Brand Rate and Special Brand Rate of Drawback-Fixation and Extension (other than Simplified Scheme)

The Policy

The drawback rate can be got fixed/revised in the following types of cases: -

1. Where the amount or rate of drawback has not been determined (Rule-6). It is known as Brand Rate.

2. Where the amount or rate of drawback determined is low i.e. less than 4/5th of such amount or rate determined (Rule-7). It is known Special Brand Rate.

3. Brand rate of countervailing (additional) duty paid in cash on inputs imported under DEPB scheme.

4. Brand rate of drawback of duties paid on inputs supplied by DTA units for processing by EOUs/EPZ units.

Cases under Process. In cases where a brand rate letter is under process, and are not decided upto 31st May of any year, exporters should file a fresh brand rate application along with DBK statements for all shipments effected on or after 1st June of that year.

Regulation of Drawback

No amount or rate of drawback may be determined in respect of any goods under Drawback Rule-3, Rule-6 or, as the case may be, Rule-7, the amount or rate of drawback of which would be less than 1% of the value thereof except where the amount of drawback per shipment exceeds Rs. 500/- (Rule-8). However, the condition of minimum one 3% f.o.b. value will not be applicable in case of postal exports and exports made in discharge of export obligation against advance licences issued under Duty Exemption Scheme.

Moreover, no amount or rate of drawback shall be determined in respect of any goods or class of goods under Rule 6 or 7, as the case may be, if the export value of each of such goods or class of goods in the Shipping Bill or Bill of Export is less than the value of imported materials used in the manufacture of such goods or class of goods or is not more than such percentage of the value of the imported materials used in the manufacture of such goods or class of goods as the Central Govt. may by Notification in the official gazette specify in this behalf. The value of imported materials would be inclusive of the lading change.

Drawback is of average amount of duty paid as explained in Chapter 3.

Brand Rate i.e. Cases where Amount or Rate of Drawback has not been Determined

Date of Application. Where no amount or rate of drawback has been determined in respect of any goods, any manufacturer or exporter of such goods may, at any time within 60 days from the date of export of such goods, apply for the determination of the amount or rate of drawback thereof stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods and the duties paid on such materials or components.

Relaxation. The application for determination of the rate of drawback is to be sent within 60 days from the date of export as stated above. However, it can also be sent within a further period of 30 days from the date of export of such goods provided the manufacturer or exporter shows sufficient cause for not filing the application before the date of export. Hence, take care of filing the application for determination of rate of drawback before export.

Further Condonation

Where an exporter after carrying out exports, applies for drawback under Section 74 of the Customs Act, 1962 and the Competent authority after expiry of time limit, rejects the claim and advises the claimant for filing Brand Rate Application under Section 75, or where the drawback is originally granted and is subsequently revoked and recovered, the application for drawback under Section 74.

The period of 60/90 days allowed for filing application for fixation of brand rate can be relaxed further on showing specific reasons for the delay in filing applications in time, as detailed in CBEC Circular No. 82/1998-Cus dt. 29/10/1998.

Special Brand Rate i.e. Cases where Amount or Rate of Drawback Determined is Low

Time Limit. Where, in respect of any goods, the manufacturer or exporter finds that the amount or rate of drawback determined under Rule-3 or, as the case may be, revised under Rule -4 for the class of goods is less than 4/5th of duties paid on the materials or components used in the production or manufacture of the said goods, he may within 60 days from the date of export of the said goods, apply in writing for fixation of appropriate amount or rate of drawback stating all the relevant facts including the proportion in which the material or components are used in the production or manufacture of goods and the duties paid on such materials or components. This date will be the date on which the vessel sails and neither the date of shipping bill nor the date on which the ‘let export order’ is given is applicable.

Relaxation. The period of application can be relaxed upto 30 days from the date of export, provided the manufacturer or exporter shows sufficient cause for not filing the application before the date of export. Further relaxation is also possible. See CBEC Circular No. 82/1998-Cus dt. 29/10/1998. Further Condonation. See above

Subsequent Shipments. For shipments other than those for which brand rate request has already been made (either for individual consignment or on period of time basis) on which brand rate may have been granted or where the request may still be under processing, the exporter must make sure that a fresh application is made well within the time limit laid down as per DBK rules. Filing of fresh applications may be walved if consumption pattern/duty incidence etc. is certified to be identical, and earlier application shows sufficient stock of inputs, but a written request for brand rate for further shipments not covered by earlier request/brand rate must be made in time. In the absence of any such timely application/request on record, the exporter’s subsequent requests are bound to be rejected on consideration of limitation of time.

Brand Rates for Goods of Identical Nature

Through the application for Brand rate is required to be filed in relation to goods under a particular shipment (within the specified time limit), applications for brand rate fixation for a period of time may also be made. The conditions are that: -

(i) application may be for shipment upto one years,

(ii) export goods are same, of identical nature/description, consumption pattern of inputs and duty incidence suffered thereon is same,

(iii) goods are exported or proposed to be exported on repeat basis (as often happens in DEEC cases),

(iv) application must be filed within 60 days of the date of first shipment.

Brand Rate for Passenger Buses-Simplified Procedure

Passenger bus exporters could be allowed, while fixing a composite rate for their buses, relief for the duties on the inputs of bus body building at an average rate of 7% of the actual cost for the bus body as charged by the body builders, apart from the duty relief considered admissible for inputs of chassis. This will be subject to the condition that the bus body builder is not working under MODVAT or does not claim benefits of any Duty Exemption Scheme.

