Drawback - Fixation  of  brand  rate  of  duty drawback  by the  Central Excise  field  formations under  Rules  6  and  7  of  the  Customs  and  Central Excise  Duties  Drawback  Rules, 1995 -  Removal  of difficulties.

Document Text

Circular No. 83/2003-Customs 18th September, 2003. F.No.603/32 /2003-DBK Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs Central Sub: Fixation of brand rate of duty drawback by formations Excise the under Rules 6 and 7 of the Customs and Central Excise Duties Drawback Rules, 1995 - Removal of difficulties – regarding. field Attention Central amended by Notification No.20/2003-Cus(N.T.) dated 3.3.2003. Drawback Customs revised Duties Excise invited 1995, Rules, to is and as for was such apply Rate, earlier special fixation exporters centralised 2. The fixation of duty drawback under Rule 6 (i.e. Brand Rate) in respect of those export products which do not figure in the All Industry Rate of Drawback Table or under Rule 7 (Special Brand Rate) where the on account of inadequate rebate of input stage duties through All in Industry the Ministry. However, as a measure of decentralization and trade facilitation, the powers for fixation of brand rate to and the jurisdictional Commissionerates of Central Excise through the amended Duty Drawback Rules. For the convenience of the field formations and for the guidance of the trade, a comprehensive Customs Circular No.14/2003 had been issued on 6th of March, 2003. As a result, brand rates/special brand rates for duty drawback are now being the Central Excise Commissionerates on the basis of the applications filed by the exporters. Though the new system has been in place for past five months, some confusion persists in the minds of field formations as well as trade in regard to certain areas. fixed by delegated brand been have rate 3. The following issues raised by the field formations and the trade have been examined in detail in the Board:- (a) Applicability of All brand rates of duty drawback. of duty drawback in Industry Rates leather articles (i) It has been brought to the notice of the Board that in respect of the exporters have not been furnishing duty paying documents in field respect of formations are not factoring the duty drawback on account of finished leather/lining leather into the total brand rate. leather. As a footwear, etc., finished/lining including result the to the Central finishing chemicals, in mind finishing of inputs in penetrating It is clarified that both finished leather as well as lining leather are exempt from the Central Excise levy. However, it is to the nature be borne that various agents, of wattle extracts and leather dyes & auxiliaries are used in the the duties on raw hides. Therefore, these inputs remain unrelieved as leather (finished / lining) is not it subject has been the practice to factor the All Industry Rate of duty drawback / lining leather into the total duty drawback rate while calculating the drawback rate for export products manufactured from finished / Field formations are, therefore, advised that while computing the for rate brand of leather All articles Industry Rate available on leather may be considered on the consumption of finished/lining leather in the export product. footwear, finished/lining Therefore, including drawback available leather. finished Excise lining levy. the on to It leather, produce involved predominant usage of synthetic Illustration: ready-made Supposing, the leather product exported is indigenous garment. finished lining imported material, duty paid imported zippers and metallic buttons. In this case, in respect of the imported materials, the exporter would be required of entry, evidencing the Customs duty incidence suffered on these on incidence the materials consumed ( after allowing normal wastage) shall be purposes for of calculating duty drawback on these inputs. However, as reg ards exporter would be required to furnish an invoice indicating the local price finished leather procured. Duty drawback element on this leather shall to a maximum be calculated @ 6% of value, subject inputs. Duty indigenous reckoned finished leather, inputs paying these duty bills the the of on the sq. Duty ft. as provided Drawback in SS No.41.02 of Rs.4.00 per of 2003- 2004. If the local invoices show procurement of finished leather @ Rs.60.00 per sq. ft. then the duty drawback element on this component shall be restricted to Rs.3.60 per sq. ft. However, if the drawback amount computed comes to more than Rs.4.00 per sq. ft., the same shall be restricted as per the drawback cap available. Table, in Similarly, (ii) case of complete bicycle, manufactured by using various cycle parts a nd also certain other accessories / parts, not listed under SS No.87.44 of the Duty Drawback, the brand rate could be allowed in respect of such extra parts / accessories, provided / that accessories are procured