Fixation of brand rate of duty drawback by the Central Excise field formations under Rules 6 and 7 of the Customs and Central Excise Duties Drawback Rules, 1995 - Removal of difficulties

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Customs Circular No. 89/20003 dated 6.10.2003
Sub: Fixation of brand rate of duty drawback by the Central Excise field formations under Rules 6 and 7 of the Customs and Central Excise Duties Drawback Rules, 1995 - Removal of difficulties – regarding.

Attention is invited to Customs Circular Nos.14/2003 dated 6.3.2003 and 83/2003 dated 18.9.2003, wherein detailed procedure as to the fixation of Brand Rate and Special Brand Rate has been explained.

2. These instructions as well as the illustrations given therein were based on the presumption that field formations are aware of the fact that drawback facility should not be allowed in case the exporter has availed of input stage relief under various schemes including Cenvat facility. It has, however, been learnt that some confusion persists in the minds of field formations.

3. In order to dispel such doubts, it is clarified that duty drawback scheme is aimed at neutralising the input stage duties of Customs and Central Excise suffered in respect of various inputs used in the manufacture of the export products.

Apart from duty drawback, exporters also have other schemes for claiming the relief of input stage duties of Central Excise through rebate under Rule 18 of the Central Excise Rules, 2002 or Cenvat Facility under the Cenvat Credit Rules, 2002. It is clarified here that if the input stage duties have been rebated through the instrumentality of any of these schemes, then simultaneous relief under Drawback scheme shall not be admissible. The field formations, therefore, should ensure that the Central Excise allocation of the duty drawback rate can be permitted only if the exporters furnish the evidence that they are not availing –

Cenvat facility under Cenvat Credit Rules, 2002 (or earlier Rules), and
rebate of the inputs/materials used under Rule 18 of the Central Excise Rules, 2002 (or the corresponding rule under the earlier Rules).

However, if any of the inputs have suffered customs duty and drawback is admissible on it as per rules, the same may be allowed.

4. Further, the field formations are also aware that manufacturers/ producers have the facility of removing the materials (inputs) without payment of duty from the factory of the producer or the manufacturer or the warehouses or any other premises, for use in the manufacture or processing of the goods which are exported with the approval of the Commissioner of Central Excise. Therefore, this facility also amounts to a relief of the input stage duties. Hence, while allowing drawback it should be ensured that the exporters do not avail of the facility under Rule 19(2) of the Central Excise Rules, 2002 (or the corresponding rule under the earlier Rules).

5. Field formations should also note that under DEPB Scheme, drawback can only be allowed in terms of the Customs Circular no.39/2001 dated 6.7.2001.

6. Similarly, under Advance Licence Scheme, the exporters get the facility of duty free import of the inputs required for the manufacture of export product. Therefore, the relevant import documents (Bills of Entry, etc.) should be carefully scrutinised to ascertain whether duties have been exempted. No Brand Rate of drawback should be fixed for such cases. However, Brand Rates can be fixed for rebating duties on such inputs which do not figure in relevant Advance Licence/DEEC Book and which have been procured by exporters indigenously or through import under the cover of proper duty paying documents i.e. Central Excise invoices or bills of entries, as the case may be, provided that the exporters do not avail of CENVAT facility in respect of the element of Central Excise duty or the Countervailing Duty(CVD) as the case may be.

7. On the other hand, under Duty Free Replenishment Certificate Scheme, which is a post export scheme, the exporters are issued a DFRC Licence. The DFRC licence is freely tradeable in the market. The import of relevant inputs figuring in the Standard Input-Output Norm (SION), published in the Handbook of Procedures, Vol.II to the EXIM Policy, against a DFRC licence is exempted from the basic customs duty. But the importers are required to pay the countervailing duty (CVD) in cash. It is clarified here that the exporters who manufacture their export product by using the material imported against a DFRC licence, can be given brand rate of drawback in respect of such element of CVD provided they do not avail of Cenvat facility on the same.

8. In the revised scheme of the things, the brand rate letters are to be issued by the jurisdictional Central Excise authorities and the Customs field formations are required to permit drawback on the strength of such rate letters. In order to ensure that the exporters do not simultaneously avail of the relief of input stage benefits under various schemes, the brand rate letters issued should specify that the manufacturer exporters or the supporting manufacturers (in case the exporter is a merchant exporter) has not availed of the benefit of various schemes mentioned in paragraphs 3, 4, 5, 6 and 7 above. However, if brand rate has been fixed in respect of exceptional situations under these schemes as explained in the above referred paras, the brand rate letters should specify the same.

9. Suitable public notices for information of the trade and standing orders for guidance of the staff may kindly be issued accordingly.

10. The receipt of this Circular may kindly be acknowledged.

Yours faithfully,
Sd/-
(S.S. Renjhen)
Joint Secretary to the Government of India
Telefax No.23341079

F.No.603/32 /2003-DBK