In ‘duty drawback’, the excise duty and customs duty paid on inputs and service tax paid on input services is
given back to the exporter of finished product by way of ‘duty drawback’.
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.
Duty drawback rates are of following types – (a) All Industry Rate (b) Brand Rate and (c) Special Brand Rate.
Duty drawback rates can be fixed with retrospective effect [rule 5(2) of Drawback Rules, 1995].
All Industry Drawback Rates – All Industry Drawback rates are fixed by Directorate of Drawback, Dept. of
Revenue, Ministry of Finance, Govt. of India, Jeevan Deep, Parliament Street, New Delhi-110 001. The rates are
perodically revised-normally on 1st June every year. The All Industry Drawback Rate is fixed under rule 3 of
Drawback Rules by considering average quantity and value of each class of inputs imported or manufactured
Duty drawback rate shall not exceed 33% of market price of export goods (Rule 8A w.e.f. 15-2-2006).
Brand Rate of Duty Drawback – It is possible to fix All Industry Rate only for some standard products. It cannot
be fixed for special type of products. In such cases, brand rate is fixed under rule 6. The manufacturer has to be
submit application with all details to Commissioner, Central Excise. Such application must be made within 60
days of export.
Upper limit of drawback rate – Duty drawback rate shall not exceed 33% of market price of export goods
(Rule 8A w.e.f. 15-2-2006).
Special Brand Rate of duty drawback
All Industry rate is fixed on average basis. Thus, a particular manufacturer or exporter may find that the actual
excise/customs duty paid on inputs or input services is higher than All Industry Rate fixed for his product. In
such case, he can apply under rule 7 of Drawback Rules for fixation of Special Brand Rate, within 30 days from
The conditions of eligibility are (a) the All Industry Rate fixed should be lees than 80% of the duties paid by him
(b) rate should not be less than 1% of FOB value of product except when amount of drawback per shipment is
more than Rs. 500 (c) export value is not less than the value of imported material used in them – i.e. there should
not be ‘negative value addition’.
Duty Drawback on Re-Export – Section 74 of Customs Act, 1962 provide for drawback if the goods are reexported
as such or after use. This may happen in case like import for exhibitions, goods rejected or wrong
shipment etc. The re-exported goods should be identifiable as having been imported and should be re-exported
within two years from date of payment of duty when they were imported. This period (of two years) can be
extended by CBE&C on sufficient cause being shown. These should be declared and inspected by Customs
Officer. Original shipping bill under which the goods were imported should be produced. The goods can be
exported as cargo by air or sea, or as baggage or by post -. -. – After inspection, export and submission of
application with full details, 98% of the customs duty paid while importing the goods is repaid as drawback.