FinMin revises duty drawback rates

The finance ministry has revised the nationwide rates of duty drawback for 2008-09 with effect from September 1. Duty drawback seeks to neutralise the incidence of Customs duty, central excise duty and service tax on exported articles.

In a statement, the ministry said there was a general reduction in the rates of drawback in most commodities. The drawback rates have undergone changes in line with the changes in the duties.

The peak rate of aggregate import duties in 2008-09 has come down to 31.7 per cent, as against 34.13 per cent in the previous year.

Customs duty on major raw materials such as crude oil, raw cotton, zinc and ferro alloys has been brought down to zero. The excise duty has been reduced across the board from 16 per cent to 14 per cent.

The drawback schedule includes several new items. These include bulk quantities of coffee (raw beans), coffee (roasted or decaffeinated) and tea.

The schedule also includes tea in consumer packs, including tea bags, instant coffee, components of harness and saddlery (made of leather or non-leather material), stainless steel jewellery, brass bushes and optical fibre cables.

Like in previous years, the drawback rates have been determined on the basis of certain broad parameters, including, inter alia, the prevailing prices of inputs, input-output ratios, share of imports in the total consumption of inputs, the applied rates of duty and freight-on-board (FOB) prices of export goods.

The increase in prices of inputs has also been taken into account. The incidence of duty on high-speed diesel and furnace oil has been factored in the drawback calculation. The incidence of service tax paid on taxable services used as input services in the manufacturing or processing of export goods has also been factored in.

The Ministry of Finance had constituted a committee to determine the drawback rates, under the chairmanship of Prime Minister’s Economic Advisory Council member Saumitra Chaudhuri with former textiles secretary SB Mohapatra and former chief commissioner of customs and central excise TR Rustagi as members.

The Committee held extensive consultations with various industry and trade associations, and other stakeholders at various locations and submitted its Report on August 11.