article is particularly very much relevant for current period as every company wants some relief from the government as a part of refund or remission or duty drawback, but does not have the information about them. So this article particularly focuses on such issues.

What is Duty Drawback ??

Duty Drawback means credit/rebate of the customs duty and excise duty paid on inputs used in export of final product. Drawback Rates for all products are decided by Principal Commissioner or Commissioner of Central Excise. There are different rates for different products. Duty drawback is covered u/s 75 of the Central Excise Act. There are some products which are re-exported once they are imported back after export of the same product because of some technical issues in the product and hence needs to be re-exported, then rebate on such re-exported goods is also available u/s 74 of such act. The occurrence of service tax is also calculated for calculating the drawback.

Cases where Duty Drawback is not permissible :-

  1. The first and foremost reason for not granting the drawback is “Negative value addition”, i.e. the value of imported goods for the production of exported goods is more than the value of exported goods.
  1. If the imported input goods are covered by and having receipt of Advance License, which means the holder of the license will not have to pay import duty and so no credit for the same will be available.
  1. The basic rule is that if you pay for the duty for imported goods and if you export the same goods after some process then only rebate will be given. If no duty has been paid then no credit for the same will be provided.
  1. The basic aim of giving such drawback is to generate higher foreign currency in the market. If the Foreign currency is not generated with stipulated time period then no rebate is possible.
  1. Case where assesse has made a Bond with Government stating that the input goods which are imported by the assesse are for export purpose than no duty will be charged at the time of import so no question arises for its drawback.
  1. If the duty drawback amount is less than Rs. 50, than also drawback will not be processed.
  1. The Duty drawback is of Excise and Customs only and not of any other taxes like sales tax,octroi etc.
  1. The production by EOU or the products which are produced in Special Economic Zone, they are not liable for payment of Excise and Customs so no drawback is required.
  1. If the credit of the same inputs is taken somewhere else,i.e. lets say in CENVAT credit than drawback will not be provided.
  1. There is special exemption for claiming drawback in case of jute batching oil and its components where drawback is not allowed and another exemption is the location exemption, that if they are exported to Nepal/Bhutan, drawback is not available.

Special section 76(2) speaks about the special disallowance for claiming the drawback where commissioner finds some existence of the same exported goods to be smuggled in India, then they may disallow individually.

The only principle for claiming the duty drawback is that the assesse or the person claiming it should not get double benefit for the same and the intention of the same should be proper. This exemptions are provided to assesse only for the generation of foreign exchange in the country which in turn increases the growth rate of the country

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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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