on payment of duty and not imported duty free under Advance Licence/DFRC/DEPB Schemes. these parts the No. (SS stand 87.106), in the carrier(SS proves these accessories but does not Illustration: For example, an exporter exports a complete bicycle with certain accessories, i.e., indigenous seat cover, imported headlight, indigenous front basket, bicycle bell (SS No. 87.52), bicycle No. 87.63) and freewheel multi-speed (SS No. 87.112). Brand rate of drawback in this case should be calculated by including following components:- All Industry Rate of duty drawback appearing at SS No.87.44, All Industry Rates of duty drawback for various accessories respect of appearing the Duty Drawback Table, which usage of furnish any duty paying documents, i.e., bicycle bell (SS No. 87.52), bicycle stand (SS No. 87.106), carrier(SS No. 87.63) and freewheel multi-speed (SS No. 87.112). Central Excise duty invoices as regards indigenous seat cover basket. Duty paid bill of entry in case of imported headlight. (b) of duty drawback for complete buses by the field formations. It is clarified that since 1988, there has been the practice in the Ministry for factoring a component of 7% of the cost of bus body the total brand rate fixed for the complete buses. This percentage has paid and indigenous front Calculation drawback in the exporter brand body, duty rate into bus as of on at after been arrived averaging data been furnished by certain established bus body builders and the same has officers of the Comptroller and Auditor General of India. Therefore, the the same practice while field fixing complete for drawback buses. This the Central Excise component purely has duty incidence and hence should be allocated accordingly. formations should continue duty rate approved brand the the of by for compressor air-conditioner. incidence suffered on various Illustration: An exporter exports a complete bus. The Chassis portion of the bus has been manufactured by using various parts, details components, as regards the duty inputs is provided in DBK-II and IIA supported by duty paying bills of entry. The exporter avails Cenvat on the countervailing duty imported suffered inputs incidence on account and claims only the Customs duty of basic Customs duty and Special Additional Duty (SAD) on the same. For the sake of illustration, this duty incidence is shown as Rs.31, 561.00. The the on all As regards same bus is got manufactured from the bus body builder and the exporter produces an invoice from the bus body builder indicating the cost of the bus body. Let us say, in this case, the cost of the body building is Rs.3,90,000.00. The duty drawback on account of body building shall be allowed @ 7%, i.e., Rs.27, 300.00. body, the The would be eligible for total drawback rate of Rs.58,861.00, i.e., (Central allocation) + 31,561.00 Excise allocation). Rs.27,300.00 (Customs exporter function of ( c) Fixation and approval of brand rate of duty drawback as laid down in para 3(d)(i) of Circular No.14 /2003 vis-à- vis the provision of post-audit prescribed in para 3(d)(ix). The to the post-audit the the nature revenue by pointing out errors whether of calculation mistake or wrong application of rules/regulations, etc. Based on the same, the Commissioner of Central Excise and invested with the officers under his control have been powers to rectify such mistakes through issuance of any amend to or ment, safeguard in corrigendum addendum is as rate brand letters issued. However, trade and issuance of further decentralization, for speedier a the for the convenience of matter of the the brand rate letters, it has been decided that proposals for fixation of brand rate involving duty drawback of more than Rs.5 lacs, shall be the Additional/Joint Commissioner of Central approved by Excise other limit. words, no proposal for fixation of brand rate of drawback shall be submitted to the Commissioner of Central Excise for approval. (d) Scope of rules 6(3) and 7(4) of the Customs and Central Excise Duties Drawback Rules, 1995. without any In of the 7(4) Customs It is clarified that the powers of Ministry expounded in rules 6(3) and Central Excise Duties Drawback Rules, 1995 are envisaged to be exercised on rare occasions. Only in those cases, where the Ministry gets the information to an investigation that the drawback rate has been incorrectly determined or the rate letter has been improperly or irregularly issued, the Ministry, in such cases, shall suo moto proceed to revoke the rate letters in question and order recovery of duty drawback amount. complaints pursuant through some and or 4. Suitable public notices for information of the trade and standing orders for guidance of the staff may kindly be issued accordingly. 5. The receipt of this Circular may kindly be acknowledged. S.S. Renjhen Joint Secretary to the Government of India

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