Eximkey - India Export Import Policy 2004 2013 Exim Policy
Customs Duty Drawback Duty Drawback Scheme Brand Rate and Special Brand Rate of Drawback

Self Verification of Data

A Scheme for self verification of data furnished for determination of drawback rates has been introduced. ThisSchemeobviates the necessary of verification of data by the Customs/Central Excise authorities and, thus, leads to prompt fixation of drawback rates.

Public Sector Undertakings

The scheme is applicable to Public Sector Undertakings of the Central Government. However, it has also been extended to private sector units as explained below.

Private Sector Units

The Self Verification Scheme is applicable to all companies whether Public or Private Ltd., in the private sector, subject to the following conditions: -

(i) the concerned applicant must be having brand rate for the past three years,

(ii) his consumption pattern may be more or less the same for at least three years,

(iii) drawback statement I, II, IIA, III and IIIA must be certified by a Chartered/Cost Accountant or Chartered Engineer.

(iv) the applicants are themselves manufacturers, manufacturing simple products where no co-product or bye-product is involved and whose accounts are under the company law statutorily audited.

(v) the unit has exporting experience of about five years.

Post Audit

The applicant using the self-certification data scheme is required to keep the record always ready so that the post-audit of the data of such company may be done at a short notice. Where the data are found incorrect in post-audit of the account of the company which led to fixation of a higher rate of drawback, the facility of self-certification will stand withdrawn forthwith and normal procedure of pre-check/pre-verification will have to be followed.

Verification of Data in Factory

The application and data submitted/furnished by the applicant is to be verified by an officer of Central Excise/Customs by visiting his factory. Ensure to produce all the original documents showing —

(i) payment of duty

(ii) issuance/issue from store for manufacture

(iii) details of actual manufacture

(iv) stock of finished product

(v) proof of export

(vi) register for account of visible wastages in the prescribed form

Verification Report

The Directorate of Drawback has prescribed a proforma for the verification report to be furnished by Central Excise/Customs Commissionerates on the application filed for fixation of brand rate. The applicants must go through this proforma to know the various points on which scrutiny is made by the CE officers. It will help them in providing right information in the brand rate application form.

The proforma of Verification report is at Annexure 36. Also see “Deficiencies” in verification reports in the ‘procedure for verification’ later in this Chapter.

Applications Filed before Commencement of 1995 Rules

It terms of Rule 18(2)(a) “every application made by a manufacturer or exporter for the determination/revision of the amount or rate of drawback in respect of goods exported before the commencement of these (1995) Rules may be disposed of in accordance with the provisions of the 1971 Rules as if these (1995) Rules had not been made.

Guidelines for Filing of Brand Rate Applications
Circular No. 21/1997-DBK-Ministry of Finance, Deptt. of Revenue

Exporter who export under claim for drawback may apply for fixation of brand rates under Rule 6 or Rule 7 of the Customs and Central Excise Duties Drawback Rules, 1971 either for specific shipment or for period of time (subject to certain quantitative restrictions). It has been seen that the period for which such rates are asked for vary widely from one month to even two years.

Drawback year

2.1 It has now been decided that all brand rate letters will be issued by following the drawback year commencing from 1st June to 31st May (of the following year) i.e. brand rate letters issued by this Ministry will now be valid upto 31st May only and for any shipment made after this date, exporters are advised to file a fresh brand rate application alongwith Statement DBK-I, II and III. In cases where a brand rate letter is under process, the exporters should note that the rate letter on issue would be valid only upto 31st May and adequate precaution should be taken by exporters by filing a fresh brand rate application along with DBK Statement I, II and III for all shipments effected on or after 1st June of that year.

Stock Position

2.2 While applying for the brand rate, the exporter should also furnish the stock position as on 31st May (in case where an application is filed at the beginning of the new drawback year) so that the verifying officers can certify the same on the basis of which appropriate rates could be worked out by this Ministry, considering the inputs suffering the pre-revised rates of duty. In case the application is generated before 31st May they may furnish the stock position to verifying officers of Customs/Central Excise.

Extension of Time for Filing Application

3. Request for Extension under Rule 6/7 of the Duty Drawback Rules, 1995.

3.1 The normal time limit for filing an application for brand rate under Rule 6 & 7 of the Drawback Rules, 1971 is 60 days from the date of export which can be extended by another 30 days under exceptional and genuine circumstances by the Central Government. Consequently, for seeking an extension of a rate later, a separate application would be necessary within the above mentioned prescribed time limit which could be reckoned from the date of Shipping Bill or export

3.2 However, in the interest of export promotion and as a facilitation to the exporters they are permitted to file a simple request for such extension within the said time limit accompanied with documents wherever necessary.

In order to follow a uniform practice in cases where such requests can be made, the following guidelines are prescribed for the guidance of the Trade.

(A) Request for Inclusion of Subsequent Shipment

Where original brand rate application is filed for a specific shipment(s) and the exporter wants the same to be extended to other subsequent shipments, the request for such extension will be considered if filed within 60 days from the date of last shipment mentioned in the original application in the following situations:

(a) where rate letter has already been issued and the stock shown in the earlier DBK-I, II and III statements are sufficient to cover the subsequent shipment(s) for which extension is sought; or

(b) where verification has already been completed and stock is sufficient to cover the subsequent shipment(s), but the brand rate letters are yet to be issued; or

(c) where verification has already been completed but the opening stock plus the inputs acquired thereafter is not sufficient to cover the quantity manufactured for the subsequent shipment(s) for which extension is sought; then, such request should be supported by necessary original duty paying documents which will be subject to post-facto verification has not been completed, the exporters shall get the additional duty paying documents of the additional stock also verified by the Jurisdictional Commissioner for the subsequent shipment.

