Eximkey - India Export Import Policy 2004 2013 Exim Policy
Customs Duty Drawback Duty Drawback Scheme The Duty Drawback Credit Scheme

12. Advance Payment of Drawback

The Customs Duty Drawback can also be paid in advance immediately on presentation of Customs certified shipping bill under the “Duty Drawback Credit Scheme, 1976”. Only specified (eligible) banks are allowed to make payment of drawback in advance under this scheme. The advance is interest free although the-banks may charge reasonable amount to cover their administrative expenses.

The Duty Drawback Credit Scheme

Salient Features. The salient features of the “Duty Drawback Credit Scheme, 1976” are as follows.

(i) The payment is to be made within specified banks as an advance only, and thus, not to be considered as payment by banks.

(ii) The payment is to be made within specified limits. As such, the banks will sanction suitable limits to individual exporters for the purpose of granting advance against the provisional duty drawback entitlements.

(iii) These limits will be based on the export performance, eligibility for drawback and other relevant factors.

(iv) The margin between the amount of drawback provisionally certified by the Customs authorities and the advance to be granted should not exceed 10 per cent.

(v) The banks may charge a reasonable amount of interest for covering their administrative expenses or cost relating to transmission of funds between the Centres where the reference is obtained from the RBI and the Centres where advances are made to the exporters. Thus, rate of interest on advances made to the exporters under theSchemeis to be very nominal, as otherwise the advance is interest free.

(vi) It does not cover the shipment of goods for which no drawback rate has been fixed.

(vii) The interest free advance will be given for 90 days. Thereafter, the bank may charge interest as per RBI’s directions.

Registration with Banks. Where advance payment of duty drawback is required, the exporter should get himself registered with the authorized bank and obtain a reference number from the latter for identification. Find out from the banks concerned whether they are authorised under the Duty Drawback Credit Scheme, 1976 for making advance payment of drawback.

Exporter’s Endorsement on Shipping Bill

The exporter should endorse the shipping bill relating to the goods for which the amount drawback is desired to be obtained in advance to the following effect:

“Please pay Rs………being the amount of drawback admissible to me in respect of the shipment covered by the shipping bill to M/s……………(Name of the Bank) through the Reserve Bank of India quoting the reference number……..allotted to us by the authorised bank”.

Signature of the Exporter

Custom’s Endorsement on Shipping Bill

The Customs Authorities will scrutinize the amount of drawback claim on the basis of declared description of goods, and endorse the shipping bill as follows: -

“Amount of drawback as ascertained on the basis of the declaration given in the shipping bill is Rs. ……………………………. and this amount will be admissible to the exporter on export of the quality mentioned in the shipping bill provided that the declared description is found to be correct on the basis of examination and chemical test, if necessary”.

The Customs authorities will also endorse the appropriate A.I. rate claimed by the exporter pending sanction of Special Brand Rate by the Govt., on the relevant Shipping Bill.

Submission of Shipping Bills to Banks

The exporter should submit a copy of the shipping bill carrying the custom’s endorsement with regard to the amount of drawback, etc. to his bank for obtaining advance under thisSchemeafter effecting the shipment. However, the exporter should reduce the amount of drawback suitably if the goods actually shipped are short of the quantity declared on the shipping bill before submitting the shipping bill to the bank.

Payment

After necessary scrutiny of the shipping bill, the bank will grant the advance within the limit earlier sanctioned by it. (The banks sanction suitable limits to the individual exporters for the purpose of granting the advance against the provisional duty drawback entitlements, it is done at the time of registration with banks of the exporters under the scheme).

The amount of advance will be almost interest free for 90 days, except nominal charge covering administrative expenses.

Claim Processing & Provisional Payment

The Customs Authorities will process the claim for drawback in the usual course and arrange for payment of the amount to the RBI for crediting the same to the concerned bank.

Intimation to Exporter

The Customs Authorities will also send an intimation to the concerned exporter stating the actual amount sanctioned. If the exporter is not satisfied with the amount sanctioned, he can file an appeal in the matter.

Provisional Payment

In case where no drawback exists and application has been filed for its fixation, the exporter may apply in writing to the Director (Drawback) that a provisional amount be granted towards drawback on the export of such goods pending determination of the exact amount. These applications containing details of shipment may be made simultaneously or after the application for determination has been submitted. The application for fixation of provisional rates of drawback is to be sent in the usual form, along with Statements DBK-I, DBK-II, DBK IIA, DBK III and DBK-IIIA in the same manner as for fixation of brand rate detailed below.

Banks will also grant advances to exporters against provisional settlement of duty drawback on the basis of appropriate A.I. rate claimed by the exporter on the Shipping Bill, as endorsed by the Customs, pending sanction of Special Brand Rate by the Govt.

After the verification and examination of application, the Government may provisionally sanction an amount not exceeding 75% of the amount claimed. This provisional payment is adjustable against the drawback finally payable. If the amount so adjusted is in excess or falls short of the drawback finally payable, the exporter shall repay the excess or be entitled to the deficiency as the case may be.

Execution of Bond

Before making a provisional payment, however, the exporter may be required to execute a bond for such amount or for an amount not exceeding the full amount claimed as drawback in respect of a particular consignment and binding the exporter to: -

(i) refund the amount so sanctioned provisionally if, for any reason, the central Government decides not to allow the drawback.


(ii) refund the excess, if any, paid to him provisionally if the Central Govt. decides to allow a lower amount of drawback.

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