Duty drawback: the All Industry Rate against a Brand Rate

Duty drawback returns the customs and excise incidence carried by the inputs that went into an export. The CBIC taxpayer services brochure on duty drawback sets the scheme out in three categories: the All Industry Rate, the Brand Rate, and drawback on the re-export of imported goods. The first two answer the same question with different evidence, and the choice between them is where the money is.

Which section is drawback paid under, and under which rules?

Two sections, and they answer different questions. The Kolkata Customs page on the duty drawback scheme records that section 75 of the Customs Act, 1962 and section 37 of the Central Excise Act, 1944 empower the Central Government to grant drawback of the duties suffered on inputs used in the manufacture of exported goods. Section 74 of the Customs Act, 1962 is the separate route for the re-export of goods that were imported on payment of duty and are leaving again substantially as they arrived.

The procedural rules are where a careless citation goes wrong. Several commissionerate pages still describe the machinery by reference to the Customs and Central Excise Duties Drawback Rules, 1995. The rules operating today are the Customs and Central Excise Duties Drawback Rules, 2017, and the Bengaluru City Customs Public Notice No. 15/2024 processes brand rate claims under section 75 read with rule 6 and rule 7 of the 2017 rules. The rule numbers happen to carry across, which is exactly why the wrong year survives on so many pages.

What is the All Industry Rate, and how is a row read?

The CBIC brochure defines it precisely: the All Industry Rate for an export product is an average rate, based on the average quantity and value of material and the average duties of Customs and Central Excise borne by each class of material from which the export goods are ordinarily manufactured, and the rates are normally reviewed annually on the Drawback Committee's recommendation. The word doing the work is average. The rate was built for a class of goods, not for your bill of materials.

The schedule is a notification, and a row has more in it than a percentage. Chennai Customs Standing Order No. 10/2023 dated 27-10-2023 records that the revised All Industry Rates were notified vide Notification No. 77/2023-Customs (N.T.) dated 20-10-2023, coming into force on 30-10-2023, and communicated by CBIC Circular No. 26/2023-Customs dated 26-10-2023. It states that each tariff item in the schedule carries a rate under column (4) and a cap on the drawback amount, wherever applicable, under column (5), and that the claim is made by suffixing the tariff item with the letter B, so tariff item 610901 is declared as 610901B.

When is the published rate enough?

Most of the time, and for a reason that is not laziness. The CBIC brochure lists what the All Industry Rate actually saves: it is granted on the shipping bill declaration without requiring additional documentation, it is processed end to end electronically, it is disbursed directly into the exporter's account, and it needs no separate documentary evidence of realisation of export proceeds. For a standard process on a mature tariff line, the average is close enough to your own number that the difference will not pay for the work of proving it.

Two limits decide whether the published figure is worth having at all. Where column (5) carries a cap, the cap binds before the percentage does, so on a high value consignment the effective rate is the cap divided by the free on board value rather than the headline figure. The Jawaharlal Nehru Customs page on drawback also records that no drawback is admissible under section 75 where the market price of the goods is less than the drawback claimed, and that a claim below Rs 50 in an individual shipment is not admitted.

When is a brand rate worth building?

Two situations, and the rules name them separately. Public Notice No. 15/2024 sets them out as rule 6, cases where the amount or rate of drawback has not been determined, and rule 7, cases where the amount or rate determined is low. Rule 6 is the plain case of a product with no published rate. Rule 7 is the interesting one, and the notice quotes its trigger: where the exporter finds that the amount or rate determined under rule 3, or revised under rule 4, for the class of goods is less than eighty percent of the duties paid on the materials or components used in the production or manufacture of the goods.

Eighty percent is not a target, it is a threshold. A brand rate is worth building when your input duty incidence is structurally higher than the class average: an imported input the average maker of that product does not use, a grade that attracts a higher basic customs duty, a yield the schedule did not assume. The CBIC brochure adds two facts that change the risk of trying. Brand rates are fixed by the local Commissioners of Customs having jurisdiction over the place of export, and pending fixation the All Industry Rate, where one exists, can be availed upfront. You are not choosing to go without cash while the application sits.

What is the clock on a brand rate application?

Three months, and it starts at the export rather than at the decision. Public Notice No. 15/2024 records that under rule 6(1)(a) and rule 7(1) the exporter must apply within three months from the relevant date, being the first date of the let export order, for determination of the amount or rate of drawback. That is the single fact that decides whether a brand rate is available to you at all, and it is fixed on a date that has already passed by the time anyone compares the received drawback against the input duty.

Extensions exist and they are priced. The notice records that the Assistant Commissioner or Deputy Commissioner of Customs may extend the period by three months, and the Principal Commissioner or Commissioner of Customs by a further six months, each on an application that may involve an inquiry and where reasons for refusal are recorded in writing. The fee is 1 percent of the free on board value or Rs 1,000, whichever is lower, at the first level, and 2 percent of the free on board value or Rs 2,000, whichever is lower, at the second.

What does a brand rate application actually cost to assemble?

