According to section 74 of Customs Act 1962, when duty-paid imported goods are re-exported in used or unused condition within two years, the importer may claim refund of import duty up to maximum 98 % of the Customs duties paid at the time of importation as duty drawback.

Drawback is the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods. Such refunds are only allowed upon the exportation or destruction of goods under U.S. Customs and Border Protection supervision.

Duty Drawback scheme was introduced by the Ministry of Finance as a rebate for duty chargeable on any imported materials or excisable materials used in manufacture or processing of goods, manufactured in India and exported. The exported products are revenue natural.

Duty drawback is the refund of Customs duties, taxes and fees paid on imported items that are matched with subsequently exported or destroyed items.

Excise duty drawback is a refund of UK excise duty. It is made when excise goods have not been and will not be consumed in the UK (although see section 11), providing certain conditions and requirements are met.

Duty drawback is a refund of duties, fees and taxes paid on goods imported into the U.S. that are subsequently exported from the U.S. Similar to how you are refunded sales tax when you return an item to a store, you can claim a duty refund when you export an item that was previously imported.

The below following are the documents required for processing drawback claim.

1. Triplicate copy of the Shipping Bill.
2. Copy of the Bill of entry.
3. Import Invoice.
4. Proof of payment of duty paid on the importation of goods.
5. Approval from the Reserve Bank of India for re-exports of goods.
6. Copy of the Bill of Lading or Airway bill.

Duty drawback or any other incentive provided by the Government of India under any scheme should be adjusted from cost of materials or services. It is not profit and is not taxable to income tax as Income from business. Because it is not profit derived from business hence deduction under section 80IB is not available.

(1) These rules may be called the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. (2) They extend to the whole of India. (3) They shall come into force on the 26th day of May, 1995.

In exercise of the powers conferred by section 75 of the Customs Act, 1962 (52 of 1962), section 37 of the Central Excise Act, 1944 (1 of 1944) and section 93 A read with section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules namely:- Rule 1. Short title and commencement –

Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 Rule 1 Short title, extent and commencement Rule 2 Definitions Rule 3 Drawback Rule 4 Revision of rates Rule 5 Determination of date from which the amount or rate of drawback is to come into force and the effective date for application of amount or rate of drawback Rule 6

( a) “drawback” in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods;