New duty drawback rates effective from Monday

NEW DELHI: The finance ministry on Friday revised duty drawback rates, effecting an across-the-board reduction in line with the duty changes made this year. The changes are based on the recommendations of a committee set up by the finance ministry to study drawback rates.

Duty drawback rates seek to neutralise the incidence of Customs duty, central excise duty and service tax borne by an exported article. The revised rates would come into effect from September 2008, the Central Board of Excise and Customs said in a statement.

The decrease is largely in the case of petrochemicals due to phasing out of import duty on crude oil. The peak rate of aggregate import duties in 2008-09 has come down to 31.7% as compared to 34.13% in the previous year. Customs duty on major raw materials such as crude oil, raw cotton, zinc and Ferro alloys has been eliminated. The excise duty has been reduced across the board from 16% to 14%.

Drawback rates have been increased for some items like flax yarn, which will now be eligible for 9.6% duty from 7.5% earlier. The rate for optical fibre has been increased to 1.2% from 1% earlier. Wooden artwork too would also attract higher drawback rate.

In most cases, the net realisation for exporters would remain unchanged since the finance ministry has pegged the rupee higher against the dollar as compared to last year. The rupee was pegged at 39 to a dollar last fiscal as against 43 in the current revision.

Finance ministry had set up a panel under Prime Minister’s Economic Advisory Council member Saumitra Chaudhuri to determine the rates.