We would like to inform you that  the  Central Board of Indirect Taxes and Customs (CBIC)   has issued Circular No. 33/2019-Customs   dated 19/09/2019   giving Clarification regarding duty drawback allowed in cases of short realisation of export proceeds due to bank charges deducted by foreign banks.

We understand that CBIC has received representations   from trade/ industry regarding show cause notices issued by some Customs field formations for recovery of duty drawback on account of short realisation of export sale proceeds due to bank charges deducted from export invoice by the banks. Exporters have contended that these short realisations are actually service charges deducted by intermediary banks while remitting payments from abroad and that said charges are documented by the banks. It has been requested such short realised export sale proceeds may be considered as full realisation and that duty drawback not be recovered for such short realisation.

In this regard,  CBIC has clarified that duty drawback may be permitted on FoB value without deducting foreign bank charges. It is further clarified that since agency commission up to the limit of 12.5% of the FoB value has been allowed, such deduction on account of foreign bank charges is allowed within this overall limit of 12.5% of the FoB value. From the average rates of agency commission and foreign bank charges in respect of export shipments, it is seen that these deductions fall within the aforesaid overall limit of 12.5% of FoB value allowed by the Board. Agency commission and foreign bank charges, separately or jointly, exceeding this limit should be deducted from the FoB value for granting duty drawback.

CBIC  has also advised field formations  to consider on merits exporter’s requests for regularising such short realisation on account of foreign bank charges based on documentary evidence such as export invoice, bank’s confirmation regarding foreign bank charges, etc. to justify such deductions. They  are also requested to deal with the show cause notices already issued by them accordingly.

Relevant members are requested to take  note  of  the same and do  the needful accordingly.  This circular is available for reference/ download using below link-

http://cbic.gov.in/htdocs-cbec/customs/cs-circulars/cs-circulars-2019/Circular-No-33-2019.pdf

Members  may also send their comments/ feed-back on this relaxation  on  our e-mail id’s:  ed@chemexcil.gov.in  &  deepak.gupta@chemexcil.gov.in .

Thanking You,

Yours faithfully,

(S. G. BHARADI)
EXECUTIVE DIRECTOR