Drawback - when inputs are imported availing DEPB - yet another faux pas from the Board · TIOL-DDT 233

Drawback - when inputs are imported availing DEPB - yet another faux pas from the Board

By Vijay Kumar

Board clarifies that "it has been decided that the additional customs duty paid through debit under DEPB shall also be allowed as brand rate of duty drawback."

The Board clarification needs a little analysis. Here's the text of the operative part of the circular.

an issue has been raised as to whether additional customs duty paid through debit under DEPB can be allowed as brand rate of duty drawback.
The matter has been examined by the Board. Hitherto, the additional customs duty paid in cash only was adjusted as CENVAT credit or duty drawback while the same paid through debit under DEPB was not allowed as duty drawback. In the Foreign Trade Policy 2004-2009, which came into force w.e.f. 1.9.2004, it has been provided under paragraph 4.3.5 that the additional customs duty/excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT credit or Duty Drawback as per the rules framed by the Department of Revenue. Taking note of this change, it has been decided that the additional customs duty paid through debit under DEPB shall also be allowed as brand rate of duty drawback.

So according to the Board,

1. The Foreign Trade Policy has provided that CVD paid through DEPB credit can be adjusted as Cenvat Credit or Drawback as per the rules framed by the Department of Revenue. (Board is not sure whether such rules have been framed)

2. Taking note of this change, Board has now decided (by a circular) that CVD paid through DEPB shall also be allowed as duty drawback.

Now this raises certain questions:-

1. Board has issued this clarification by a circular on 28th October 2005. Since when is it effective? From October 28th 2005 or September 2004?
2. Will drawback be given from the date of the policy?
3. This circular is silent on cenvat credit. Does it mean Cenvat credit will be allowed of the CVD paid from DEPB credit?
4. Why is this circular silent on cenvat credit and what was the need for clarification on drawback (only)?

DDT invites comments from our netizens on this issue. Please mail them immediately. We will come up with answers tomorrow.

CIRCULAR NO. dated the 28th October,2005