TRADE NOTICE : 137 / 2003                                                                                Dated: 20.10.2003

Sub:  Fixation  of  brand  rate  of  duty drawback  by the  Central Excise field formations under  Rules  6  and  7  of  the  Customs  and  Central Excise  Duties  Drawback  Rules, 1995-  Removal  of difficulties  -  Regarding.              


              Copy of  Board’s Circular No. 89 / 2003 – Cus. dated: 6.10.2003 (F. No. 603/32/2003-DBK) is  communicated herewith.

              The contents of the Trade Notice may be brought to the knowledge  of all  constituent members of Trade Associations / Chamber of Commerce.

          (Issued from file C.NO.IV/16/4/2003-C.Ex.Pol )


//ATTESTED//                                                                                   (D.P. NAIDU)




As per mailing list   I / II / III  /  All  Sections in Hqrs., Trichy.

                                  Copy of   Board’s  Circular No. 89 / 2003 – Cusdated: 6.10.2003


Sub:  Fixation  of  brand  rate  of  duty drawback  by the  Central Excise field formations under  Rules  6  and  7  of  the  Customs  and  Central Excise  Duties  Drawback  Rules, 1995-  Removal  of difficulties  -  Regarding.


Attention is invited to  Customs   Circular  Nos.14/2003 dated  6.3.2003 and 83/2003 dated  18.9.2003,   wherein  detailed  procedure  as  to the fixation of  Brand Rate  and  Special  Brand Rate has been  explained. 

2.      These   instructions  as  well as the illustrations  given  therein were  based  on the  presumption  that  field formations  are  aware  of  the  fact  that  drawback  facility should  not  be allowed  in case the  exporter  has  availed  of  input  stage  relief  under  various  schemes  including  Cenvat  facility.  It  has,  however,  been learnt  that  some  confusion  persists  in the  minds of  field formations. 

3.       In  order to  dispel  such  doubts,  it is clarified  that  duty  drawback  scheme  is  aimed  at neutralising  the  input  stage  duties  of  Customs  and  Central  Excise  suffered  in respect of  various inputs used  in the manufacture  of  the  export  products. 

Apart  from   duty  drawback,  exporters  also  have  other  schemes  for claiming  the  relief  of  input  stage duties  of Central Excise  through rebate  under Rule 18 of  the  Central Excise  Rules, 2002  or Cenvat  Facility  under  the  Cenvat  Credit  Rules, 2002.  It is clarified here  that  if the input stage duties have been rebated through the instrumentality of any of these schemes, then simultaneous relief under

Drawback scheme shall not be admissible. The field formations, therefore, should ensure  that  the  Central Excise allocation  of the  duty drawback  rate can be permitted  only  if  the  exporters  furnish the  evidence  that  they  are  not  availing – 

·        Cenvat  facility  under  Cenvat  Credit  Rules, 2002 (or earlier Rules),  and

·         rebate of  the inputs/materials  used  under  Rule  18  of  the  Central Excise  Rules, 2002 (or the corresponding rule under the earlier Rules). 

However, if any of the inputs have suffered customs duty and drawback is admissible on it as per rules, the same may be allowed.   

4.       Further, the field  formations  are also aware  that  manufacturers/ producers  have the facility  of removing  the  materials (inputs)  without  payment  of  duty  from the  factory  of  the  producer or the  manufacturer  or  the  warehouses  or  any other  premises, for  use  in the  manufacture  or  processing  of the  goods  which are  exported  with  the approval  of  the  Commissioner  of  Central Excise.  Therefore, this facility also amounts to a relief of  the   input  stage duties.  Hence, while   allowing  drawback  it should  be ensured  that  the  exporters do  not  avail of the facility  under  Rule  19(2) of the Central Excise  Rules, 2002 (or the corresponding rule under the earlier Rules). 

5.       Field formations should also note that under DEPB Scheme, drawback can only be allowed in terms of the Customs Circular no.39/2001 dated 6.7.2001. 

6.       Similarly, under Advance Licence Scheme, the exporters get the facility of duty  free   import  of  the  inputs  required  for the  manufacture of  export product.   Therefore, the relevant import documents (Bills of Entry, etc.)  should  be  carefully  scrutinised  to ascertain  whether  duties  have been  exempted.  No Brand Rate  of   drawback  should be fixed  for  such  cases.  However, Brand Rates can be fixed for rebating duties on such   inputs  which do  not  figure  in relevant  Advance Licence/DEEC Book and  which  have been  procured by exporters  indigenously  or through  import  under the cover  of  proper  duty  paying  documents i.e.   Central  Excise   invoices  or  bills  of  entries, as the case may be, provided that the exporters do not avail of CENVAT facility in respect of the element of Central Excise duty or the Countervailing Duty(CVD) as the case may be. 

7.       On the other hand, under Duty    Free  Replenishment  Certificate  Scheme, which  is  a  post export  scheme,  the  exporters  are issued  a  DFRC Licence.  The DFRC licence is   freely tradeable  in the market.  The import of relevant inputs figuring  in the Standard Input-Output Norm (SION), published in the Handbook of Procedures, Vol.II to the EXIM Policy, against a DFRC licence  is exempted from the basic customs duty. But the importers are required to pay the countervailing duty (CVD) in cash.  It is clarified here that the exporters  who manufacture  their  export  product by  using the  material  imported  against  a  DFRC licence, can be given  brand  rate of  drawback  in respect of  such  element of  CVD  provided  they  do  not  avail  of  Cenvat  facility  on the same. 

8.       In the revised scheme of the things,  the  brand rate letters  are to be issued  by the  jurisdictional  Central Excise authorities  and  the Customs field formations  are  required  to permit drawback  on the strength  of  such  rate  letters.   In order to ensure that the exporters do not simultaneously avail of the  relief  of  input  stage  benefits  under  various  schemes,  the brand rate letters  issued  should  specify  that  the  manufacturer  exporters or  the  supporting  manufacturers (in case  the  exporter is a merchant  exporter)  has  not  availed of  the  benefit  of various schemes mentioned in paragraphs 3, 4, 5, 6 and 7 above. However, if brand rate has been fixed in respect of exceptional situations under these schemes as explained in the above referred paras, the brand rate letters should specify the same. 

                         S.S.   Renjhen
Joint  Secretary to the  Government of  India
                    Telefax No.2334107