Our Bureau

New Delhi , Jan. 19

THE Finance Ministry has revised the all-industry duty drawback rates to give effect to the Customs and Excise duty changes announced on July 8 last year in the Union Budget for 2004-05.

Duty drawback payments are made to exporters to neutralise the Customs and Excise duties paid on inputs used in the manufacture of exportable products.

The latest drawback rates have been determined on the basis of certain broad parameters including the prevailing prices of inputs, standard input/output norms (SION) published by the Directorate-General of Foreign Trade (DGFT), share of imports in the total consumption of inputs and the applied rates of duty.

For arriving at the revised duty drawback rates (effective January 19), the Finance Ministry has also factored in the 2 per cent education cess that is now being collected as duties of Excise and Customs.

A circular issued by the Revenue Department on Tuesday highlighted that a significant feature of the new drawback schedule is that the rates for most products have been expressed in terms of metric tonnes/kg in lieu of the earlier ad-valorem rates.

Further, following the SION, the rates previously expressed in terms of numbers, pieces and gross have now been changed to metric tonne/kg.

The adoption of specific rates as against ad-valorem rates would help prevent disputes and litigations arising from alleged over-invoicing of exports. "Ad-valorem rates generally encourage over-invoicing. Under specific rates, we are insulated from over-invoicing," sources said.

To make the drawback schedule attractive and useful for exporters, the Ministry has provided drawback of excise duty for several entries in respect of which no drawback of excise duty was hitherto provided.

Deleted/new entries

The Ministry has also decided to withdraw the all-industry rate for those products where the main inputs are exempt from customs duty. The exporters of such products can, of course, avail themselves of the brand rate of duty drawback. About 46 entries have been deleted from the schedule.

In the new drawback schedule, a new Chapter (Chapter 72) has been introduced covering pig iron, iron ore pellets, ferro-alloys and steel products. In all, 29 new entries have been created.

About 165 new entries have been created in the textile sector (Chapters 50-63).

The new products included are wool tops, cotton yarn, acrylic yarn, viscose yarn, various blended yarn/fabrics, fishing nets etc.

Further, the existing entries in the drawback schedule relating to garments have been expanded so as to create separate entries for garments made up of (i) cotton, (ii) cotton and MMF (Man Made Fibre) blend; and MMF. Separate rates have been prescribed for these categories of garments on the basis of composition of textiles.

In the case of silk, the drawback rate for higher quality silk fabrics has been increased from Rs 86/kg to Rs 126. In the case of wool, the new rate for woollen worsted yarn (dyed) - weaving quality is Rs 20.50/kg, which is higher than the existing rate of Rs 4.80/kg.

The drawback rates on blended yarn and fabrics have been revised upwards accordingly. In the case of ready-made garment sector, the rate for knitted blouses/shirts/tops of cotton is Rs 42/kg as against the existing rate of 10.6 per cent of f.o.b. value subject to a maximum of Rs 40/piece.

The new rate for knitted blouses/shirts/tops of man-made fibre is Rs 53.50/kg. For knitted blouses/ shirts/tops of cotton and man made fibre blend, the rate is Rs 48/kg. The drawback rates on woven garments have been revised accordingly.

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