Self Verification of Data
A Scheme for self
verification of data furnished for determination of drawback rates has been
introduced. ThisSchemeobviates
the necessary of verification of data by the Customs/Central Excise authorities
and, thus, leads to prompt fixation of drawback rates.
Public Sector Undertakings
The scheme is applicable to Public Sector Undertakings of the Central
Government. However, it has also been extended to private sector units as
explained below.
Private Sector Units
The Self Verification Scheme is applicable to all companies whether Public or
Private Ltd., in the private sector, subject to the following conditions: -
(i) the concerned applicant must be having brand rate for the past three years,
(ii) his consumption pattern may be more or less the same for at least three
years,
(iii) drawback statement I, II, IIA, III and IIIA must be certified by a
Chartered/Cost Accountant or Chartered Engineer.
(iv) the applicants are themselves manufacturers, manufacturing simple products
where no co-product or bye-product is involved and whose accounts are under the
company law statutorily audited.
(v) the unit has exporting experience of about five years.
Post Audit
The applicant using the self-certification data scheme is required to keep the
record always ready so that the post-audit of the data of such company may be
done at a short notice. Where the data are found incorrect in post-audit of the
account of the company which led to fixation of a higher rate of drawback, the
facility of self-certification will stand withdrawn forthwith and normal
procedure of pre-check/pre-verification will have to be followed.
Verification of Data in Factory
The application and data submitted/furnished by the applicant is to be verified
by an officer of Central Excise/Customs by visiting his factory. Ensure to
produce all the original documents showing —
(i) payment of duty
(ii) issuance/issue from store for manufacture
(iii) details of actual manufacture
(iv) stock of finished product
(v) proof of export
(vi) register for account of visible wastages in the prescribed form
Verification Report
The Directorate of Drawback has prescribed a proforma for the verification
report to be furnished by Central Excise/Customs Commissionerates on the
application filed for fixation of brand rate. The applicants must go through
this proforma to know the various points on which scrutiny is made by the CE
officers. It will help them in providing right information in the brand rate
application form.
The proforma of Verification report is at Annexure 36. Also see
“Deficiencies” in verification reports in the ‘procedure for
verification’ later in this Chapter.
Applications Filed before Commencement of 1995 Rules
It terms of Rule 18(2)(a) “every application made by a manufacturer or
exporter for the determination/revision of the amount or rate of drawback in
respect of goods exported before the commencement of these (1995) Rules may be
disposed of in accordance with the provisions of the 1971 Rules as if these
(1995) Rules had not been made.
Guidelines for Filing of Brand Rate Applications
Circular No. 21/1997-DBK-Ministry of Finance, Deptt. of Revenue
Exporter who export under claim for drawback may apply for fixation of brand
rates under Rule 6 or Rule 7 of the Customs and Central Excise Duties Drawback
Rules, 1971 either for specific shipment or for period of time (subject to
certain quantitative restrictions). It has been seen that the period for which
such rates are asked for vary widely from one month to even two years.
Drawback year
2.1 It has now been decided that all brand rate letters will be issued by
following the drawback year commencing from 1st June to 31st May (of the
following year) i.e. brand rate letters issued by this Ministry will now be
valid upto 31st May only and for any shipment made after this date, exporters
are advised to file a fresh brand rate application alongwith Statement DBK-I, II
and III. In cases where a brand rate letter is under process, the exporters
should note that the rate letter on issue would be valid only upto 31st May and
adequate precaution should be taken by exporters by filing a fresh brand rate
application along with DBK Statement I, II and III for all shipments effected on
or after 1st June of that year.
Stock Position
2.2 While applying for the brand rate, the exporter should also furnish the
stock position as on 31st May (in case where an application is filed at the
beginning of the new drawback year) so that the verifying officers can certify
the same on the basis of which appropriate rates could be worked out by this
Ministry, considering the inputs suffering the pre-revised rates of duty. In
case the application is generated before 31st May they may furnish the stock
position to verifying officers of Customs/Central Excise.
