Drawback under Section 74 of Customs Act 1962



A) SECTION 74. Drawback allowable on re-export of duty-paid goods.

(1) When any goods capable of being easily identified which have been imported into India and upon which [any duty has been paid on importation, -

  • are entered for export and the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51; or
  • are to be exported as baggage and the owner of such baggage, for the purpose of clearing it, makes a declaration of its contents to the proper officer under section 77 (which declaration shall be deemed to be an entry for export for the purposes of this section) and such officer makes an order permitting clearance of the goods for exportation; or
  • are entered for export by post under section 82 and the proper officer makes an order permitting clearance of the goods for exportation, 98% of such duty shall, except as otherwise hereinafter provided, be re-paid as drawback, if -]
  • (a) the goods are identified to the satisfaction of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] as the goods which were imported; and
  • (b) the goods are entered for export within two years from the date of payment of duty on the importation thereof : Provided that in any particular case the aforesaid period of two years may, on sufficient cause being shown, be extended by the Board by such further period as it may deem fit.

(2) Notwithstanding anything contained in sub-section (1), the rate of drawback in the case of goods which have been used after the importation thereof shall be such as the Central Government, having regard to the duration of use, depreciation in value and other relevant circumstances, may, by notification in the Official Gazette, fix.


(3) The Central Government may make rules for the purpose of carrying out the provisions of this section and, in particular, such rules may —


  • provide for the manner in which the identity of goods imported in different consignments which are ordinarily stored together in bulk, may be established;
  • specify the goods which shall be deemed to be not capable of being easily identified; and
  • provide for the manner and the time within which a claim for payment of drawback is to be filed.]

(4) For the purposes of this section -


(a) goods shall be deemed to have been entered for export on the date with reference to which the rate of duty is calculated under section 16;


(b) in the case of goods assessed to duty provisionally under section 18, the date of payment of the provisional duty shall be deemed to be the date of payment of duty.



Section 74 of Customs Act, 1962 provide for drawback if the goods are re-exported as such or after use. This may happen in cases like import for exhibitions, goods rejected or wrong shipment etc.


B) VALUE AT THE TIME OF EXPORT IS RELEVANT - As per section 74(4), goods are deemed to have been entered for export on the date rate of duty is to be calculated under section 16. As per section 16, value of export goods will be taken on the date on which proper officer makes an order permitting clearance of goods for export under section 51 of Customs Act. Hence, ‘Value’ for the purposes of section 76(1)(b) will be value at the time of export and not the original value of import of the goods. This was stated by Commissioner, Customs; at the meeting of Customs Advisory Committee held at Mumbai dated 28-10-93. (Ref. : W.O.B. 45/93 dated 9-11-93).


C) GOODS CAN BE RE-EXPORTED TO ANY PARTY AND FROM ANY PORT –It has been clarified that goods can be re-exported to any party (and not only to the same supplier) and re-export can take place from any port.

D) DRAWBACK FOR USED GOODS - If the imported goods are used before re-export, the drawback will be allowed at a reduced percentage [section 76(2) of Customs Act, 1962]. If the goods were in possession of the importer, they might be treated as used by the importer.


E) DECLARATIONS TO BE MADE AT THE TIME OF EXPORTS:
In the case of exports other than by post, the exporter shall at the time of export of the goods -


  1. To state on the Shipping bill the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback under section 74 and make a declaration on the relevant shipping bill or bill of export that -
    1. the export is being made under a claim for drawback under section 74 of the Customs Act;
    2. that the duties of customs were paid on the goods imported;
    3. that the goods imported were not taken into use after importation;

    4. OR
    5. that the goods were taken in use;
  2. furnish to the proper officer of customs, copy of the Bill of Entry or any other prescribed document against which goods were cleared on importation, import invoice, documentary evidence of payment of duty, export invoice and packing list and permission from Reserve Bank of India to re-export the goods, wherever necessary.


F) MANNER & TIME OF CLAIMING DRAWBACK ON GOODS EXPORTED:

(1) A claim for drawback under these rules shall be filed in the form at Annexure II within three months from the date on which an order permitting clearance and loading of goods for exportation under section 51 is made by proper officer of customs:



“TABLE”
S. No. Length of period between the date of clearance for home consumption and the date when the goods are placed under Customs control for exportPercentage of import duty to be paid as Drawback
(1)(2)(3)
1. Not more than three months 95%
2. More than three months but not more than six months 85%
3. More than six months but not more than nine months 75%
4. More than nine months but not more than twelve months 70%
5. More than twelve months but not more than fifteen months 65%
6. More than fifteen months but not more than eighteen months 60%
7. More than eighteen months Nil”;