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Circular No. 27 / 2012-Customs
F. No. 609/110/2012-DBK
Government of India
Ministry of Finance, (Department of Revenue)
Central Board of Excise & Customs
New Delhi, dated 5
th
October, 2012
To
All Chief Commissioners of Customs/Customs (Prev.)
All Chief Commissioners of Central Excise/Customs & Central Excise
All Director Generals under CBEC
All Commissioners of Customs/Customs (Prev)
All Commissioners of Central Excise/Customs & Central Excise
Subject: All Industry Rates of Duty Drawback 2012-13 - Reg.
Ma'am/Sir,
The Ministry has notified the All Industry Rates (AIR) of Duty Drawback 2012-13 vide Notification No. 92 / 2012- Customs
(N.T.), dated 4.10.2012. The notification shall come into force on 10
th
October, 2012.
2. As in previous years, the drawback rates have been determined on the basis of certain broad parameters including,
inter alia, prevailing prices of inputs, Standard Input Output Norms, share of imports in the total consumption of inputs, FOB
value of export goods, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on
taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of
duty on HSD/Furnace Oil.
3. Some of the broad aspects, from amongst the changes notified with respect to AIR of duty drawback and entries in the
Schedule, are -
(a) Most, but not all, of the items that were already covered under the duty drawback schedule prior to 1.10.2011 [that is,
before last year's (2011-12) duty drawback schedule was issued] will see an increase from the existing AIR. Some of the items
that will see a reduction in AIR include leather trunks and handbags, wool yarn and fabric, gaskets (84.84), lawn tennis balls,
cricket balls, felt tipped/porous tipped pens and markers, goods of heading 90.02 to 90.05.
(b) In continuation of a transitory arrangement, most of the items incorporated in last year's (2011-12) duty drawback
schedule, from the erstwhile DEPB scheme, will see a reduction in the AIR rates.
(c) The existing residuary rate of 1% ad valorem (all customs) will now be either 1% composite rate with 0.3% customs
component, or it will see an increase to 1.5% (customs component) or 2% (customs component).
(d) With certain exceptions, the drawback caps have not been assigned where the higher of the composite rate / customs
component of the rate is 3.5% or lower. Where the AIR will be above 3.5%, not every entry has been assigned the drawback
caps. Where drawback caps have been assigned, these will by and large see a relative increase.
(e) In certain cases separate tariff entries have been created, as for calcined bauxite, silicon dioxide, gauze swabs, dairies
with leather covers, leather insoles, sarees with or without blouse piece under chapters 50, 52 and 54, women's/girl's blouses
with tightening at the bottom, footwear with TPR/PU soles and canvas uppers, worked human hair, imitation jewellery made up
of iron, motor cars with manual transmission, motor cars with automatic transmission, multi-speed bicycles etc. Under heading
3004 (medicaments), dosage and pack-size specifications for many items have been removed. Composite rates have been
assigned in a few cases such as under heading 7321, 7415 and 8535. The unit for the drawback cap has been changed from
litre to kilogram for printing inks of heading 3215.
(f) Drawback has been restored for export of Guar Gum (Tariff Item No. 130201) by providing a specific composite rate
with a specific customs component.
(g) In order to continue with the existing classification of sports gloves under the drawback schedule, an appropriate
exception, to the principle of alignment at four digit level with the First Schedule to the Customs Tariff Act, 1975, has been
specified in the Notes and Conditions in the Notification.
4. It is requested to download the notification with the Schedule for 2012-13 from Board's website (www.cbec.gov.in) and

carefully peruse it and thereby take note of all the specific changes notified. As before, it may be ensured that exporters do not
avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing
of export goods through any other mechanism while claiming AIR. Since the changes include specification of composite rates
in many cases, it needs recalling that the composite rate (when Cenvat facility has not been availed) is not available, inter alia,
when rebate of central excise duty on inputs is availed or inputs are procured without payment of central excise duty, under rule
18 or 19 (2) of Central Excise Rules 2002, respectively. The due diligence is also expected to be exercised to prevent any
misuse, inter alia, in the light of not all items having drawback caps and the assigned drawback caps seeing a relative
increase.
5. While every effort has been made to avoid errors / omissions, these are not ruled out. If an error is noticed, please
immediately inform the Board for appropriate corrective action. Difficulties faced, if any, in implementation of the changes may
also be brought to Board's notice. Suitable public notice and standing order may be issued for guidance of the trade and
officers. Receipt of this Circular may be acknowledged.
(Rajiv Talwar)
Joint Secretary