Duty Drawback against Exports

[Kaustubh Karandikar]

XYZ exported the goods under LUT without payment of GST. The foreign customer had subsequently refused to pay part payment against the supply. XYZ got this unpaid amount as refund from ‘Export Credit Guarantee Corporation (ECGC)’. The amount not received from the customer XYZ had claimed Duty Drawback against this supply. Will the duty drawback claimed needs to be partly paid back to the extent of the amount not received from the customer?

[Rajagopalan Ranganathan]

Sir,

The reply to your question is yes.

AI Summary

Duty drawback entitlement reduced where exporter obtains insurance or guarantee recovery for unpaid export consideration, repayment required accordingly. The legal effect is that the duty drawback claim is subject to reduction to reflect the actual net loss on the export transaction: where the exporter obtains a recovery for the unpaid consideration, the available drawback entitlement must be adjusted and the duty drawback must be repaid or reduced to the extent of the recovery or the unpaid amount recovered, thereby preventing double benefit for the same shortfall in export realisation.