Extension of Time for Filing Application
3. Request for Extension under Rule 6/7 of the Duty Drawback Rules, 1995.
3.1 The normal time limit for filing an application for brand rate under Rule 6
& 7 of the Drawback Rules, 1971 is 60 days from the date of export which can
be extended by another 30 days under exceptional and genuine circumstances by
the Central Government. Consequently, for seeking an extension of a rate later,
a separate application would be necessary within the above mentioned prescribed
time limit which could be reckoned from the date of Shipping Bill or export
3.2 However, in the interest of export promotion and as a facilitation to the
exporters they are permitted to file a simple request for such extension within
the said time limit accompanied with documents wherever necessary.
In order to follow a uniform practice in cases where such requests can be made,
the following guidelines are prescribed for the guidance of the Trade.
(A) Request for Inclusion of Subsequent Shipment
Where original brand rate application is filed for a specific shipment(s) and
the exporter wants the same to be extended to other subsequent shipments, the
request for such extension will be considered if filed within 60 days from the
date of last shipment mentioned in the original application in the following
situations:
(a) where rate letter has already been issued and the stock shown in the earlier
DBK-I, II and III statements are sufficient to cover the subsequent shipment(s)
for which extension is sought; or
(b) where verification has already been completed and stock is sufficient to
cover the subsequent shipment(s), but the brand rate letters are yet to be
issued; or
(c) where verification has already been completed but the opening stock plus the
inputs acquired thereafter is not sufficient to cover the quantity manufactured
for the subsequent shipment(s) for which extension is sought; then, such request
should be supported by necessary original duty paying documents which will be
subject to post-facto verification has not been completed, the exporters shall
get the additional duty paying documents of the additional stock also verified
by the Jurisdictional Commissioner for the subsequent shipment.
NOTE: Where such request is for inclusion of other intervening shipments then
the same should be filed within 60 days of date of export.
(d) To obviate the above difficulties, it is suggested that exporters may be
advised to make application(s) for a specific period of time subject to the
quantity of raw material available/procured by the Unit so that they do not have
to make fresh application(s) during the same year in respect of the quantity
already lying in stock prior to the date of first shipment. However, such
application will be valid only for shipments to be effected upto 31st May, For
shipments effected after 1st June of any year, fresh brand rate application must
be filed.
(B) Request for Extension of Period of Time and/or Quantity Enhancement
Similarly, request for such extension where the rate latter has been issued for
a specific period of time and/or with quantity restriction will also be
considered in the following situations:
(a) where the request is only in respect of increase in quantity, such request
should be made within 60 days, extendible by another 30 days, from the expiry of
the terminal date mentioned in the rate letter, and—
(i) if the verification has already been completed and stock is sufficient to
cover such quantity enhancement as asked for; or
(ii) verification has already been completed but stock is not sufficient to
cover the subsequent quantity for which extension is sought; then, such request
should be supported by necessary original duty paying documents which will be
subject to post-facto verification thereof by the Jurisdictional Commissioner
within 3 months; OR if verification has not been completed, the exporters shall
get the additional duty paying documents of the additional stock verified by the
Jurisdictional Commissioner for the additional quantity also.
(b) Where the request is for extension is for extension of period of time
mentioned in the original brand rate letter, such request should be filed within
30 (thirty) days from the terminal date mentioned in the rate letter.
However such extension of time would not be granted if the original Rate letter
is for period ending 31st May (i.e. end of Drawback Year).
4. In all the above situations, extension in brand rate letters would be allowed
only once, and --
(i) exporters should note that as already advised earlier in this letter, the
extension if eligible, will be granted only upto 31st May of year. For further
extension after 31st May, the exporter should file fresh application along with
DBK-I, II and III statements,
(ii) however, in respect of brand rate after issued against Advance Licences/DEECs,
extension of the time limit of brand rate letter would be entertained for
periods beyond 31st May, if such request is made on account of extension of the
validity period of export obligation under the DEEC Scheme.