NOTE: Where such request is for inclusion of other intervening shipments then the same should be filed within 60 days of date of export.

(d) To obviate the above difficulties, it is suggested that exporters may be advised to make application(s) for a specific period of time subject to the quantity of raw material available/procured by the Unit so that they do not have to make fresh application(s) during the same year in respect of the quantity already lying in stock prior to the date of first shipment. However, such application will be valid only for shipments to be effected upto 31st May, For shipments effected after 1st June of any year, fresh brand rate application must be filed.

(B) Request for Extension of Period of Time and/or Quantity Enhancement Similarly, request for such extension where the rate latter has been issued for a specific period of time and/or with quantity restriction will also be considered in the following situations:

(a) where the request is only in respect of increase in quantity, such request should be made within 60 days, extendible by another 30 days, from the expiry of the terminal date mentioned in the rate letter, and—

(i) if the verification has already been completed and stock is sufficient to cover such quantity enhancement as asked for; or

(ii) verification has already been completed but stock is not sufficient to cover the subsequent quantity for which extension is sought; then, such request should be supported by necessary original duty paying documents which will be subject to post-facto verification thereof by the Jurisdictional Commissioner within 3 months; OR if verification has not been completed, the exporters shall get the additional duty paying documents of the additional stock verified by the Jurisdictional Commissioner for the additional quantity also.

(b) Where the request is for extension is for extension of period of time mentioned in the original brand rate letter, such request should be filed within 30 (thirty) days from the terminal date mentioned in the rate letter.

However such extension of time would not be granted if the original Rate letter is for period ending 31st May (i.e. end of Drawback Year).

4. In all the above situations, extension in brand rate letters would be allowed only once, and --

(i) exporters should note that as already advised earlier in this letter, the extension if eligible, will be granted only upto 31st May of year. For further extension after 31st May, the exporter should file fresh application along with DBK-I, II and III statements,

(ii) however, in respect of brand rate after issued against Advance Licences/DEECs, extension of the time limit of brand rate letter would be entertained for periods beyond 31st May, if such request is made on account of extension of the validity period of export obligation under the DEEC Scheme.

Defects in Application

5. It is also noticed on scrutiny of the various applications that the applications filed normally suffer from some basic defects. The Trades are advised to keep the following aspects in mind:

(i) In a large number of cases it has been seen that the exporters do not furnish the stock position and the duty suffered thereon, three months prior to the date of export in DBK-IIA, or IIIA Statements as required, without the above statements, it becomes difficult to arrive at the correct rates. All exporters may be advised to furnish these Statements whenever they apply for any brand rate.

(ii) Where the exporters claim reimbursement of Central Excise duties/CV duties (which are otherwise covered under the MODVAT Scheme) while applying for brand rates, a specific certificate from the Jurisdictional Excise authorities certificate certifying non-availment of MODVAT of Excise duties/CV duty (indication thereon the Gate Pass/Bill of Entry No) is required. This certificate is not furnished by many exporters while applying for brand rates.

(iii) In many cases the DBK-II/III Statements show procurement of different lots of inputs suffering different rates of Customs/Excise duties as the case may be. In such situations the exporters can manufacture the export goods out of the one lot only or different lots procured at different points of time. Where the verification report does not indicate clearly the exact lot from which the export goods have been manufactured, the drawback rates are sometimes arrived at by following the principles of averaging. The brand rates in such cases will not be worked out in all cases by taking the average of duties suffered on different lots of inputs procured over a period of time.

(iv) At the time of verifying the data, the verifying the data, the verifying authorities check the original duty-paying documents. For this purpose the original Bill of Entry or Gate Passes as the case may be should be produced before the Verifying Officer who will suitably deface them at the time of verification and also make necessary entries in the prescribed records and give a certificate of this effect in the verification report.

(v) Where exporter claim drawback of certain inputs while availing the facility of Quantity based Advance Licence, it is often noticed that copies of the Advance Licence and both Import/Export Parts of the DEEC Book are not being submitted.

6. Rule 7A(2) of the Drawback Rules-Satisfaction of Negative Value Addition

Export Value of Goods

Rule 7A(2) of the Drawback Rules stipulate that no amount of rate of drawback shall be determined under Rule 6/7, if the export value of the goods is less than the value of the imported materials used in the manufacture of the said goods. It may be noted that the value of the imported materials will have to be arrived at with reference to the statutory provisions of Section 14 of the Customs Act, 1962 in terms of which the value would be inclusive of the landing charges. While filing application for rate letters this aspect should also be borne in mind.

7. Procedure to Expedite the Verification Reports

In order to expedite the verification reports, the Trade may be advised to submit four copies of the Brand rate applications of which two copies should be filed directly with the Assistant Commissioner of Central Excise in whose jurisdiction the manufacturing unit is located, one copy in the office of Commissioner concerned, and one copy in the office of Directorate of Drawback Ministry of Finance (Department of Revenue). The application for drawback claim should clearly indicate complete address of Assistant Commissioner in whose Division the manufacturing unit falls.

Check List on Important Points for filing Brand Rate Application

I. Proforma of Application


1. If your brand rate application is for exports against a DEEC:

(a) have you checked that no drawback is being claimed for any input which is allowed for duty free import?

(b) have you enclosed copies of the DEEC (with relevant licence) clearly indication the items of import/export.

Modvat/Proforma Credit

2. Omitted

Manufacturing Process

3. Have you enclosed a detailed write-up of the manufacturing process (along with Tech. Pamphlets, Drawing etc.) indicating clearly as to how each of the inputs mentioned in DBK-I is used.

Shipping Bill

4. If your brand rate is to be fixed for a period of time, have you clearly indicated the period and furnished copy of S/Bill (both sides) for the first shipment giving indication of date of loading .

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