The government on Monday announced the revised All Industry Rates of Duty Drawback, 2005-06, with higher rates for most products.
The rates would be effective from May 5 and are on ad-valorem basis instead of specific rates earlier. The drawback caps associated with various commodities, however, have been fixed in specified terms.
"As a conscious policy decision, it has been decided to express drawback rates in ad-valorem (percentage) terms. The ad valorem rates have the dual virtue of first being fair to the exporters and encouraging the export of value-added items," an official release said.
The release added that the internationally accepted Harmonised System (HS) classification as the basis for fixing drawback rates was adopted. With the switch to HS Nomenclature, the Schedule now covers several new products in chemicals, plastics, textiles, steel and machinery sectors.
The new classification, apart from transparency and completeness of coverage, would help in easier compilation of revenue foregone figures according to tariff lines. Communication with various agencies dealing with international trade would also be smooth, the release said.
It has also been decided that if any ministry or department of the government of India or any industry or trade association has any suggestions regarding any of the drawback rates, they may approach the committee through the Drawback Division with supporting material for further consideration by the committee.
All such requests must reach the Drawback Division by May 15, 2005.
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 8 per cent with a cap of Rs 315 per sqm and for hand tufted woollen carpets, the rate is 8 per cent with a cap of Rs 175 per sqm against the existing rate of 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 sqm against the existing rate of 150 per kg. The drawback rate on cotton durries is fixed at 8 per cent with a cap of Rs 16 per kg against the existing rate of 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.
Likewise, the new drawback rate for leather footwear for adults is 8.3 per cent with a cap of Rs 70 per pair and the rate for leather footwear for children is 9 per cent with a cap of Rs 40 per pair.
Under the existing Schedule, no distinction exists between adult footwear and children's footwear and all leather footwear carry a drawback rate of 7.9 per cent subject to a maximum of Rs 61 per pair.
In the case of leather apparels the rate provided is 7.5 per cent with a cap of Rs 400 per piece against the existing rate of 7.2 per cent with a cap of Rs 360 per piece.