Duty Drawback not admitted when Cenvat Facility has been availed

[Guest]

Dear Sir,

We are manufacturing & exporting Brass Strips in Coils under Drawback Schedule Heading 7409-B i.e Drawback when cenvat facility has been availed. We are preparing ARE-1 under N.T. 19/2004 of CE dt. 06/09/04 (as amended), issued under Rule 18 of CE (No.2) Rules, 2001. We are also claiming Cenvat Credit on the finished goods and debiting the duty on the same day. But, our case is being rejected by Customs saying that both benefits can't be availed as stated under 8(e) of N.T. No. 103/08 dt. 29.08.08.

We feel that the same is incorrect. Kindly, clarify.

Regards,

Parivesh Goel

[Snehal Kulkarni]

We feel, the claim should not be rejected on the ground that the Cenvat Facility is availed.

In the drawback schedule, the exporter have entiled to claim the drawback by claiming the Cenvat as well as without Cenvat.

Please check whether your Finished goods comprises the Imported Items. If you are procuring all the inputs indigenously, then the claim on the drawback cannt be filed.

[RadheyShyam Mangal]

An exporter cannot claim rebate under Rule 18 of Central Excise Rules and Drawback on its exports simultaneously. hence stand taken by department is correct.

[Snehal Kulkarni]

 

Dear Mr Mangal

Would liek to address that Rebate is entitlement given by the Central Excise and Duty Drawback is the incentive offer by Customs obviously to promot Exports.

If the Finished goods comprising of the Imported as well as Indigenous Inputs, then the Drawback can be claimed as specified in the Drawback Schedule.

If Exproter is Claiming the Drawback after availing the Cenvat, then He Can Claim the Drawback of Custom Duty only which was paid at the Time of Import.

 

[YAGAY andSUN]

If, CENVAT credit was claimed on the Central Excise duty portion, even then, under Section 75 of the Customs Act, 1962 an exporter can claim the Duty Drawback to the extent of the components of customs duty involved in those goods.

[RadheyShyam Mangal]

        There is prohibition in condition No 8(e) of Notification 103/2008 Customs---  No Drawback shall be claimed for goods manufactured or exported by availing  the  rebate of  duty  paid  on  materials  used  in the manufacture  or  processing  of such  commodity  or  product  in terms of rule 18 of theCentral Excise Rules, 2002;, therefore the stand taken by Customs is correct. Here the question is not whether the manufacture availed Cenvat on input used in manufacturing of export goods, but on the one hand the manufacture has availed cenvat on input used on exported goods, then he cleared such goods by paying duty from cenvat which gets back by way of rebate under Rule 18 of CER,2002.

[YAGAY andSUN]

No drawback of excise duty on rawmaterial for manufacturers availing CENVAT credit

It is essential to note that manufacturers of excisable goods who are availing CENVAT credit facility are eligible to take as CENVAT credit any duty of excise paid on raw material or countervailing duty (CVD) paid on imported raw materail or service tax paid on input services.  CENVAT credit is iteself a scheme of instant reimbursement of duties and taxes. Therefore, to the extent credit has been availed by the manufacturer exporter there cannot be any claim of drawback under the drawback scheme.  Obviously, there cannot be a dual benefit of the drawback as well as CENVAT credit only on CVD portion as the basic customs duty is not allowed to be centvated. In such cases, the manufacturer-exporter can restrict his claim for drawback only to the basic customs duty which the impted material has suffered.  This aspect needs to be kept in mind whenever drawback claims are presented.

[RadheyShyam Mangal]

Dear Pradeepji,

The question in the instant issue is not about availment of cenvat on input used in the manufacture of goods exported. If the goods would have been exported under Bond without payment of duty, the exporter could have claimed DBK for custom portion if he had availed cenvat. Since in this case exports has been made under Rule 18 of CER,2002 under rabate of duty paid on exports and there is prohibition of availment of DBK when the exporter claims rebate under Rule 18, hence the DBK in such case is rule out.

[prakash vankhede]

Dear sir

We need to your expert guidiance regarding Duty drawback under section 74 and 75,

 We have re exported our inported capital goods under dbk section 75 and we taken the cenvat credit on CVD portion including SAD. now we put the dbk under Section 75 only for custom duty porion i.e BCD

Now the custom office did not pass the claim due to we have already taken cenvat portion 

We need to any relevant judgement for we should claim only the custom duty portion with count any valid board circular too.

Thanks

prakash

M-09879519725

[PRABHU RAMANATHAN]

YES, CENVAT CREDIT RELATED TO EXPORT IS REVERSED IS EQUAL TO NON-AVAILEMENT OF CENVAT CREDIT. THE EXPORTER SHOULD NOT BE DENIED FULL DRAWBACK ON THE EXPORTS MADE. REFER TO SUPREME COURT CASE LAW-CHANDRAPUR MAGNET WIRES VS.CCE(NAGPUR), ELT3/1996. I WELCOME ANY MORE INPUTS ON THIS SUBJECT. ONE WAY GOVERNMENT IS GIVING LUKE WARM RESPONSES TO THE EXPORTS WITH ALL TYPES OF ITCHES SO THAT THE EXPORTS HAVE TO STRUGGLE TO GET THEIR LEGITIMATE CLAIM. THE LAW IS NOT TRANSPARENT AND CLEAR. LOT OF SMALL EXPORTERS ARE DISCOURAGED WITH THIS UNCLEAR PROVISIONS OF DBK. 

REGARDS

S.RAMANATHAN

[Rishabh Gugale]

The Rebate under Rule 18 of the Central Excise and Drawback under customs are two different issues.  You can claim rebate of the excise duties paid on the clearance of export goods from central excise authority.  The drawback is under AIR - Drawback schedule wherein two separate rates has been indicated.  One Rate is applicable when cenvat credit availed and another rate is when cenvat credit not availed.  You apply the rate where cenvat credit availed.  Recently both the rates are almost same. 

You verify teh drawback schedule of your product and explain the authorities the difference between rebate and drawback.

Rishabh

AI Summary

Duty drawback: entitlement limited where excise rebate or CENVAT credit is availed; apply applicable drawback rate. Issue: whether exporters who avail CENVAT credit and claim rebate under Rule 18 can also claim customs duty drawback. Notification 103/2008 condition 8(e) prohibits drawback where rebate under Rule 18 has been obtained, which Customs relies on to deny claims. Counter positions note that drawback and excise rebate are distinct: drawback schedule rates differ based on CENVAT availment, and exporters may claim drawback limited to customs duty components (basic customs duty) on imported inputs, while CENVAT-availment precludes drawback for the excise/CVD portion unless CENVAT is reversed.