Duty Drawback Scheme:
Duty Drawback is a relief by way of refund of custom and excise duties paid on inputs or raw materials used in the manufacture of export goods. To entitle goods to drawback, they must be exported to a foreign port. Duty drawback provisions are given under section 74 and 75 of the Customs Act. Section 74 allows duty drawback on re-export of duty paid goods. Section 75 allows drawback on imported goods used in the manufacture of export goods.
The Duty Drawback is of two types: (i) All Industry Rate (AIR) and (ii) Brand Rate.
- The All Industry Rate (AIR) of Duty Drawback is generally fixed as a percentage of FOB price of export products.
- Where the export product has not been notified in All Industry Rate (AIR) of Duty Drawback or where the exporter considers the All Industry Rate (AIR) of Duty Drawback insufficient to fully neutralize the duties suffered by his export product, he may opt for the Brand Rate of Duty Drawback.
Drawback is not allowed when the assessee opts for Advance Authorisation Scheme. Therefore, it is advisable to analyse beneficial options before choosing any particular option.