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2020 ] RECOVERY OF DRAWBACK, WHERE EXPORTS MADE UNDER ECGC A137

RECOVERY OF DRAWBACK, WHERE
EXPORTS MADE UNDER ECGC
By
S.K. Mathur
ADVOCATE, DY. COMMISSIONER OF CUSTOMS (RETD.)

The Drawback is an incentive given to the export-
ers in respect of the duties, taxes suffered on the inputs
used in the manufacture of the exported goods. The
amount of drawback is revised by the Central Govern-
ment from time to time to take into account the changes
observed in the rates of duties and taxes over a period of
time so as to compute the average quantum of all such duties and taxes suffered
on the inputs used in the manufacture of the exported goods. There are also pro-
visions of fixing of special brand rate which is not the subject matter of the pre-
sent analysis.
The issue of drawback on imported material used in the exported goods
is governed by Section 75 of the Customs Act, 1962. It contains the provisions for
recovery of drawback allowed in respect of any goods where the sale proceeds
are not realized by or on behalf of the exporter.
This article focuses on the question of recovery of drawback where ex-
port proceeds are not realized. As such attempt of this author is to discuss the
provisions of sub-rule (5) introduced to Rule 16A of the Customs and Central
Excise Duty Drawback Rules, 1995 vide Notification No. 30/2011-Cus. (N.T.)
dated 11-4-2011 which is reproduced below :
‘(5) Where sale proceeds are not realized by an exporter within the period
allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but
such non-realisation of sale proceeds is compensated by the Export Credit
Guarantee Corporation of India Ltd. under an insurance cover and the Re-
serve Bank of India writes off the requirement of realisation 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, the amount of drawback paid to the exporter or the claimant shall not
be recovered.’
For the first time the recovery of Excise part of duty drawback was covered un-
der Customs and Central Excise Duty Drawback Rules, 1995 as there was no le-
gal mechanism under the earlier Duty Drawback Rules 1971 to recover the Excise
part of the drawback where the export proceeds were not realized, the only
course of recovery of Excise part of the Drawback amount was under the provi-
sions of Section 142 of the Customs Act, 1962.
Thus, in a situation where the exports are made by an exporter under
Export Credit Guarantee Scheme but the export proceeds are not realized within
the time specified including the time of extension for any reasons mainly due to
insolvency of the recipient or any other economic situation. Then in case the ex-
porter is issued a certificate by the Foreign Mission of India mentioning reasons
of default of non-payment of exporter’s dues and the Reserve Bank of India
EXCISE LAW TIMES  15th May 2020  45