Defects in Application
5. It is also noticed on scrutiny of the various applications that the
applications filed normally suffer from some basic defects. The Trades are
advised to keep the following aspects in mind:
(i) In a large number of cases it has been seen that the exporters do not
furnish the stock position and the duty suffered thereon, three months prior to
the date of export in DBK-IIA, or IIIA Statements as required, without the above
statements, it becomes difficult to arrive at the correct rates. All exporters
may be advised to furnish these Statements whenever they apply for any brand
rate.
(ii) Where the exporters claim reimbursement of Central Excise duties/CV duties
(which are otherwise covered under the MODVAT Scheme) while applying for brand
rates, a specific certificate from the Jurisdictional Excise authorities
certificate certifying non-availment of MODVAT of Excise duties/CV duty
(indication thereon the Gate Pass/Bill of Entry No) is required. This
certificate is not furnished by many exporters while applying for brand rates.
(iii) In many cases the DBK-II/III Statements show procurement of different lots
of inputs suffering different rates of Customs/Excise duties as the case may be.
In such situations the exporters can manufacture the export goods out of the one
lot only or different lots procured at different points of time. Where the
verification report does not indicate clearly the exact lot from which the
export goods have been manufactured, the drawback rates are sometimes arrived at
by following the principles of averaging. The brand rates in such cases will not
be worked out in all cases by taking the average of duties suffered on different
lots of inputs procured over a period of time.
(iv) At the time of verifying the data, the verifying the data, the verifying
authorities check the original duty-paying documents. For this purpose the
original Bill of Entry or Gate Passes as the case may be should be produced
before the Verifying Officer who will suitably deface them at the time of
verification and also make necessary entries in the prescribed records and give
a certificate of this effect in the verification report.
(v) Where exporter claim drawback of certain inputs while availing the facility
of Quantity based Advance Licence, it is often noticed that copies of the
Advance Licence and both Import/Export Parts of the DEEC Book are not being
submitted.
6. Rule 7A(2) of the Drawback Rules-Satisfaction of Negative Value Addition
Export Value of Goods
Rule 7A(2) of the Drawback Rules stipulate that no amount of rate of drawback
shall be determined under Rule 6/7, if the export value of the goods is less
than the value of the imported materials used in the manufacture of the said
goods. It may be noted that the value of the imported materials will have to be
arrived at with reference to the statutory provisions of Section 14 of the
Customs Act, 1962 in terms of which the value would be inclusive of the landing
charges. While filing application for rate letters this aspect should also be
borne in mind.
7. Procedure to Expedite the Verification Reports
In order to expedite the verification reports, the Trade may be advised to
submit four copies of the Brand rate applications of which two copies should be
filed directly with the Assistant Commissioner of Central Excise in whose
jurisdiction the manufacturing unit is located, one copy in the office of
Commissioner concerned, and one copy in the office of Directorate of Drawback
Ministry of Finance (Department of Revenue). The application for drawback claim
should clearly indicate complete address of Assistant Commissioner in whose
Division the manufacturing unit falls.
Check List on Important Points for filing Brand Rate Application
I. Proforma of Application
DEEC
1. If your brand rate application is for exports against a DEEC:
(a) have you checked that no drawback is being claimed for any input which is
allowed for duty free import?
(b) have you enclosed copies of the DEEC (with relevant licence) clearly
indication the items of import/export.
Modvat/Proforma Credit
2. Omitted
Manufacturing Process
3. Have you enclosed a detailed write-up of the manufacturing process (along
with Tech. Pamphlets, Drawing etc.) indicating clearly as to how each of the
inputs mentioned in DBK-I is used.
Shipping Bill
4. If your brand rate is to be fixed for a period of time, have you clearly
indicated the period and furnished copy of S/Bill (both sides) for the first
shipment giving indication of date of loading .