Customs Circular
No.25/2007-Cus dated 16.7.2007
All Industry Rates of
Duty Drawback, 2007-08 – Reg.
The Ministry has announced the revised All Industry Rates of Duty Drawback vide
notification No.68/2007-Cus (NT) dated 16.7.2007. Taking into account the duty
incidence on inputs the drawback rates have been increased in most cases. The
increased rates of drawback have been made effective retrospectively from
1.4.2007. However, in a few cases such as primary steel, dyes and chemicals, the
drawback rates have been reduced. The reduced rates will take effect
prospectively from 18.7.2007, i.e. the date of coming into force of the
notification. The notification may be downloaded from CBEC website
www.cbec.gov.in and perused for details.
2. 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 calculation. 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 rate of
drawback.
3. The Drawback Schedule includes several new items. These include mats/rugs
made of LDPE/LLDPE, leather-cum-synthetic/textile footwear upper, coir mats,
parts of electrical apparatus made of copper/brass, handicraft/artware of
stainless steel and certain dye & dye intermediates. The Schedule may be perused
for details.
4. The drawback rates have undergone changes in line with the changes in prices
of inputs, duties etc. The Schedule may kindly be perused for details. The more
important changes are discussed below: -
i) Textiles and Textile Articles (Chapters 50-63)
a) Silk: In the case of silk, the drawback rate for higher quality silk
fabrics has been increased from 8.3% with a drawback cap of Rs. 250/kg to 10.8%
with a drawback cap of Rs.325/kg.. The rate for fabrics of noil silk has also
been revised upwards.
b) Wool: In the case of wool, the new drawback rate for woollen worsted
yarn grey – weaving quality is 8% with a cap of Rs.42/kg as against the existing
rate of 7.2% with a cap of Rs.24/kg. The new drawback rate for woollen worsted
yarn (dyed) – weaving quality is 9% with a cap of Rs.48/kg. Likewise, the
drawback rate on woollen worsted yarn (grey) – hosiery grade has been revised
upwards to 8% with a cap of Rs.27/kg from the existing rate of 7.2% with a cap
of Rs.19/kg. The dyed yarn – hosiery grade carries a higher rate of 9% with a
cap of Rs.30/kg. The drawback rates on blended yarn and fabrics have been
revised upwards accordingly.
c) Cotton Yarn and Fabrics: The new drawback rate for grey cotton yarn of
less than 60 counts is 5.4% with a cap of Rs.11/kg as against the existing rate
of 4% with a cap of Rs.8/kg. The new rate for dyed cotton yarn of less than 60
counts is 6.5% with a cap of Rs.18/kg. In respect of cotton yarn of 60 counts
and more, a higher rate of 8.8% / 9.9% with a cap of Rs.26 per kg / Rs.33 per kg
has been provided depending upon whether the yarn is grey or dyed. As for cotton
fabrics, the new rate is 6.4% (grey) / 7.7% (dyed) with a drawback cap of Rs.19
per kg (grey) / Rs.28 per kg (dyed). The new drawback rate for lungies and Real
Madras Handkerchiefs is 6.4% with a cap of Rs.28/kg, the same as applicable for
dyed fabrics. In the case of denim fabrics the new rate prescribed is 8.5% with
a cap of Rs.32/kg as against the existing rate of 6.5% with a cap of Rs.24/kg.
d) Man-made Filaments and Man-made Staple Fibres: In the case of
synthetic / artificial filament yarn (Chapter 54), the new drawback rate is 16%
(grey) / 17.3% (dyed) as against the existing rate of 12.5% (grey) / 14% (dyed).
In the case of woven fabrics of synthetic / artificial filament yarn, the
drawback rate has been revised upwards to 10.5% (grey) and 11.8% (dyed). Insofar
as synthetic / artificial fibres (Chapter 55) are concerned, the new drawback
rate is 16% as against the existing rate of 13.5%. In the case of yarn of
synthetic / artificial staple fibres, the new rates are 14.4% (grey) and 17.5%
(dyed). In the case of woven fabrics of synthetic / artificial staple fibres and
/ or man-made filament yarn, the new rates are 10.8% (grey) / 12.1% (dyed) as
against the existing rates of 8.5% (grey) / 10% (dyed). The Schedule may be
perused for details.
e) Carpets and Floor Coverings: The new drawback rate for hand knotted
woolen carpets is 12.5% with a cap of Rs.700 per sqm. as against the existing
rate of 9.4% with a cap of Rs.565 per sqm. For silk carpets, the new drawback
rate is 15.5% with a cap of Rs.2750 per sqm. as against the existing rate of
11.8% with a cap of Rs.1600 per sqm. The drawback rate on cotton durries is
fixed at 11.5% with a cap of Rs.26/kg as against the existing rate of 9.4% with
a cap of Rs.20/kg.
