The Hindu Business Line : Duty drawback rates revised upwards

THE Government on Monday announced an upward revision in drawback rates for most products. Releasing the All Industry Rates of Duty Drawback, 2005-06, the Government said that the new rates will come into effect from May 5.

Barring a few exceptions, the rates on all export products have been expressed in ad-valorem terms in lieu of earlier specific rates. "Though the weight-based drawback is reported to be less vulnerable to abuse, the ad-valorem rates have the dual virtue of first being fair to the exporters, and secondly, serve the policy objective of encouraging the export of value added items," said a press statement.

The drawback rates have been determined on the basis of certain broad parameters, including the prevailing prices of inputs, standard input/output norms, share of imports in the total consumption of inputs and the applied rates of duty. The element of education cess and incidence of duty on High Speed Diesel has been factored in the drawback rates.

The new drawback schedule now covers about 2,620 entries. "The new schedule has much wider scope in comparison with the existing schedule which covers about 1,050 entries only. In view of switchover to HS Nomenclature, the Schedule now covers several new products in chemicals, plastics, textiles, steel and machinery sectors. The advantages of adopting HS classification are many. Apart from transparency and completeness of coverage, it would now be easier to compile revenue foregone figures tariff line-wise. Communication with various agencies dealing with international trade will, henceforth, be smooth," said the statement.

The drawback rate for higher quality silk fabrics has been revised from Rs 126 per kg to 7.5 per cent with a drawback cap of Rs 140 per kg. In the case of wool, the new drawback rate for woollen worsted yarn grey — weaving quality is 6.5 per cent with a cap of Rs 22 per kg against the existing rate of Rs 16.50 per kg.

As against the existing drawback rate on cotton yarn at Rs 4 per kg (grey) and Rs 8 per kg (dyed), the new drawback rates for cotton yarn are 3.5 per cent with a cap of Rs 5 per kg (for grey yarn of less than 60 counts) and 4.5 per cent with a cap of Rs 8 per kg (for dyed yarn of less than 60 counts).

The new drawback rate for hand knotted woollen carpets is eight per cent with a cap of Rs 315 per sq. m. and for hand tufted woollen carpets the rate is eight per cent with a cap of Rs 175 per sq. m. against Rs 35.50 per kg for both categories. For silk carpets, the new drawback rate is 10 per cent with a cap of Rs 1,080 per sq. m. against Rs 150 per kg. The drawback rate on cotton durries is fixed at eight per cent with a cap of Rs 16 per kg against Rs 8 per kg.

The drawback rates on leather and leather products have mostly been revised upwards. The new drawback rate for finished leather is 6.3 per cent with a cap of Rs 5 per sq. ft. against the existing rate of 5.1 per cent with a cap of Rs 3.40 per sq. ft.

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