How to avoid Excise Duty while Export and Can we avail Excise Duty exemption or remission and Duty Draw Back together?

[Guest]

Since we are Yarn Producer and while Purchasing  PET Chips as Raw Material we pay Excise Duty @ 10% which we later on pass on local buyers while selling them Yarn hence recover duty.But here the question is we can pass on duty in case only selling Yarn to local Buyers but in case of Export we can not pass on excise duty to the importers or overseas Buyers hence here we are unable to recover our paid Excise duty which we have already paid to suppliers or from whom we are procuring raw material so in case of export we are unable to pass on duty to the overseas buyer and apart from that we can claim Duty Draw Back (Export Incentive) @ 5% only but still we are making loss by 5% ( Since we paid Excise Duty @ 10% and can avail Duty Draw Back @ 5% only on FOB Prices).

 

                     So Here are some points where I need your assistance to clear:-

 

1. In case of Exports, is there any way where we could avoid the Excise Duty?If Yes then what is the mechanism and procedure?

2. Can we avail  Excise Duty exemption and Duty Draw Back simultaneously?

3. What are the ways where we could avoid Excise Duty i.e Exemption and Remission?

 

Once you clear this, then Kindly Clear Duty Draw Back Scheme since There are two provision in the mentioned Scheme.

one is When CENVAT facility is not availed and second is When CENVAT Facility is availed.

 

We are unable to understand these conditions.

 

Thanks and Best Regards,

Devendra Kumar,

+91-9909854514 

[Radha Arun]

1.   As regards exports and Cenvat credit:-

1. You can take Cenvat credit of the 10% excise duty paid on the inputs (PET chips);
2. You can export the yarn without payment of excise duty under Rule 19 of the Central Excise Rules, under cover of ARE-1 form.
3. You can use the Cenvat credit for payment of excise duty on local clearances. Or, if you have too much credit, you can claim cash refund under Rule 5 of the Cenvat Credit Rules 2004.

2.  As regards drawback:-

• There are two rates, as mentioned by you. The columns of the drawback schedule show that one rate is applicable if Cenvat credit is not taken on the inputs, while the other rate is applicable if Cenvat credit is taken on the inputs.
• If you follow the procedure described in (1) above by taking Cenvat credit, the lower rate of drawback will be available.
• When working out whether 5% drawback on the final product value is better or 10% Cenvat credit on the inputs is better, you have to consider the value addition as well as the administrative costs and delays. In big ports, drawback is paid quickly. Cenvat credit refund, on the other hand, is often delayed by the excise authorities.

Hope this helps.

[Guest]

Thanks Mr. Arun for Explaining the things in a comprehensive way. This helped me to clear my confusion. 

Could you please suggest me the websites and Government Contacts where I could access the frequent Updates of International Trade.

Best Regards,

Devendra Kumar

+91-9909854514

[Radha Arun]

TMI is always updated. You could also try eximkey.com and ieport.com. The govt website for customs and excise is cbec.gov.in.

[Guest]

Mr. Aurn sir,  a senior consultant's reply is exhaustiveon this topic and easily understandable.

Thank you Mr. Arun sir.

 

AI Summary

Cenvat credit: use duty-free export procedure to preserve input credit while comparing lower drawback rates for exporters. Exporters can take Cenvat credit of excise duty paid on inputs and export under the ARE-1 duty-free procedure; Cenvat credit may be used for domestic duty payments or claimed as a cash refund if excess. The Duty Drawback scheme provides different rates depending on whether Cenvat credit was availed, so exporters must compare the lower drawback available when taking credit against the benefit of Cenvat credit or refund, considering value addition and administrative delays.