Duty Draw Back and Refund under CCR, 2004

[Ashok Chopra]

Respected Forum,

i am manufacturer exporter of Readymade Garment availing drawback on export.

i am not registered with central excise and paying lot of service tax on input services

if i myself get registered in central excise and get the refund of service tax under Rule 5 of Cenvat Credit Rule, 2004 as Unutilized Cenvat, will it effect my drawback, if yes, pls explain how or i can avail both the benefit.

pls guide me accordingly

[YAGAY andSUN]

Dear Sir,

You must be availing All Industry Duty Drawback on the Garment exports.   In All Industry Duty Drawback it is presumed that inputs used in manufacturing of final goods, must have incurred customs duties at any stage of manufacturing.  Therefore, under All Industry Duty Drawback scheme, duty is refunded on wheigted average basis.

Whereas Refund of service tax under rule 5 of the Cenvat Credit Rule, 2004 is nothing to do with the All Industry Duty Drawback untill it is specifically mentioned in the drawback schedule.

You may avail the both simultenously.  Please also check the rate of refund of duty against your product's tariff heading (with or without availing the CENVAT credit) under the Duty Drawback scheme, do the cost benefit analysis and avail the same, accordingly.

 

AI Summary

Duty drawback can be claimed alongside a Rule five Cenvat service-tax refund unless the drawback schedule specifies otherwise. Refund of service tax under Rule 5 of the Cenvat Credit Rule as unutilized Cenvat does not affect entitlement to All Industry Duty Drawback unless the drawback schedule for the product's tariff heading specifically provides otherwise; both benefits may be availed concurrently, subject to comparing drawback rates with and without Cenvat and conducting a cost-benefit analysis.