Duty drawback on inputs used in export products shouldn't be denied

Business Standard

26-05-2025

The standard input-output norms (SION) for our product are already fixed but they do not fully meet our requirements. So, we had applied for review of the norms under Para 4.06 of the HBP, which is still under consideration. Meanwhile, we have received an order for export of the same product. Can we now apply for advance authorisation under SION or under Para 4.07 of the HBP to meet our immediate requirement?
Yes. There is no bar on applying for advance authorisation under SION or Para 4.07 of HBP while your request for review of the SION under Para 4.06 of the HBP is pending.
We have obtained an advance authorisation under SION, which allows 4 inputs. We want to import only 3 of the inputs. We are holding duty paid stocks of the 4th input. We will make the export product using all the 4 inputs. Can we file DEEC-cum-Drawback shipping bill and adjust the exports against the export obligation and also claim the drawback of the duty paid on the 4th input?
In my opinion, you can do that, because there is nothing in Section 75 of the Customs Act, 1975 or the Customs and Central Excise Duties Drawback Rules, 2017 to deny the drawback of the duty paid on the inputs except under specified circumstances. However, you better get the duty paid input removed from the advance authorisation because the CBEC Circular no.89/2003-Cus dated 6th October 2003 says that (relevant extracts) 'brand rates can be fixed for rebating duties on such inputs which do not figure in relevant Advance Licence/DEEC Book and which have been procured by exporters indigenously or through import under the cover of proper duty paying documents i.e. Central Excise invoices or bills of entries, as the case may be'. Also, you may take careful note of Para 4.15 of the FTP which says that 'drawback as per rate determined and fixed by Customs authority in terms of DoR Rules shall be available for duty paid imported or indigenous inputs (not specified in the norms) used in the export product. For this purpose, applicant shall indicate clearly details of duty paid input in the application for Advance Authorisation. As per details mentioned in the application, Regional Authority shall also clearly endorse details of such duty paid inputs in the condition sheet of the Advance Authorisation'. In my opinion, the restriction that drawback will be available only for 'duty paid inputs not specified in the norms' makes no sense. You may represent to the DGFT to remove that irrational restriction.