The evidence is the cost, not the fee. Public Notice No. 15/2024 lists what has to accompany a rule 6 or rule 7 application, and the list is the reason a brand rate is a decision rather than a default: a DBK-I statement signed by a chartered engineer, DBK-II, DBK-IIA, DBK-III and DBK-IIIA statements signed by a chartered accountant, a description of the manufacturing process, a drawback working sheet, an export statement for a rule 7(1) claim, a value addition statement, attested copies of the shipping bills, and the bills of entry behind the inputs.

The application is also refusable on shape rather than on merit. The notice records that an incomplete claim is returned with a deficiency memo within ten days for goods exported other than by post under rule 14(3)(a), or fifteen days for goods exported by post under rule 12(3), and that if the deficiencies are not rectified within 30 days the claim is deemed not to have been filed. Where the exporter does rectify in time, the date of the acknowledgement is deemed the date of filing for the purpose of section 75.

What about drawback on the re-export of imported goods?

It is a different scheme wearing the same word, and it is the one exporters most often forget they are entitled to. The CBIC brochure records that drawback can be claimed on the export of duty paid imported goods, that up to 98 percent of the import duty paid can be claimed on such exports, and that proof of duty paid on importation and identification of the export goods as those imported earlier are among the primary requirements. The Jawaharlal Nehru Customs page attributes this route to section 74 of the Customs Act, 1962.

Nothing in the All Industry Rate against brand rate decision applies here, because no manufacture happened. What matters instead is identity: the goods leaving have to be provably the goods that arrived, which is a documentation problem rather than a costing one. A rejected consignment going back, a machine returning after a trial, an exhibition stock coming home: each of those is a section 74 question that is usually filed as nothing at all.

Where to go from here

Drawback is one of four remission routes that can attach to the same shipment, and the choice between them is made before the shipping bill is filed rather than after.

• The scheme that replaces inputs instead of refunding them. Advance authorisation imports the inputs duty free against an export obligation, which is the alternative to paying duty and claiming it back.
• What the remission becomes once it is allowed. Duty credit scrips covers the ledger the RoDTEP and RoSCTL rebates arrive in, and why drawback does not use it.
• Reading a scheme rate as at a date. RoDTEP rates and the change timeline shows why a rate looked up today can be the wrong rate for last quarter's shipment.
• The field the claim is made on. The shipping bill, field by field traces what each declaration downstream depends on.
• The dates around the year. The EXIM compliance calendar places the annual scheme reviews against everything else that falls due.

Purser Outbound holds the let export order date on the shipment record itself, so a three month brand rate window is computed rather than remembered, and the tariff item that produced the drawback claim is the same one the invoice and the shipping bill carry. Purser never submits to a government portal, and it never sends an outbound message without a recorded human approval event. The customs broker still files the shipping bill and the drawback claim: what changes is that the decision behind the claim is on the record before filing, not reconstructed after it.

Frequently asked questions

What is the difference between the All Industry Rate and a brand rate of duty drawback?

The All Industry Rate is a published rate per tariff item. The CBIC taxpayer services brochure on duty drawback describes it as an average rate based on the average quantity and value of material and the average duties borne by each class of material from which the export goods are ordinarily manufactured. A brand rate is fixed for one exporter's own product on evidence of the duty actually suffered, under rule 6 or rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017, and is fixed by the Commissioner of Customs having jurisdiction over the place of export.

When can an exporter apply for a brand rate of duty drawback?

In two situations named separately in the rules. Rule 6 of the Customs and Central Excise Duties Drawback Rules, 2017 covers cases where the amount or rate of drawback has not been determined for the goods. Rule 7 covers cases where the rate determined is low, and Bengaluru City Customs Public Notice No. 15/2024 quotes its test: where the amount or rate determined under rule 3, or revised under rule 4, for the class of goods is less than eighty percent of the duties paid on the materials or components used.

How long does an exporter have to apply for a brand rate?

Three months from the relevant date, which is the first date of the let export order, under rule 6(1)(a) and rule 7(1) of the Customs and Central Excise Duties Drawback Rules, 2017. Bengaluru City Customs Public Notice No. 15/2024 records that an Assistant Commissioner or Deputy Commissioner may extend that by three months, and a Principal Commissioner or Commissioner by a further six months, on a fee of 1 percent of the free on board value or Rs 1,000, whichever is lower, at the first level and 2 percent or Rs 2,000, whichever is lower, at the second.

Where are the All Industry Rates of duty drawback notified?

In a schedule annexed to a customs notification. Chennai Customs Standing Order No. 10/2023 dated 27-10-2023 records that the revised All Industry Rates were notified vide Notification No. 77/2023-Customs (N.T.) dated 20-10-2023, coming into force on 30-10-2023, and communicated by CBIC Circular No. 26/2023-Customs dated 26-10-2023. Each tariff item carries a rate in column (4) and a cap where applicable in column (5), and the claim is declared by suffixing the tariff item with the letter B.

Can drawback be claimed on goods that were imported and then re-exported?

Yes, under section 74 of the Customs Act, 1962, which is a separate route from the manufacture based drawback under section 75. The CBIC taxpayer services brochure on duty drawback records that drawback of up to 98 percent of the import duty paid can be claimed on the export of duty paid imported goods, and that proof of duty paid on importation and identification of the export goods as those imported earlier are among the primary requirements.