Drawback is a rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of export goods. It is paid to the exporters after export of goods. Under the provisions of Customs Act, 1962 the drawback is to be recovered if the sale proceeds in respect of such export goods are not realized within the time allowed under the Foreign Exchange Management Act, 1999.

Presently, the monitoring of realization of export proceeds in respect of goods exported under the Drawback Scheme is being done on the basis of Export Outstanding Statement (XOS) received from the RBI. The XOS is a consolidated half-yearly statement giving details of all export bills outstanding beyond the period prescribed for realisation. However, following the issuance of RBI's instructions dispensing with submission of declarations for export of goods of value not exceeding US $ 25,000 it is observed that a large number of export consignments presently fall outside the purview of monitoring mechanism through XOS in as much as, the shipment details of goods valued upto Rs. 10 lakhs (approx) are no longer reported through this statement.

In view of this, particularly considering that under the statute the drawback payment is ultimately linked to the realisation of export proceeds, it has become necessary for the Department of Revenue to put in place an in-house monitoring mechanism to monitor the realization of proceeds for exports made under the Drawback Scheme. Extensive consultations were held in this regard with field formations and the trade bodies, viz. Federation of Indian Export Organisations (FIEO), Apparel Export Promotion Council (AEPC), Council for Leather Exports (CLE), Engineering Export Promotion Council (EEPC), Export Promotion Council for Handicrafts (EPCH), Delhi Exporters Association and others. Taking note of suggestions received from the trade and after examination of the issue, a software "BRC (Bank Realisation Certificate) module" has been developed for monitoring realization of export proceeds in respect of Drawback Shipping bills. Under this module, the exporters will submit a certificate from the authorized dealer (s) providing details of shipment which remain outstanding beyond the prescribed time limit including the extended time, if any, allowed by the authorized dealer/RBI on quarterly basis. The status holders and other exporters who are permitted to realize export proceeds within a period of 12 months or more may submit these certificates once in six months. The certificates have to be furnished port-wise. The software shall issue alerts against the shipping bills where the BRC/negative statement has not been furnished by the exporter within the prescribed date. Notices will be issued by the Customs to recover drawback paid on export consignments in respect of which export proceeds have not been realized.

It has been decided to operationalise the above mentioned BRC module with effect from 1.4.08. A draft Circular, outlining the basic features of the module, has been placed. It is requested that suggestions, if any, on the proposed module may please be sent to Joint Secretary (Drawback), 4th Floor, Jeevan Deep Building, Parliament Street, New Delhi so as to reach him by 26.3.08 so that the same can be considered before operationalization of the module.

Drawback monitoring: new BRC certificate requirement obliges exporters to report unrealised export proceeds and triggers alerts and recovery notices. A BRC (Bank Realisation Certificate) module will be implemented to monitor export proceeds realisation for shipping bills under the Drawback Scheme. Exporters must submit port wise authorised dealer certificates detailing shipments outstanding beyond prescribed realisation periods-generally quarterly, or once in six months for status holders and exporters with extended realisation permission. The software will flag shipping bills lacking BRCs or negative statements and Customs will issue notices to recover drawback paid where proceeds remain unrealised. The module follows consultations with trade bodies and is to be operationalised from 1.4.08.