In the case of knotted carpets under heading 5701, the pile threads are usually
of wool or silk but sometimes of mohair or Kashmir goat hair. The ground fabric
is generally of cotton, flax, hemp or jute. Hand-knotted woollen carpets usually
contain cotton yarn varying between 10% to 30% which is used as warp as well as
backing. In view of this, these carpets may be allowed drawback @ 12.5% under
drawback S.No.570101 which specifically covers knotted carpets of wool.
f) Ready Made Garments: In the ready made garment sector, the new
drawback rate for knitted blouses/shirts/tops of cotton is 10% with a cap of
Rs.48 per piece as against the existing rate of 7% with a cap of Rs.31 per
piece. The new rate for knitted blouses/shirts/tops of man-made fibre is 11.5%
with a cap of Rs.48 per piece as against the existing rate of 8.1% with a cap of
Rs.34 per piece. For knitted blouses/shirts/tops of cotton and man made fibre
blend, the new drawback rate is 10.7% with a cap of Rs.48 per piece as against
the existing rate of 7.5% with a cap of Rs.32 per piece. The drawback rates on
woven garments have been revised accordingly. As for ready made garments made up
of silk and wool, the rate provided is 10% with varying caps.
g) Made Ups: In the made up category, the new drawback rate for bed
linen, table linen, toilet linen, kitchen linen and curtains of cotton is 9.1%
with a cap of Rs.110 per kg as against the existing rate of 6.4% with a cap of
Rs.64 per kg. The new drawback rates on made-ups of manmade fibres and made-ups
of silk/wool have also been revised upwards. The new rates are 10.4% and 9.8%
respectively as against the existing rate of 7.5% and 6.9%.
ii) Leather and Leather Articles (Chapters 41-42 & 64)
5. The new drawback rate for finished leather is 7.5% with a cap of Rs.8 per
sq.ft. as against the existing rate of 6.6% with a cap of Rs.7 per sq.ft.
Likewise, the new drawback rate for leather footwear for adults is 11.5% with a
cap of Rs.105 per pair as against the existing rate of 9.5% with a cap of Rs.85
per pair. In the case of leather apparel the rate provided is 11.4% with a cap
of Rs.650 per piece as against the existing rate of 9.5% with a cap of Rs.533
per piece. The drawback rates on other leather items viz. suit cases, handbags
and gloves have also been revised upwards.
5.1 The new drawback rate for saddlery and harness, made of leather is 10.2%.
The corresponding rate for saddlery and harness, made of non-leather is 9.5%.
Saddlery and harness are horse riding equipment which consist of saddlery used
on horse back for the rider to sit and harness goods which cover rest of the
horse riding equipment, such as bridles, reins, breastplates, martingales,
crupper, body rollers, halters, traces, collars, etc. These goods are exported
individually or in sets, depending upon the requirements of the overseas buyers.
In view of this, saddlery and harness of leather or non-leather under drawback
serial Nos. 420101, 420102 & 420103 exported individually or in sets may be
allowed drawback @ 10.2% or 9.5%, as the case may be, provided they are
otherwise classifiable under heading 4201. Pending provisional assessments, if
any may be finalized accordingly.
5.2 The term ‘articles of leather’ in chapter 42 of the Drawback Schedule has
been defined in condition 14 of the said notification as any article wherein 60%
or more of the outer visible surface area (excluding shoulder straps or handles
or fur skin trimming, if any) is of leather notwithstanding that such article is
made of leather and any other material. For removal of doubts, it is clarified
that the term ‘articles of leather’ would also include articles of apparel, made
of leather.
iii) Base Metals and Articles of Base Metals (Chapters 72-83)
6. The drawback rates on semi-finished steel, HR Coils, CR Sheets, GP Sheets and
bars & rods of mild steel have been reduced from 2.7% to 3.7% (all customs) to
1%. The drawback caps varying from Rs. 625/MT to Rs.1000/MT have, however, not
been changed. In the case of similar items of stainless steel, the rate has been
reduced from 2.6%-3.5% to a uniform rate of 2%. In respect of stainless steel
utensils, the rate has been revised upwards from 15% to 17% with varying caps
depending upon the quality of utensils.
6.1 Table, kitchen or other household articles (tariff item 73.23) are at times
fitted with lids, handles or other parts or accessories of other materials. In
cases of export of such articles, drawback may be allowed @ 17% with relevant
caps (i.e. the rate prescribed for tariff item 73.23) without making any
deductions towards the weight of such lids, handles etc. provided that they
retain the character of iron or steel articles classifiable under the said
tariff item.
