Duty Draw Back

Duty Drawback has been one of the popular methods of encouraging export. It is a method of refund of custom duties paid on the inputs of raw materials used in the manufacture of export goods. The term drawback is applied to a certain amount of duties of Customs and Central Excise, sometimes the whole, sometimes only a part remitted or paid by Government on the exportation of the commodities on which they were levied. To entitle goods to draw- back, they must be exported to a foreign port, the object of the relief afforded by the drawback being to enable the goods to be disposed of in the foreign market as if they had never been taxed at all. For Customs purpose drawback means the refund of duty of customs and duty of central excise that are chargeable on imported and indigenous materials used in the manufacture of exported goods. Goods eligible for drawback applies to

  • Export goods imported into India after having been taken for use
  • Export goods manufactured / produced out of imported material
  • Export goods manufactured / produced out of indigenous material
  • Export goods manufactured /produced out of imported or and indigenous materials. The Duty Drawback is of two types:
    • All Industry Rate (AIR) and
    • Brand Rate

Elements necessary for drawback under Sec. 74:

  1. The goods on which drawback is claimed must have been previously imported;
  2. Import duty must have been paid on these goods when they were imported;
  3. The goods should be entered for export within two years from the date of payment of duty on their importation (whether provisional or final duty). The period can be further extended to three years by the Commissioner of Customs on sufficient cause being
  4. The goods are identified as the goods
  5. The goods must be capable of being identified as imported
  6. The goods must actually be re-exported to any place outside
  7. The market price of such goods must not be less than the amount of drawback claimed.
  8. The amount of drawback should not be less than 500/- as per Sec. 76-(1) (c) of the Customs Act.