Maximize Your Exports: CBIC’s New AIR Duty Drawback Guidelines Explained
The Central Board of Indirect Taxes & Customs (CBIC) has recently issued Instruction No. 01/2025 – Customs on February 28, 2025, aiming to clarify the admissibility of the All Industry Rate (AIR) of duty drawback for export goods. This directive comes in response to concerns raised regarding the denial or reduction of duty drawback on exports where some inputs used are either non-duty paid or subject to concessional duty rates.
Key Highlights of CBIC’s Instruction
- Clarification on AIR Duty Drawback Calculation
- The AIR duty drawback rates are determined based on average duty paid on inputs used for manufacturing export goods.
- A weighted average of imported and indigenous inputs is considered across a broad section of exporters.
- Field formations are not permitted to investigate whether duty-exempted inputs were used in the production of exported goods.
- Reference to Board Circular No. 19/2005
- The latest instruction reiterates Circular No. 19/2005 – Customs, issued on March 21, 2005, which established that AIR duty drawback must be calculated without scrutinizing whether duty-free inputs were utilized.
- The purpose of this approach is to provide a simplified and uniform method of granting duty drawback to exporters without unnecessary intervention from authorities.
- Enforcement of Compliance
- CBIC has instructed relevant authorities to issue standing orders to ensure strict compliance with the 2005 circular.
- Field officers and customs officials must adhere to this clarification and refrain from imposing additional conditions.
- Any operational challenges or difficulties encountered should be reported to the Board for resolution.
Impact on Exporters
- Simplification of Duty Drawback Process: The instruction ensures that exporters receive their duty drawback benefits without delays caused by unnecessary verification.
- Enhanced Export Competitiveness: By eliminating arbitrary rejections, Indian exporters can compete more effectively in the global market.
- Legal Clarity & Reduced Compliance Burden: This move reassures exporters that their claims will be processed fairly and transparently, reducing bureaucratic hurdles.
Final Thoughts
CBIC’s latest instruction reinforces the government’s commitment to fostering a pro-export environment by ensuring a smooth duty drawback mechanism. By strictly adhering to established policies and eliminating arbitrary investigations, this directive will significantly benefit exporters, enhancing ease of doing business in India.
For further details, you can refer to the full CBIC Instruction No. 01/2025 – Customs or Board Circular No. 19/2005 – Customs.
