Duty Drawbacks : A Simple Explanation : Rates

A simple explanation to Duty Drawback,

 Let’s simplify it!

Imagine you’re making a sandwich to sell abroad. You buy bread, lettuce, and cheese from another country, and you pay extra money (duty) for bringing these into your country.

Now, you make your sandwich and sell it abroad. The government says, “Hey, you sold your sandwich abroad, so we’ll give you back the extra money (duty) you paid for the bread, lettuce, and cheese.” This refund is what we call Duty Drawback.

There are two main types:

1. Re-export of duty paid goods: If you bring in a bicycle, pay duty, but then send it back abroad without using it, you can get up to 98% of your duty back.
2. Export of manufactured articles: If you bring in raw materials, make a bicycle, and then sell it abroad, you can get some duty back.

But remember, not all goods qualify for this, and if you use the goods before sending them back, you might get less money back. Hope this helps! Now let's read further into the topic as you have an overview of it.

Duty Drawback is a trusted and time-tested scheme administered by CBIC to promote exports. It rebates the incidence of Customs and Central Excise duties, chargeable on imported and excisable material respectively when used as inputs for goods to be exported. This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specified taxes. Duty Drawback provides essential support to exporters.

Duty Drawback is a scheme introduced by the Ministry of Finance as a rebate for duty chargeable on any imported materials or excisable materials used in the manufacture or processing of goods, manufactured in India and exported¹. The Central Government is empowered to grant Duty Drawback under section 74 and 75 of the Customs Act, 1962¹.

There are two categories of Duty Drawback:

1. Drawback allowable on Re-export of duty paid goods (Section 74): If duty paid imported goods are re-exported in used or unused condition within two years, the importer may claim a refund of import duty up to a maximum of 98% of the customs duty paid at the time of importation as duty drawback¹.
2. Drawback on export of manufactured articles (Section 75): This empowers duty drawback on export of manufactured articles¹.

Please note that certain goods are not entitled to drawback at all under the Notification No. 19/65 Cus dated 6-2-1965¹. Also, if the imported goods are used after importation, the amount of drawback will be at the reduced rates as fixed by the Central Government¹.

Our Sources; TAXGURU , GOVERNMENT OF INDIA , WIKIPEDIA , DRIP CAPITAL

Also read the source material from CBIC, Government of India; Click Here to Read

Thanks, for reading.