Duty Drawback Scheme: Eligibility, Procedure and Drawback Rates
The Duty Drawback scheme was introduced by the Ministry of Finance as a rebate to exporters on the costs incurred during the exporting process. There are certain goods that enjoy duty drawbacks. The scheme essentially provides a cashback to the exporters for certain raw materials and service tax.
This article aims to provide a detailed account of the Duty Drawback scheme, its eligibility and the documents required.
What Is a Duty Drawback Scheme?
The Duty Drawback Scheme (DBK) is a rebate program that is administered by the Department of Revenue. The scheme aims to help exporters get a refund on some of the costs accrued during the export process, particularly in the supply chain.
Under this scheme, individuals can avail rebates on Customs and Central Excise charged on any imported materials that will be used to manufacture goods meant for export. A significant number of export items have been included in the DBK scheme.
What Are the Goods Eligible for Duty Drawback scheme?
The Central government enables this scheme for the following goods:
- Import of exported goods into India.
- Import of used exported goods into India
- Export of goods made from imported materials.
- Export of goods made from indigenous materials.
- Export of goods made from a combination of imported or indigenous materials.
What Are the Eligibility Criteria for Duty Drawback Scheme?
Duty drawback scheme is available for exporters under certain conditions:
- The individual willing to take advantage of this scheme must own the rights for holding them.
- The individual must pay a customs duty on imported goods.
DBK scheme applies to most goods that carry a customs duty on being imported and exported henceforth.
What Are the Documents Required for Duty Drawback Scheme?
Exporters eligible for the duty drawback on export must show the following documents before availing this scheme. They are as below:
- Three copies of freight Bill
- Copy of Bill of entry
- Copy of Bill of Lading or Airway bill.
- Copy of Bank Certified Invoices.
- Import Invoice
- Proof of payment of import duty paid on importation.
- Approval from the Reserve Bank of India for re-exportation
- Six copies of AR-4 documents
- Export invoice and packing list.
- Freight and Insurance certificate
- Copy of the Test report of goods
- MODVAT Declaration
- A worksheet showing the drawback amount claimed
- DEEC Book and licence copy where applicable.
- Transhipment certificate, where applicable
- Two blank acknowledgement cards
- Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs. 1 revenue stamp
What Are Duty Drawback Rates?
The Central government provides a detailed rate chart of the percentage drawback. Exporters should note that the period mentioned below refers to the difference between clearance date and date of placement in customs control before it is ready for export.
Percentage of Drawback
Less than 3 months
Higher than 3 but less than 6 months
From 6 to 9 months
From 9 to 12 months
From 12 months to 15 months
From 15 months to 18 months
Higher than 18 months
What Is the Procedure for Claiming Duty Drawback?
The exporter needs to follow the following steps to take advantage of the duty drawback scheme:
Step 1: Exporters must fill all requisites in a prescribed shipping bill format under the DBK scheme.
Step 2: Digital document processing does not require any separate application.
Step 3: Separate applications for claiming duty drawbacks must be submitted for manual exports.
Step 4: The exporter must apply for the claim process in accordance with the policies laid down by the Drawback Rules 1995.
Step 5: Once the exporter files the general export manifest, the 3rd shipping bill copy becomes the principal application.