6.2 In Chapter 74 (Copper and Articles thereof), the drawback rates on copper
cathodes, wire bars and rods have not undergone any change. Taking into account
the duty incidence and prices of inputs, the drawback rate on brass builder
hardware and handicrafts of brass has been increased from 15% with a cap of
Rs.75/kg to 18% with a cap of Rs.110/kg. The same is the case with artware/handicrafts
of copper where the drawback rate has been increased from 15% with a cap of
Rs.110/kg to 18% with a cap of Rs. 155/kg.
6.3 In the case of stainless steel cutlery falling under Chapter 82, the
drawback rate has been increased to 17% in line with duty drawback on stainless
steel utensils. The drawback rate on brass hardware items and other similar
items under chapter 83 has also been raised to 18% on par with brass
handicrafts.
iv) Machinery and Equipment (Chapters 84 and 85)
7. In the case of machinery items falling within Chapter 84, by and large, the
existing drawback rates have not been changed. In the case of electrical
machinery and equipment under Chapter 85, the rates have been revised downwards
marginally.
v) Bicycle & Bicycle Parts (Chapter 87) and Sports Goods (Chapter 95)
8. The drawback rates on bicycles and bicycle parts have been revised upwards
taking into account the duty incidence on inputs and the current FOB realization
on exports. The new rates are 13% for bicycles and 13%-15% on parts thereof. The
drawback rates on sports goods have also been revised upwards. The drawback rate
on the residual heading for sports goods has been increased from 1% to 4%. The
drawback rate on toys has also been increased to 6% from the existing rate of
2.1%.
vi) Writing Instruments (Chapter 96)
9. The existing drawback rate on ball point pen is 7% with a cap of Rs.75 per
100 pcs. The drawback rate on this item has been revised upwards to 8.5% with a
cap of Rs.225 per 100 pcs. The drawback rate on felt tipped pen has also been
increased from 12% with a cap of Rs.200 per 100 pcs to 13.3% with a cap of
Rs.275 per 100 pcs. Further, on high value fountain pens (Rs.500 & above) the
drawback has been provided @ 3% as against the existing rate of 1%.
vii) Chemicals, Dyes, Essential Oil, Plastics and Rubber (Chapters 28-40)
10. In the Schedule the drawback rates have been provided on 9 new dyes and 12
new dye intermediates. The drawback rates provided for these items are mostly in
the range of 1.5%-3%. On other dye & dye intermediates the rates have been
revised downwards marginally.
10.1 In respect of chemicals, pharmaceutical products, dye and dye intermediates
under Chapters 29, 30 and 32, drawback caps have been removed on items where the
rate prescribed is 2% or below. In the case of plastics in primary forms under
Chapter 39, the excise duty component in the Drawback Schedule has been removed
as the units exporting such products are in the CENVAT chain. Thus, for these
items, only the customs component has been indicated in the new Schedule.
10.2 In the case of perfumed agarbattis, taking into account the incidence of
duty on packing material, the drawback rate has been increased from 9.2% with a
cap of Rs.25/kg to 12% with a cap of Rs.33/kg. In the case of zinc oxide – IP /
BP / USP Grade (28.17), the new drawback rate is 6.3% (customs) as against the
present rate of 5.5%. On heat resistant latex rubber thread, the drawback rate
has been reduced from 14.2% to 12%.
10.3 Last year, a drawback rate of Rs.1050/MT (all customs) was provided in the
case of Furnace Oil and HSD (27.10) supplied by domestic oil companies to the
Units located in SEZs. In view of increase in crude prices, the rate has been
increased to Rs.1160/MT.
11. The notification and the new Drawback Schedule may be gone through carefully
to note the changes made therein. The 2007 amendments to the HS Nomenclature
have been fully captured in the new Schedule at the four-digit level. Though all
care has been taken in formulating / publishing the rates, the possibility of
inadvertent errors / omissions cannot be ruled out. It is requested that any
error / omission noticed during the implementation of the rates may be brought
to the notice of the Board immediately for suitable corrective action.
12. The Commissioners may kindly ensure that a quick and efficient
administrative system is in place to deal with all drawback claims for
hassle-free crediting of drawback the moment the exports take place. In
particular, they may ensure that the drawback amount is credited into the
exporter’s account immediately after ‘let export’ order and filing of manifest
by the carrier. Further, the grievances of exporters, if any, relating to
payment of drawback should be looked into quickly and if the same are not
addressed within 72 hours, the matter should be brought to the notice of Member
(Cus/EP) by e-mail.
12.1 As the increased rates of drawback have been given retrospective effect,
the Custom Houses may create separate cells to settle the supplementary claims.
The Commissioners may personally monitor this and ensure that such claims are
settled as expeditiously as possible.
13. A suitable Public Notice for information of the Trade and Standing Order for
guidance of the 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.
F.NO. 609/10/2007-DBKYours
faithfully,
(P.K. Mohanty)
Jt.Secretary to Government of India
Telefax: 23341079
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