Fix Duty Drawback Brand Rates in Time, Enjoins DBK JS
[CBEC
Instruction dated 11th October 2013]
Subject:
Audit Report No. 15/2011-12, Section 2 – Duty Drawback Scheme.
Reference
is drawn to Board’s Circular No.46/2011-Cus dated 20.10.2011, Instruction dated
31.7.2013 and Circular No. 35/2013-Cus dated 5.9.2013 related to the above
subject. The outcomes reported by field formation on the Audit observations
were reviewed further.
2. The
Audit Report highlighted aspects on the compliance side which Internal Audit
did not notice. A better performance by Internal Audit would have enabled
remedial actions to be taken earlier. Board directs that Commissioners should
appropriately strengthen their Internal Audit wings to achieve desired
diligence levels and a significantly improved performance in areas such as
payment of re-export drawback, cases of manual processing of drawback and the
determination/fixation of brand rates.
3. Special
cells were created for reconciliation of sales proceeds of exports under duty
drawback scheme vide the Circular No. 5/2009-Cus.
Instruction No. 609/119/2010-DBK dated 18.1.2011 emphasized methodical and time
bound feeding of details in the BRC module and Instruction No. 609/35/2013-DBK
dated 4.4.2013 directed that exporters should not be asked to submit
BRC/negative statement more than once. This direction has a systemic aspect
that there will be management of BRC submissions through a proper receipt and
acknowledgement procedure and subsequent monitoring that details were fed in
the BRC module. Board directs all Commissioners to ensure this. A similar
receipt and acknowledgment procedure should also be ensured for exporters who
file brand rate letters issued by Central Excise formations.
4. From
amongst the sample verifications of declarations (submitted and accepted with
respect to settled AIR claims) requested by Audit, instances of recovery were
reported by field formations. The field formations reported that they too are
conducting random/sample post-facto checks as directed by Board and in certain
instances these too led to recoveries/detection of cases. This suggests the
importance of regular sample checking of the veracity of declarations accepted
for disbursing AIR drawback claims. These are to be regarded as a form of audit
checks. Accordingly, the Board directs that a proper record of such checks
should be maintained. Detections that indicate lower FOB/realization should
also be intimated to RA/DGFT for necessary action when any benefit under FTP is
involved. Further, the Commissionerates may collate
data on the performance of these and similar checks w.r.t. AIR drawback
payments in the enclosed format. This may be refined by field
formations. The Chief Commissioners may monitor the sufficiency of such checks
on monthly basis. The Board shall request this
information at a future date.
5A. The
time taken in fixation of brand rates by Central Excise field formations was
examined by Audit. The Board has noted that after the decentralization of brand
rate fixation work the normal procedure (in terms of Circular No. 14/2003-Cus
dated 6.3.2003) of brand rate fixation was available in which verification is
to be done in 15 days and brand rate is fixed in 10 days after receipt of
verification report. Subsequently, the Member (Customs) D.O. letter No.
609/110/2005-DBK dated 26.8.2005 conveyed decision of the Board on two measures
of trade facilitation. Briefly, the first measure was to make re-available the
revised simplified procedure to five categories of exporters in which the
Central Excise would, subject to certain conditions, grant provisional brand
rate letters within maximum 15 days and do the post verification within 2
months. The details may be seen in the letter dated 26.8.2005. The second
facilitation measure was that the other exporters (i.e. other than the said
five categories) may be granted All Industry Rate (AIR) in respect of
applications filed under Rule 7 of Customs, Central Excise Duties and
Service Tax Drawback Rules, 1995 (Drawback Rules, 1995) pending verification
and fixation of brand rates under the normal procedure. For granting this
second facilitation a specific time line is not prescribed.
5B. In
this regard the Board directs that once a complete application for fixation of
brand rate under/in terms of Rule 7 of the Drawback Rules, 1995 has been filed
with the jurisdictional Central Excise w.r.t. exports made under claim of brand
rate of drawback in the shipping bills and request made, on or alongside the
said application, for grant of drawback on relevant AIR provisionally, the
Central Excise officer who is to fix the brand rate should, ensuring that the
exporter is eligible for the relevant AIR, authorize provisional brand rate
letter within 7 days to claim the drawback. Apart from other pertinent
details, the said letter should show the shipping bill No. and date/item wise
relevant drawback tariff item No.(including whether
‘A’ or ‘B’ column) of the AIR Schedule, rate and cap of drawback being granted,
and the amount of drawback (equivalent to the relevant AIR with cap) bifurcated
into Customs and/ or Central Excise/Service Tax components. The bifurcation
should be based on claim in the application for fixation of brand rate filed in
terms of said Rule 7. This is so that the components remain aligned with
claimed ‘actual’ incidence. The final brand rate letter should adjust the
provisionally granted amount. Even if brand rate request is denied, the
rejection letter should be endorsed to the Customs formation with request to
treat the provisional brand rate letter as final and update the record.
5C. Reports
collated from the field formations on time taken to finalize brand rates show
that there are reasons attributable to both exporters and the Department.
Insofar as time attributable to the Central Excise formations is concerned, the
Board is of the view that the respective Commissioners have a primary executive
responsibility to ensure concerted and sustained action for disposing brand
rate work in prescribed time frame. Daily monitoring by Commissioner, of the applications
and of brand rate work by Divisions/Ranges and headquarter Unit, should be
institutionalized and positive results achieved over next 3 months and
maintained in future. The Chief Commissioners are requested to guide their
Commissioners where the time attributable to the department exceeds prescribed
time frame.
F.No.
603/01/2011-DBK
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Format (it can be refined or expanded by Commissioner) |
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Month
____ Year _____ |
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Part A |
Part
B |
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|
Summary
of sample verifications conducted on post facto basis on specific
declarations made in AIR drawback cases |
Summary
of PMV enquiries conducted in deserving cases, if any |
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|
|
Non-availing
of CENVAT credit on inputs and input services |
Goods
declared by merchant exporters or manufacturer exporters as not having been
manufactured or exported in terms of rule 19(2), CER or by availing rebate on
material used in manufacture or processing in terms of rule 18, CER |
Actual
freight in cases where price declared on CIF or C&F basis (This is to
cover cases of export incentives as well) |
Others
(specify nature of check such as for correctness of negative statement,
genuineness of positive statement, debit notes raised by foreign buyers after
initial realization by exporter, reduction in invoice value after proceeds
are negotiated or realized, etc) |
Total
|
No. of enquiries conducted |
No. of enquiries in which wrong PMV detected |
Amount of drawback to be recovered (in Rs. Lakh) |
Nature of goods and exporters involved in mis-declaration |
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|
|
Jurisdiction |
Total No. verified |
No. in which recovery reqd. |
Amt. (in Rs. lakh) to be
recovered |
Total No. verified |
No. in which recovery reqd. |
Amt. (in Rs. lakh) to be
recovered |
Total No. verified |
No. in which recovery reqd. |
Amt. (in Rs. lakh) to be
recovered |
Total No. verified |
No. in which recovery reqd. |
Amt. (in Rs. lakh) to be
recovered |
Total No. verified |
No. in which recovery reqd. |
Amt. (in Rs. lakh) to be recovered |
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