Limitations on admissibility of Duty Drawback - CBEC's Customs Manual 2023 - Customs

5. Limitations on admissibility of Duty Drawback: 5.1 The Customs Act, 1962 and the Drawback Rules, 2017 lay down certain limitations and conditions for grant of duty drawback. No duty drawback shall be allowed where: (i) The duty drawback amount due in respect of any goods is less than Rs.50/- (Section 76,ibid.), (ii) In respect of any goods the market price is less than the amount of drawback due thereon (Section 76 ibid.), (iii) Where value of export goods is less than the value of imported material used in their manufacture. In this regard, if necessary, certain minimum value addition over the value of imported materials can also be prescribed by the Government (Section 75 ibid.) and (iv) The drawback amount or rate determined under Rule 3 of Drawback Rules 2017 does not exceed one-third of the market price of the export product (Rule 9 of Drawback Rules, 2017). 5.2 In case the Central Government forms an opinion that there is likelihood of export goods being smuggled back into India, the Government may not allow drawback or allow it subject to specified conditions or limitations. Notifications have been issued under Section 76 of the Customs Act, 1962. [Notification No. 208-Cus., dated 1-10-1977] 5.3 While prior repatriation of export proceeds is not a pre-requisite for grant of Duty Drawback, the law prescribes that if sale proceeds are not received within the period stipulated by the RBI, the Duty Drawback will be recovered as per procedure laid down in the Drawback Rules, 2017. An exception is made where non-realization of sale proceeds is compensated by the Export Credit Guarantee Corporation of India Ltd. under an insurance cover and the Reserve Bank of India writes off the requirement of realization of sale proceeds on merits and the exporter produces a certificate from the concerned Foreign Mission of India about the fact of non-recovery of sale proceeds from the buyer. [Refer Rule 18 of Drawback Rules, 2017]