eligibility of a manufacturer for DBK

[MEHUL ASHAR]

Respected Sir,

One of my clients is an exciseable manufacturer & is an exporter too, then the query is that if he purchases goods from an non-exciseable manufacturer & make finish goods out of it & exports then at what rate of DBK he receives.Please reply.

[CSSANJAY MALHOTRA]

Dear Mehul,

Duty Drawback has two Rates i.e. One if CENVAT benefit has been availed on Inputs & Input Services and Second When CENVAT Benefit has not been availed on Input & Input Services.

You may refer to the Duty Drawback Schedule for DBK rate on your product. If the Duty DBK rate is same in both the situations, then the same is considered as CUSTOM DBK rate and Exporter is entitle to CENVAT Benefit on Inputs also.

Exporter in present scenario is procuring goods from Non excisable manufacturer, now it needs to be seen, whether the exporter claims CENVAT facility OR NOT on inputs used by him in manufacture / packing of goods meant for Export. Accordingly the Drawback rate as stated in earlier Paras may apply.

[CSSANJAY MALHOTRA]

Dear Mehul,

Please read the words as "Input & Input services" in my submission instead of "INPUT".

[Kishan Barai]

There are two types of DBK rate

1. AIR = All industry rate, you can get it via Indiantradeportal website.

2. Brand rate. If you are not happy with current rate you many apply for brand rate.

Great Answer by CS SANJAY MALHOTRA sir but what would be the journal entry for CENVAT & what would be the journal entry in the books of account when the credit is avail. Thanks

[CSSANJAY MALHOTRA]

Dear Mr. Kishan,

Yes, you are correct even Brand Rate of Drawback can be fixed, if exporter so desires.

Journal Entry for CENVAT Availment would be: Lets say A.Value of product is ₹ 100, ED is ₹ 10, then entry would be : CENVAT Account - Dr by ₹ 10, Purchase a/c --Dr. by ₹ 100/- and Party Account to be Cr. by ₹ 110/-

On Utilisation : CENVAT Payable ---Dr. and Cenvat Receivable to be Cr.

In case of CENVAT Reversal, Purchase / Raw Material consumed --- Dr to Cenvat Receivable.

[Kishan Barai]

Thanks a lot sir. 

AI Summary

Duty drawback rates depend on whether CENVAT is availed, determining exporter entitlement and AIR or brand options. Duty Drawback eligibility for an excisable exporter using inputs from a non excisable supplier depends on whether the exporter avails CENVAT credit on inputs and input services; distinct DBK rates apply for CENVAT availed and non availed cases. If both rates coincide, the rate is treated as the customs DBK rate and the exporter may claim CENVAT. Exporters may claim the published All Industry Rate (AIR) or apply for a Brand Rate. Accounting entries include debiting CENVAT Account on availment, debiting CENVAT Payable on utilisation, and reversing to purchase/raw material when CENVAT is reversed.