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Drumbeat: Ad Buzzaar
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Wednesday, September 2, 1998
Government overhauls duty-drawback rates
Our Economic Bureau
New Delhi, Sept 1: The government has increased the drawback rates on 219 items, lowered rates on another 290 items and added six new items to the list.Major items on which drawback rates have been increased are readymade garments, hand tools, bicycle and bicycle parts, brass artware, brass hardware, leather and leather products, made-ups, including handloom made-ups and certain machinery items. The new rates will come into effect on September 2. Referring to the special additional duty (SAD) levied in the budget, the finance ministry release says the levy of 4 per cent SAD has been taken into account along with the 5 per cent SAD applicable on various imported inputs. This will provide export products the necessary leverage to compete with products of southeast Asian countries where prices have fallen steeply on account of a depreciation of their currencies, the release said. The release adds that the increased drawbacks take into account "the increased incidence of duties introduced on differentinputs used by exporters." It has been the endeavour of the finance ministry to ensure that exports do not suffer on account of high custom and excise duties, it said. Highlights of the changes are as follows: The six new products which have been included are surgical blades, heat resistance rubber, non-computing registers, dual type, electrical motors and tennis rackets; 219 items on which rates have been increased are items where duties have increased or the total incidence of duties has increased due to a rise in input prices; rates in respect of 238 products are being continued at existing levels as there is no change in input duties and prices; rates of 290 products have to be revised downwards in view of the reduction in duties and prices of inputs used by manufacturers; rates have been revised upwards on handloom products and the description has been revised to include all varieties of made-up articles. This will enable exporters to earn drawback on any articleincluding new varieties which are in demand in the international market; drawback rates have been reintroduced for garments exported from EOU/EPZ units which have inputs on which duty has been paid; the major benefit on which the government had decided to restrict the modvat credit availed to 95 per cent is a new provision in the drawback table which compensates exporters for the 5 per cent modvat credit which cannot be otherwise utilised. This removes the disability of 5 per cent which made inputs costlier for exporters; in the case of handloom products, handicrafts including handicrafts of brass artware, finished leather, grey fabrics and other export products which are unconditionally fully exempt from excise duty, it has been decided to dispense with the need to produce certificates regarding non-availment of modvat facility as a measure to simplify export procedures and pay drawback more expeditiously to exporters; in respect of certain other products a circular has beenissued on guidelines to be followed for verification of modvat availed.Insight Broadbasing export range The range of exports which will now get higher duty drawback is wide. This is because the special additional customs duty is being levied -- on top of the 5 per cent special customs duty -- on a large variety of imports which go into exports. Among the beneficiaries of higher duty drawback are thrust items like textiles, drugs and pharmaceuticals and electronic hardware On the flip side, duty drawback rates have been lowered on 290 items. This seems to be an economy drive. Apparently, duty forgone in favour of exports is large -- a consequence of efficient computerised settlement of drawback claims -- and is more than 25 per cent of annual customs revenue. Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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