Exporters upset over CBEC diktat on duty refund scheme

Exporters' body FIEO today said it will approach the government for withdrawal of an order which sought recovery of duty drawback credits from those who failed to realise payments from their buyers.

Reversing a concession given by the Commerce Ministry to the embattled exporters in the midst of recession in the West last year, the Central Board of Excise and Customs (CBEC) has directed Chief Commissioners of customs and excise to recover the drawbacks from exporters who have not realised their proceeds.

"The drawback claims are made based on the Export Credit and Guarantee Corporation (ECGC) guarantee. This should be enough to establish our credentials that we have shipped the goods out," President of the Federation of Indian Export Organisations (FIEO) A Sakthivel said.

For promotion of exports, the government refunds duties which exporters pay on their imported raw material or the excise on domestic procurements. Sakthivel said if the buyers default and the exporters are not able to realise the proceeds, "why should we be asked to refund the drawback".

The CBEC directive issued on March 23 overrules a provision in the last year's Foreign Trade Policy which had said that exporters can claim drawback and the government will not insist on realisation of the proceeds if the Reserve Bank of India writes off such a requirement.

However, the CBEC citing the Customs Act, has said, "drawback would not be payable in cases where export proceeds have not been realised in accordance with the provisions of the Foreign Exchange Management Act, 1999, even if the claim has been settled by ECGC (Export Credit Guarantee Corporation) or realisation waived by the RBI."

The Board has asked its staff for stern action for recovery of the refund credit. "Action should be taken for recovery of drawback in such cases."

India's exports during April-January 2009-10 stood at $131.93 billion, 17.8 per cent down by $160.43 billion in the same period last year.