Government Revises All Industry Rates of Drawback
THE Central Government yesterday revised the All Industry Rates (AIRs) of Drawback by Notification No. dated 31.10.2016 which comes into force on 15.11.2016.
These AIRs take into account relevant broad average parameters including,
1. prevailing prices of inputs,
2. input output norms,
3. share of imports in input consumption,
4. the rates of central excise and customs duties,
5. incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods,
6. incidence of duty on HSD/furnace oil,
7. value of export goods, etc.
Some of the changes are: -
i. AIRs have been provided to certain worked articles under chapters 45, 46 and 68;
ii. Certain products, earlier with all customs AIRs, have been provided composite rates. These include rubber parts (for automobile or other machinery) of chapter 40 and children's picture, drawing/colouring books, etc. of chapter 49;
iii. Changes in certain tariff items description have been made for dispute prevention or enhancing simplification. These relate, inter-alia, to packaged rice, rubber parts, certain leather items, leggings, frocks, bicycles, protective sports gear, etc;
iv. For better product differentiation, separate tariff lines have been provided by carving out from (or replacing) certain existing tariff items. These include surimi fish paste (chapter 16), belts (chapter 39), leather woven/braided hand-bag (chapter 42);
v. In the notes and conditions of the notification, the term article of leather in chapter 42 of the Drawback Schedule has been expanded to include any article wherein 60% or more of the outer and inner surface area taken together is of leather. This is in the light of newer design and commercial practices;
vi. Residuary rate (customs) provided to items across various chapters has been reduced from 1.9% to 1.5% and from 1.4% to 1.1%.
The Notification also specifies:
1. The alternative AIRs on garment exports made against the Special Advance Authorization (para 4.04A of FTP 2015-20) in discharge of export obligations in terms of Notification No. 45/2016-Customs dated 13.8.2016. For claiming these alternative AIRs, the relevant tariff item has to be suffixed with suffix "C" or suffix "D" for the situation when Cenvat facility has not been availed or when Cenvat facility has been availed, respectively, instead of the usual suffix "A" or suffix "B".
2. The amount for payment as provisional drawback by proper officer of Customs in terms of sub-rule (3) of Rule 7 of Customs, Central Excise and Service Tax Drawback Rules, 1995. This is equivalent to the Customs component of AIR corresponding to the export goods, if applicable, and subject to the same conditions as applicable to a claim for that component.
Apart from revisions in the AIRs, the Government has also amended the Customs, Central Excise and Service Tax Drawback Rules, 1995 by Notification No. dated 31.10.2016 for the purpose of deleting sub-rule (1) of rule 8 which did not allow AIR or Brand Rate drawback to exports (other than postal exports or exports under advance authorization) if the amount of drawback is less than 1% of F.O.B. value of export, except where the amount of drawback per shipment exceeded Rs.500. This deletion takes effect from 15.11.2016.
The CBEC expects the Commissioners to ensure:
1. due diligence to prevent any misuse.
2. that the shipping bills with parameters considered to be sensitive to be handled with adequate care at the time of export.
3. that in case of claim of the composite (higher) rate of AIR, the processing should specifically ensure availability of "Non-availment of Cenvat certificate" etc. at the export stage itself.
4. that in the case of AIR claim against tariff item numbers 711301, 711302 or 711401 the availability of exporter's declaration as per Circular No. and recorded at the Let Export Order stage by the Customs officer.
5. continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill.
6. that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR.
7. that suitable public notice and standing order are issued for guidance of the trade and officers.
8. that any inconsistency, error or difficulty faced are intimated to the Board.
9. They inform, with appropriate data, the details of specific products where drawback cap needs to be imposed
With trade facilitation in view, tenure of the Drawback Committee constituted by the Central Government has been extended to expeditiously look into issues arising from the changes made. Accordingly, exporters of products at revised residuary rates of 1.1% and 1.5% may immediately come forward with data, if any, for higher than residuary rates.
CBEC Circular No. 50/2016-Customs., Dated: October 31, 2016