Customs Circular No- 48/2011 dated 31.10.2011
All Industry Rates of Duty Drawback, 2011-12 - Reg.
As you are aware, the All Industry Rates (AIR) of Duty Drawback 2011-12 were
notified vide Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. These rates
have come into effect on 01.10.2011. Subsequently, the Ministry has received
representations on the Drawback Schedule 2011-12 from Export Promotion Councils,
Trade associations and individual segments of industry. The representations
broadly relate to doubts on classification of items (mainly erstwhile DEPB
items) in the Schedule, duty drawback rates, value caps and other miscellaneous
2. The representations have been duly examined and certain amendments / changes,
wherever required, have since been carried out vide Notification No. 75 /
2011-Cus. (N.T.), dated 28.10.2011. The Notification may please be downloaded
from CBEC website www.cbec.gov.in and perused for details.
3. Some of the major changes / amendments carried out in the above mentioned
notification are discussed below.
4. Parts and components made of iron, steel or aluminium through casting or
forging process which were earlier covered under various serial numbers of
product group 61 (Engineering) of DEPB scheme were incorporated in Chapter 73 or
76, as the case may be, in the Drawback Schedule. Many representations were
received stating that these goods merit classification more appropriately under
different headings of Chapter 84 or 85 or 87, for which no specific tariff entry
has been provided. To resolve this problem, the said entries have been
appropriately replicated under headings 8487, 8548 and 8708 to enable exporters
to claim drawback on such parts or components, irrespective of classification of
such goods at any other four digit level in the Chapter 84 or 85 or 87 of the
Schedule. In this regard a new note (3A) has been inserted in the Notes and
Conditions of the Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011.
5. Further, representations have also been received from the trade that certain
items merit classification more appropriately under different chapter / heading,
instead of the classification as has been provided in the Drawback Schedule. All
such representations have been examined and wherever there was merit in the
representation, it has been decided to replicate the existing entry/entries
appropriately under the tariff heading as has been sought by exporters. However,
while replicating these entry/entries, the existing entry/entries in the
Schedule have been retained so as to avoid any disputes. Further, in all such
cases where existing entries have been replicated, due care has been taken to
ensure that the rates of duty drawback / value caps (wherever assigned) are the
same for both the existing entries as well as the replicated entries.
6. It may be noted that the replication of entries as discussed in para 4 and 5
above and the insertion of Note 3(A) as discussed in the preceding para 4 above,
is a purely transitory arrangement and with a view to resolving classification
7. In some cases, representations have been received for creating new entries as
well as for making changes in drawback rates, value caps and in the description
of the goods in the Drawback Schedule. All such representations have been
examined and wherever the representation was found to have merit, the same has
been considered and necessary changes have been carried out as reflected in the
amending notification. Thus, for example, composite rate of duty drawback has
been provided for all goods falling under headings 7318 and 7418; a single entry
under heading 6117 and 6214 has been created for Shawls, Scarves, Stoles,
Mufflers, Mantillas & Veils and appropriate value caps provided on per piece
basis; Duty drawback rate has also been provided for knitted fabric having a
blend of Cotton and MMF (Man Made Fibre).
8. Certain doubts have been expressed about classification of few erstwhile DEPB
items in the drawback schedule wherein it has been pointed out that the
classification under drawback schedule does not match with the classification as
provided in the Customs Tariff. In this regard attention is invited to the para
(1) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.)
dated 22.09.2011. It is hereby reiterated that the tariff items and descriptions
of goods in the drawback schedule are aligned with the tariff items and
descriptions of goods in the Customs Tariff only upto four-digit level. Hence,
so long as the alignment is there at the four digit level, there should not be
any difficulty for exporters to claim drawback as per the rate specified in the
Drawback Schedule, notwithstanding the fact that there may be difference in the
classification of the said item at six or more digit level.
9. Doubts have been expressed regarding simultaneous availment of benefits under
Advance License / Advance Authorization Scheme along with All Industry Rates of
duty drawback. In this regard attention is invited to the sub para (b) of para
(8) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.)
dated 22.09.2011. It stipulates that the All Industry Rate of drawback is not
available if the goods are exported in discharge of export obligation against
Advance Licence except under certain conditions. It is clarified that in
general, the benefits of All Industry Rates of duty drawback and Advance Licence
Scheme are not available simultaneously. However, in such cases the exporter can
always avail the brand rate of duty drawback under rule 6 or rule 7 of the
Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, as the case
may be and subject to the conditions stipulated therein, for the duty paid
inputs used in the manufacture of export goods.
10. Representations have also been received seeking clarification on the
admissibility of duty drawback on Multi Utility Vehicle (MUV) / Sport Utility
Vehicle (SUV). It is clarified that MUV / SUV would, for the purpose of
drawback, be classifiable under tariff item 870302 as motor cars.
11. Field formations have expressed some difficulties on the classification of
Leather Garments exported under Chapter 42 of drawback schedule. The dispute is
over mixed leather and fabric garments which has less than 40% of their surface
area made of fabric, and whether they are classifiable under 420301, as
“Articles of apparel, made of leather” or under 420302 as “ Articles of apparel,
made of leather in combination with other materials”. In this regard attention
is invited to the para (17) of the notes and conditions of the notification No.
68/2011-Cus. (N.T.) dated 22.09.2011, which defines the article of leather as
any article wherein 60% or more of the outer visible surface area is of leather.
It is therefore clarified that the leather garment is classifiable under tariff
item 420301 as “Articles of apparel, made of leather”, if 60% or more of the
outer visible surface area is of leather and under tariff item 420302 as
“Articles of apparel, made of leather in combination with other materials” if
the area of leather is less than 60% of the outer visible surface area.
12. It may please be noted that all changes / amendments as have been carried
out through the amending notification No. 75 / 2011-Cus. (N.T.), dated
28.10.2011, come into effect retrospectively from October 1, 2011. In all such
cases, wherever it is required, the exporters shall be allowed to file
supplementary drawback claims and these claims shall be processed accordingly.
13. Public Notices and Standing Orders for guidance of the trade and staff may
be issued. Difficulties faced, if any, in implementation of the changes may be
brought to the notice of the Board immediately.
Kindly acknowledge receipt of this Circular.
Joint Secretary (Drawback)