Duty Drawback Scheme(Latest)-Benefits, Eligibility criteria

duty drawback scheme

The Duty drawback scheme is an initiative introduced by the Ministry of Finance for providing a refund to exporters for the excise duties that they paid during the exporting process of goods. These Article aims to provide the drawback scheme benefits, eligibility criteria, documents required, drawback rates, and Procedure to be followed.

Duty Drawback Scheme

The Drawback scheme in India is a government Initiative and was introduced by the Ministry of Finance to allow exporters to avail the refund on duties and taxes that they have paid on goods to be exported.

In short, it can be said that this scheme provides cashback to the exporters for the amount that they have paid for raw material or service tax. Individuals can take advantage of rebates on Customs and Central Excise charges on any imported materials that will be utilized to produce goods intended for export under this program. The DBK scheme has a significant number of export items included.

Benefits of Duty Drawback Scheme

  1. Especially in the supply or value chain, the Duty Drawback Scheme is a vital program that helps exporters in offsetting some of the expenses incurred throughout the export process.
  2. The main advantage of the program is that it provides refunds for Customs and Central Excise imposed on any imported or excisable materials used to make items meant for export.
  3. This scheme serves as an incentive for businesses to engage in export activities.
  4. Duty drawback can provide support to domestic industries by reducing their input costs.

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Duty Drawback Scheme Eligibility criteria

This scheme aims to promote exports, enhance competitiveness, and provide financial relief to exporters. To take advantage of this scheme, exporters must meet specific eligibility criteria.

  1. When goods are shipped, someone must be the legitimate owner of the items. This includes having a valid export license, being a registered taxpayer, and complying with specific export regulations.
  2. On imported goods, the individual must pay customs duties.

Documents required for Duty drawback scheme

To avail of the benefits of the Duty Drawback Scheme and claim a refund or rebate on duties paid on imported goods used in the production of exported goods, exporters need to provide certain documents as proof of eligibility.

  1. Three copies of the shipping bill.
  2. One copy of the bill of entry.
  3. Copy of the Bill of Lading or Airway bill.
  4. Copy of the Bank Certified Invoices.
  5. Import Invoice.
  6. Proof of payment of import duty paid on importation.
  7. RBI Approval for Re-exportation.
  8. Six copies of the document AR-4.
  9. Export invoice and packing list.
  10. Freight and Insurance certificate.
  11. One Copy of the Test report of goods.
  12. Modvat Declaration.
  13. A worksheet showing the drawback amount claimed
  14. DEEC Book and license copy where applicable.
  15. Transshipment certificate, where applicable
  16. Two blank acknowledgment cards.
  17. Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue stamp.

Duty Drawback Rates

A comprehensive rate chart of the percentage drawback is provided by the central government. Exporters should be aware that the time period specified below refers to the difference between the clearance date and the date of placement in customs control before it is ready for export.

Time Period Percentage of drawback
Less than 3 months 95%
Higher than 3 but less than 6 months 85%
From 6 to 9 months 75%
From 9 to 12 months 70%
From 12 months to 15 months 65%
From 15 months to 18 months 60%
Higher than 18 months NA

 

For more information visit the Central Board Of Indirect Taxes & Customs, official website of government of India.

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