Drawback on cotton power loom made ups permissible - Customs - 132/95

DBK Circular No. 130/95-Cus. dated 19/12/95 F.No. 609/126/95-DBK Government of India Department of Revenue Directorate of Drawback, New Delhi Subject: Eligibility of drawback where ad valorem rates subject of a maximum limit in quantity terms have been prescribed - Rules 7(A) of Customs Central Excise Duties Drawback Rules, 1971- Rule 8 of the Customs and Central Excise Duties Drawback Rules, 1995. Representations have been received from the exporters of Cotton Power loom made-ups (bed sheets) under S.S. No. 6305 (Old 2702(5)) of the Drawback Table where exporters' claim for drawback have not been allowed by the Customs Houses on the ground that drawback at the specific rate of Rs. 4.35 per piece works out to less than Rs. 5000/-per Shipping Bill as also less than 2% of the F.O.B. value. The cases pertain to the period when Rule 7(A) of 1971 Rules/ Rule 8 of 1995 Rules debarred determination of drawback where amount of drawback was less that than 2% of F.O.B. value of export except where the amount of drawback per shipment was. Rs 5000/- or more. The said limit of Rs. 5000/- has since been reduced to Rs. 500/- by Notification No. 52/95-Customs Central, Excise (NT) dated 18th September, 1995. The exporters have represented that once rate of 2% of F.O.B. has been specified in the Drawback Table, the eligibility of drawback even if total amount payable on the basis of maximum rate per piece specified works out to less than Rs. 5000/-or 2% of the F.O.B. value, is not affected. 2. The matter has been examined by the Ministry. The rates specified under S.S.No. No. 6305(Old 2702(5)) is 2% of the F.O.B. value which is subject to a maximum limit of Rs. 4.35 per piece. The specific rate under the S.S. No. No. 6305 (Old 2702(5)) is not repeat not the rate of drawback but maximum limit above which the amount of drawback is not to be paid. Thus for all legal purposes the rate of drawback has already been determined at 2% of the F.O.B. value and therefore exporters are eligible to claim drawback at the said rate which after calculation has to be limited to the amount calculated at the rate of Rs. 4.35 per piece - where 2% of the F.O.B value is in excess of the amount calculated at Rs. 4.35 per piece. Since in such cases drawback rate @ 2% of the F.O.B. value has already been determined by Central Government as specified in the Drawback Table, the limit of Rs. 5000/- per shipment, (since reduced to Rs. 500/- per shipment) shall not be applicable. All pending cases may therefore be disposed of accordingly. Sd/- (A..K. Madan) Under Secretary to the Govt. of India