What is the Duty Drawback Scheme?What is the current % of drawback allowed?

Question

What is the Duty Drawback Scheme?What is the current % of drawback allowed?

Answer 1

Various schemes like EOU, SEZ, DEEC, manufacture under bond etc. are available to obtain inputs without payment of customs duty/excise duty or obtain refund of duty paid on inputs. In case of Central Excise, Manufacturers can avail Cenvat credit of duty paid on inputs and utilise the same for payment of duty on other goods sold in India, or they can obtain refund. Schemes like manufacture under bond are also available for customs. Manufacturers or processors who are unable to avail any of these schemes can avail ‘duty drawback’. Here, the excise duty and customs duty paid on inputs is refunded to the exporter of finished product by way of ‘duty drawback’. Section 75 of Customs Act provide for drawback on materials used in manufacture or processing of export product. Section 37 of Central Excise Act allows Central Government to frame rules for purpose of the Act. Under these powers, ‘Customs and Central Excise Duties Drawback Rules, 1995’ have been framed.

It may be noted that duty drawback under section 75 is granted when imported materials are used in the manufacture of goods which are then exported, while duty drawback under section 74 is applicable when imported goods are re-exported as it is and article is easily identifiable.