Financial Daily from THE HINDU group of publications
Monday, Oct 21, 2002
Financial Daily from THE HINDU group of publications Monday, Oct 21, 2002 |
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Logistics
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Taxation Drawback eligibility on SAD clarified
THE Ministry of Finance, Department of Revenue, after a thorough re-examination, has now clarified that for the time being, Drawback (DBK) on the element of SAD (Special Additional Duty) should continue to be granted. The Chairman of Central Board of Excise and Customs (CBEC), and Secretary, Revenue, ordered that since Sections 74/75 of the Customs Act clearly provide for grant of drawback on any customs duty, DBK on SAD should be allowed. In terms of the said Sections of the Customs Act, inter alia drawback of Customs duties suffered on inputs used in the manufacture of an export product is allowed. The Comptroller & Accountant General of India had raised an objection that DBK was not admissible on the SAD element, and it was subsequently decided to seek the opinion of the Law Ministry in the matter. The Law Ministry, after a detailed examination of the issue, said since the provisions of the Customs Act pertaining to refunds and exemptions only applied for the purpose of levy of SAD in terms of the Customs Tariff Act, and also in view of the wording of sub-section (4) of Section 3A of the Customs Tariff Act, which did not specifically provide for grant of such DBK facility, DBK was not admissible. Sub-section (4) was inserted in Section 3A of Customs Tariff Act in the 1998 Finance Bill. Thus, the Department of Revenue (DOR) decided to temporarily disallow DBK on the element of SAD. However, representations were made by various trade associations and individual exporters stating that since the provisions of the Act, as well as the Customs & Central Excise Duties Drawback Rules, 1995 clearly provided for grant of DBK on the element of SAD, it was unfair on the part of DOR to suspend the facility.
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