Duty Drawback Scheme

What is Duty Drawback?

Duty Drawback is a refund of customs duties (Basic Customs Duty, Special Additional Duty, etc.) paid on imported inputs that are used in the manufacture of goods which are subsequently exported. It is administered by the Customs and Central Excise department under the Customs Act, 1962 and the Customs, Central Excise Duties and Service Tax Drawback Rules, 2017.

Types of Duty Drawback

  • All Industry Rate (AIR) Drawback: A standard rate notified by the CBIC for each export product (based on HS code), calculated as a percentage of the Free On Board (FOB) value of exports. This is the most commonly used drawback route — simple and quick to claim via the Shipping Bill.
  • Brand Rate Drawback: When an exporter's actual duty incidence on inputs is higher than the AIR, they can apply for a Brand Rate — a company-specific drawback rate based on actual duty paid on inputs used in manufacturing. We prepare complete Brand Rate applications with technical cost sheets.

Our Duty Drawback Services

  1. Review and verification of applicable AIR drawback rates for export products
  2. Verification of correct Shipping Bill declarations for drawback eligibility
  3. Monitoring of drawback credit and disbursal in ICEGATE account
  4. Brand Rate application — preparation of technical cost sheets, input lists, and duty payment proofs
  5. Coordination with Customs for pending drawback cases
  6. Handling drawback scrutiny, objections, and recovery notices
  7. Advisory on combining Duty Drawback (AIR) with Advance Authorisation and other schemes for maximum benefit

Duty Drawback vs. RoDTEP — Which to Choose?

Duty Drawback (AIR) and RoDTEP cannot be claimed simultaneously for the same product on the same Shipping Bill. You must choose one. Generally:

  • Duty Drawback AIR is better for products with significant import duty on raw materials.
  • RoDTEP is better for products with high embedded domestic taxes (electricity, fuel, etc.).

Samarth EXIM conducts a product-wise analysis to determine which scheme gives maximum benefit.

Frequently Asked Questions – Duty Drawback

Q: Is there a time limit for claiming Duty Drawback?

Yes. Duty drawback must be claimed within 3 years from the date of export (date of Let Export Order on the Shipping Bill). Beyond 3 years, the claim is time-barred unless special circumstances apply.

Q: Can Duty Drawback be claimed if goods were imported on Advance Authorisation?

No. If inputs were imported duty-free under Advance Authorisation, Duty Drawback cannot be claimed on those inputs. Drawback is only available on inputs on which customs duty was actually paid.

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Frequently Asked Questions

What is an IEC (Importer Exporter Code) and why is it mandatory in India?

An Importer Exporter Code (IEC) is a 10-digit identification number issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India. It is the primary business identification number required for any person or business engaged in import or export of goods and services.

IEC is mandatory because no import or export can be made without it (unless specifically exempted under the Foreign Trade Policy). It is required for Customs clearance, DGFT scheme applications, and receiving or making foreign trade payments through banks.

What are the main documents required for import-export in India?

Key documents for import-export operations in India include:

  • Shipping Bill (for exports) or Bill of Entry (for imports) — filed with Customs for clearance.
  • Commercial Invoice cum Packing List — details of goods, quantity, value, and packaging.
  • Bill of Lading / Air Waybill — transport document issued by the carrier.
  • Certificate of Origin (COO) — certifies the country of origin, needed for FTA benefits and some import requirements.
  • IEC Code — the importer/exporter identification number.
  • GST Invoice / LUT — for GST compliance on exports.
  • FSSAI Certificate — for food and agricultural imports.
  • BIS Certificate / NOC — for products under mandatory BIS certification.

What does DGFT do and why is it important for importers and exporters?

The Directorate General of Foreign Trade (DGFT) is the apex government body under the Ministry of Commerce and Industry responsible for formulating and implementing India's Foreign Trade Policy (FTP). Its key roles include:

  • Issuing and managing Importer Exporter Codes (IEC)
  • Administering export incentive schemes: Advance Authorisation, EPCG, RoDTEP, RoSCTL, SEIS
  • Granting export licences for restricted and SCOMET items
  • Issuing import licences for restricted items
  • Recognising Star Export Houses (status holders)
  • Fixing Standard Input Output Norms (SION)

Every Indian exporter and importer must interact with DGFT at some point — whether for obtaining an IEC, applying for export incentives, or seeking licences for restricted goods.

How can I find out if my product requires a special import licence in India?

India's import policy is classified under the ITC(HS) Classification of Export and Import Items published by DGFT. Every item has an import policy designation:

  • Free: Can be imported without any licence.
  • Restricted: Requires a specific import licence from DGFT before import.
  • Prohibited: Cannot be imported under any circumstances (e.g., beef in some categories).
  • Canalised: Can only be imported by government-designated agencies.

You can check the policy on the DGFT website by your ITC(HS) code, or contact Samarth EXIM for a free preliminary import policy check for your specific product.

What is the difference between Advance Authorisation and EPCG scheme?

Both are export promotion schemes under India's Foreign Trade Policy, but they serve different purposes:

  • Advance Authorisation (AA): Allows duty-free import of raw materials and inputs that are physically used in manufacturing export goods. The export obligation is the value of goods exported. Applicable before production.
  • EPCG (Export Promotion Capital Goods): Allows duty-free import of capital goods (machinery, equipment, tools) used in production of export goods. The export obligation is 6 times the duty saved, over 6 years.

They can be used together — EPCG for capital goods and Advance Authorisation for input materials — giving double duty savings on both machinery and raw materials.

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