Duty Drawback allowed in cases of short realisation of export proceeds due to bank charges deducted from foreign banks

NO. CLE-HO/POL/CIRCULAR/2019
September 25, 2019

Members of the Council,

Sub :   Clarification regarding Duty Drawback allowed in cases of short  realisation of export proceeds  due to bank charges deducted from foreign banks

Dear Sir,

Member exporters of the Council had informed CLE about notices issued by Customs asking for proportional surrender of drawback with interest in respect of shipping bills where there is short fall in export realization due to bank charges deducted by overseas banks.

Council for Leather Exports took up this issue with the Drawback Directorate requesting not to deduct drawback wherever there is short fall in export realization due to bank charges. We are happy to inform that the Central Board of Excise & Customs has issued a Customs Circular No.,33/2019-Customs dated 19.09.198 stating the following.

–         It is 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.

 –         Field formations may 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. Field formations are also requested to deal with the show cause notices already issued by them accordingly.”

Members may kindly note the above.

Thanks & regards,

R.Selvam
Executive Director
COUNCIL FOR LEATHER EXPORTS