Instances have been brought to the notice of the Board that some Customs Houses are not allowing drawback where the drawback exceed 2% of the FOB value but it less than Rs. 5000 per shipment. This practice appears to be based on the misconception that drawback amount must always exceed Rs. 5000, Rule 7A of the Customs and Central Excise Duties Drawback Rules, 1971 and corresponding rule 8 of Customs and Central Excise Duties Drawback Rules, 1995 provide that no amount of rate of drawback shall be determined in respect of any goods under rule 3, rule 6, or as the case may be rule 7 if the amount or rate of drawback is less than 2% of the FOB value thereof, subject to the exception that where the amount of drawback per shipment exceeds Rs. 5000 it shall be allowed.

2.    In view of the above it is clarified that in all cases, where drawback is more than 2% of the FOB value thereof, the limit of Rs. 5000 is not applicable and in such cases drawback is required to be paid so long as the amount exceeds the minimum limit of Rs 50 specified in Section 76 of the Customs Act. Similarly, in all cases where the amount of drawback payable is Rs. 5000 or more, the limit of 2% of FOB value is not applicable and in such cases drawback is payable even if it is less than 2% of the FOB value. This clarification may please be brought to the notice of all concerned for proper processing of drawback claims.