The Duty Drawback Scheme, governed by the Customs Act, 1962, enables exporters to claim a refund of customs duties and taxes paid on imported inputs used in the manufacture of export goods. It is a powerful tool to enhance the profitability of Indian exporters and maintain competitive pricing in international markets.
Certain situations and goods are ineligible for duty drawback, including:
To file a duty drawback claim, the following documents are typically needed:
All documents must be complete and accurate to avoid delays or rejection.
A fixed rate notified by the government based on average industry input costs and duties. Ideal for smaller exporters.
Claimed when no AIR is available or if the rate is inadequate. It is calculated based on actual duty paid on inputs.
Claimed when imported goods are re-exported in unused or lightly used condition, offering a refund of up to 98% of duties paid.
to claim drawback in the shipping bill during export.
after export.
File the drawback claim through the EDI system or manually, depending on the port.
for classification, duties, and compliance.
Upon approval, the refund is credited to the exporter’s bank account.
Exporters may face the following challenges:
Duty drawback is allowed even if export proceeds are not realized, provided:
If the sale proceeds are received within 3 months of recovery, the refunded drawback amount can be reinstated.
Fraudulent claims or overvaluation are punishable under Section 135 of the Customs Act.
No time limit for recovery of erroneously paid duty drawback.
