Drawback on the material on which Cenvat Credit has been taken

[VINOD KUMAR]

Dear experts, as per Rule 2 and 3 of Drawback rules,

'drawback' in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods; and

the amount of drawback is reduced by taking into account the amount of Cenvat Credit availed.

Why a manufacturer who has availed the Cenvat of all the taxes/duties (i.e. excise duty+sales tax+CST+Service Tax (on domestic material) and CVD+SAD+Service Tax on imported materia) is given drawback of customs portion.

Please do reply.

Thank You sir.

AI Summary

Manufacturers can't claim duty drawback on VAT/CST if Cenvat Credit is used; explore Customs Act Sections 74 & 75. A discussion on a forum addresses the issue of duty drawback for manufacturers who have availed Cenvat Credit on various taxes and duties. An expert clarifies that duty drawback is not available on VAT/CST/Sales Tax and outlines three methods to avail it: All Industry Duty Drawback, Brand Rate Fixation, and under Sections 74 and 75 of the Customs Act. If Cenvat credit is availed, no duty drawback is allowed on that portion. The discussion also covers the necessity of foreign exchange payment for claiming drawbacks and the role of the Bank Realization Certificate in export benefits.