Circular No. 8/2001-Customs dated the 20th February, 2001
Duty Drawback on Processed Fabrics/Garments–Procedure for Verification of Brand Rate Applications

Sub:       Procedure for verification of brand rate applications against export of processed fabrics & garments

A number of discrepancies have since been observed by Drawback Directorate in the brand rate applications submitted by the exporters and verification reports carried out by field formations in regard to reimbursement of yarn duty against export of processed fabrics & garments.

2.  The relevant issues have been examined in the Board and the following decisions have been taken:

i)  Brand rate is being claimed against yarn duty and is admissible against exports. Therefore, verification has to involve the fact of export and yarn consumption. It is, therefore, decided that the verification will be carried out by the Central Excise formation having jurisdiction over the premises from where the export is effected, which is normally the processor's premises. yarn consumption & wastage thereof should be verified either physically, at the weaver's premises, or on the basis of documents produced by the exporter/processor/weaver. In case of doubt or if such documents are inadequate, a reference may be made to the jurisdictional Central Excise Officer of the weaver, if necessary. However, only one verification report shall be sent to Drawback Directorate by the said jurisdictional formation of the processor. It should be independent of a Chartered Engineer's/Chartered Accountant's Certificate or the Standard Input-Output Norms notified by DGFT.

ii)  Verification report shall clearly indicate the names of processors and weavers and the quantities processed/woven by each of them.

iii)  The exporter must declare the precise composition and blend of fabric exported under each shipping bill. This must be verified in relation to AR 4, DBK-I and DBK-III statements, and the composition/blend of yarn given in each supporting excise invoice as well as commercial invoice produced by the exporter against which Drawback is desired.

iv)  Drawback is admissible only if precisely both the consignments of yarn on which duty has been paid and for which invoices have been submitted is used in the manufacture of the export product. Therefore, the exporter shall submit proper excise invoices for such yarn, supported by corroborating commercial invoices and disclaimer certificates in case the exporter himself is not the consignee in excise invoices; the commercial invoices and the disclaimer certificates must prove the movement of those consignments of yarn for ultimate consumption in the export product.

v)  The disclaimer certificates, wherever submitted, should be neatly prepared on proper letter heads of the issuing firm, clearly indicating complete address and telephone numbers of the issuing firm, and must be signed by a responsible Officer clearly indicating his name as well as designation. The same should be properly verified by the Verifying Officers.

vi)  The corroboration between proper central excise invoices and relevant commercial invoices should be properly carried out on the basis of lot number, challan number etc. to ensure that the commercial invoices pertain to that very particular consignment which has cleared against the relevant excise invoice.

viii)  The brand rate application has to be submitted within 90 days from the date of let export. Time barred applications need not be verified, and a simple letter indicating the fact of time bar alongwith the copy of the application may be sent to Drawback Directorate for issuing the necessary rejection letter. In case certain shipping bills/period is time barred, the same should also be clearly indicated in the verification report.

ix)  A brand rate application is complete only if submitted alongwith completed DBK-I/II/III statements alongwith DBK-IIA/DBK-IIIA statements (wherever necessary). An application with inadequate data on the basis of which brand rate cannot be calculated is treated as null and void and is summarily rejected by the Drawback Directorate. Whenever, such applications are received in the field formations, this fact must be mentioned clearly in the verification report and the date on which duly completed statements are received may also be indicated. In such cases, the period of 90 days for submission of brand rate applications shall be counted from the date of duly completed statements/duly completed applications only.

3.  It may finally be emphasised that any lapses in carrying out proper verification may lead to fixation of brand rate in in-eligible cases and ultimate revenue loss, which needs to be prevented. Therefore, the above instructions in addition to any other instructions issued earlier on the subject should be scrupulously and strictly followed.

4.  The contents of this Circular may please be brought to the notice of field staff for strict adherence & uniform application.