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

Eligibility for Duty Drawback When Exporting Goods from Non-Excisable Manufacturer: Understanding Rates and CENVAT Implications A discussion on a forum addresses the eligibility of a manufacturer for Duty Drawback (DBK) when purchasing goods from a non-excisable manufacturer and exporting finished goods. The main concern is determining the applicable DBK rate, which depends on whether the CENVAT benefit has been availed on inputs and input services. Two types of DBK rates are mentioned: All Industry Rate (AIR) and Brand Rate, the latter being adjustable if the current rate is unsatisfactory. The discussion also covers journal entries for CENVAT availment and utilization, providing detailed accounting guidance.