The concerned manufacturer-exporter of passenger bues in such cases need not file separate detailed data for the consumption of inputs and duty payment for the bus body part while applying for fixation of brand rates on the passenger bues. However, in its place they would have to furnish certain minimum further information about the body builder to whom the chassis is sent for building passenger bus body, the contracted price (along with a copy of the contract), certification of whether the bus body builder is working under MODVAT or not etc., duly authenticated by the body builder also, as per the prescribed proforma.

A copy should be filed with the Commisionerate of Central Excise & Customs, in whose jurisdiction the bus body builder unit is situated, who will send a report direct to the Drawback Directorate.

No Brand Rate against Debit of Duties in DEPB/Passbook

The Brand rate of drawback is admissible only against cash payment of duties, as is already laid down under Proviso (ii) of Rule 3 of the Customs & Central Excise Duties Drawback Rules, 1995. A debit of duties payable under DEPB Scheme/PassbookSchemeon import of goods is in effect availment of exemption of duty under the Customs Act. Being operated through an Exemption Notification, such debit does not constitute payment of duties. Therefore, no drawback is admissible against debit of duties made in a DEPB Book or in a Passbook issued under the erstwhile Passbook Scheme.

Simultaneous Availment of Drawback and DEPB

Exports made under DEPB Scheme of those products which cannot avail Modvat Credit of the additional duty of Customs (CVD) paid in cash on imported inputs, or excise duty paid on indigenous inputs, since no excise duty is payable on the export goods, will be eligible for payment of Brand Rate of Drawback to be fixed by the Directorate of Drawback against additional customs duty/excise duty suffered on inputs, on submission of proof of payment of duty.

Accordingly, drawback will be payable to such exporters under rule 6(1)/7(1) of the Customs and Central Excise Duties Drawback Rules, 1995, at the rate fixed on specific application. The procedure laid down under Drawback Rules, 1995, will have to be followed for fixation of Brand rates on exports under DEPB. To enable the exporters to file their application for Brand Rates, they may be permitted to file ‘DEPB-cum-Drawback Shipping Bill’. However, under no circumstances, the exporter are allowed to claim All-Industry Rate of Drawback.

Anti-dumping Duty-Drawback of

See Chapter 15.

Exports Under Duty Exemption Scheme

Where duty paid inputs are used along with duty free inputs in export products, exporters are entitled to drawback of duty paid materials. A Brand Rate is also to be got fixed for such cases. See Chapter 15 for further details.

However, drawback of additional/countervailing duty paid on inputs imported under the DEEC scheme, will be paid at the rate shown for ‘excise’ in the column of ‘allocation’ in the Drawback Table. No brand rate need to be got fixed in such cases.

Brand Rate on inputs sent by DTA Units to EOUs/EPZ Units.

The inputs which are supplied by DTA units for processing by EOUs/EPZ Units are procured by DTA units on payment of applicable duties. The DTA units shall be eligible for grant of drawback against duties suffered on their inputs which are processed by EOUs/EPZ units for the manufacture of goods which are exported in accordance with the CBEC Circular No. 67/1998 dt. 14/9/1998. Such DTA exporters will be eligible for payment of Brand Rate of Drawback against duties suffered on inputs, on submission of proof of payment of duty. Accordingly, drawback will be payable to such exporters under Rule 6 (1) of the Customs and Central Excise Duties Drawback Rules, 1995 at the rate fixed on specific application. The procedure laid down under the said Drawback Rates will have to be followed for fixation of Brand Rate of Drawback. Such exporters will have to apply to the Directorate of Drawback for fixation of Brand rates on exports under DEPB. However, under no circumstances, such exporters will be allowed to claim All-Industry Rate of Drawback.

Applications

Covering Letter/Proforme

The applications for fixation of drawback rates is to be sent (in quadruplicate) in the prescribed form at Annexure 46 under the normal scheme. For simplified scheme, see chapter 16.

The proforma is also known as a covering letter. It is to be sent along with Statements known as DBK-I, II, IIA, III and IIIA given at Annexures 47 to 51. Also see the “Additional Declaration on Drawback Statements” and “Guidelines” for submission of application later in the following pages.

The manufacturers/exporters (including merchant exporter) should file applications (in quadruplicate) for brand rate fixation of duty drawback on export of goods which are excisable whether exempted or not i.e. whether cleared under AR or not and where such goods tendered for export were excisable, as follows:

(i) one copy to the Jurisdictional Asstt. Commissioner of Central Excise in whose jurisdiction the manufacturing unit is located

(ii) a copy of the same to the Asstt. Commissioner (Technical), Central Excise Commissionerate (Hqrs).

(iii) one copy to the Commissioner concerned

(iv) a copy of the application should also be sent to the Director (Drawback), Ministry of Finance, Deptt. of Revenue, Jeevan Deep, Parliament Street, New Delhi-110001.

The applications which are not received in proper format are not considered.

Validity of Rate

While sending the application for fixation of rate, the applicant should indicate in the application whether the rate is to be fixed for individual shipment or for a period of time. Where the application is only for an individual shipment, the validity of the application would be limited to that shipment only. Where the applicant has a number of shipments to be effected in a specified period, every effort would be made t make the brand rates available for a longer period. But since the All Industry rate revision is normally done by 1st of June every year, brand rates would be restricted to 31st May of the year concerned. Brand Rate letters become inoperative form the date from which an A.I. (All Industry) rate has been fixed for that particular item.

Where on account of the availability of the limited quantity of the imported materials, the rate is announced with quantitative restriction, a longer period as requested would be granted. In case the quantity restricted gets exhausted earlier, it would mean that rate becomes otiose for further exports. It would, therefore, be upto the exporter to make a fresh application in the proper