Are customs duty and vat the same?
No, Customs Duty and VAT (Value Added Tax) are not the same. Here’s the difference:
- Customs Duty → A tax imposed on goods when they are imported (and sometimes exported) into a country. It protects local industries and generates government revenue.
- VAT (Value Added Tax) → A consumption tax applied to goods and services at each stage of production and sale. It is usually a percentage of the product’s price and is paid by the end consumer.
👉 Example: If you import a product, you might have to pay customs duty on it first. Then, when you sell it, VAT is added to the price that customers pay.
Can customs duty be claimed back?
Duty Drawback Scheme: A Complete Guide for Exporters
What is the Duty Drawback Scheme?
The Duty Drawback Scheme (DBK) is a government initiative that refunds customs and excise duties paid on raw materials, inputs, and service taxes used in manufacturing export goods. This helps reduce export costs and improve competitiveness.
Legal Provisions: Customs Act, 1962
The scheme is governed by Sections 74 & 75 of the Customs Act, 1962:
📌 Section 74: If imported goods are re-exported within two years, exporters can claim 98% of the duty paid.
📌 Section 75: If exports involve value addition through manufacturing using imported materials, a fixed percentage of customs duties can be refunded. However, if sale proceeds aren’t received within the stipulated period, the refund must be reversed.
👉 Learn more about the complete import-export and customs clearance process in India.
Benefits of the Duty Drawback Scheme
✔️ Refund of Customs & Excise Duty – Reduces export costs.
✔️ Encourages Competitiveness – Helps exporters offer competitive pricing.
✔️ Covers a Wide Range of Goods – Applies to multiple product categories.
Goods Eligible for Drawback
✅ Re-exported imported goods
✅ Used imported goods exported again
✅ Goods made from imported materials
✅ Goods made from indigenous materials
✅ Goods made from both imported & indigenous materials
Eligibility Criteria
🔹 Must be the legal owner of goods at the time of export.
🔹 Customs duty must have been paid on imported goods.
🔹 Drawback is only available for goods on which customs duty was originally paid.
Documents Required
📜 Shipping Bill (Triplicate)
📜 Bill of Entry & Import Invoice
📜 Proof of Customs Duty Payment
📜 RBI Approval for Re-exports
📜 Bill of Lading / Airway Bill
📜 Export Invoice & Packing List
📜 Freight & Insurance Certificate
📜 Test Report (if applicable)
📜 MODVAT Declaration
📜 Worksheet showing Drawback Amount
📜 DEEC Book & License Copy (if applicable)
Primary Components of the Duty Drawback Scheme
1️⃣ All Industry Rate (AIR) – Pre-fixed rates announced annually.
2️⃣ Brand Rate – Custom rates fixed if AIR doesn’t cover the product or is inadequate.
Duty Drawback Rates Based on Export Timeline
| Export Timeline | Duty Refund (%) |
|---|---|
| Within 3 months | 95% |
| 3-6 months | 85% |
| 6-9 months | 75% |
| 9-12 months | 70% |
| 12-15 months | 65% |
| 15-18 months | 60% |
| More than 18 months | Nil |
Procedure for Claiming Duty Drawback
1️⃣ File the Shipping Bill via the Electronic Data Interchange (EDI) system.
2️⃣ The EDI system automatically processes the drawback claim (no separate filing needed).
3️⃣ Ensure your bank account is linked to receive refunds via NEFT/RTGS.
4️⃣ Exception: Re-export claims under Section 74 need separate filing.
Simplify Your Duty Drawback Process!
For expert assistance in customs clearance and logistics, check out this guide on clearing & forwarding agents in Kolkata. 🚢📦
Can customs duty be claimed back in South Africa?
Updated Refunds and Drawbacks Policy (3 December 2021)
What’s New in the Refunds & Drawbacks Policy?
The Refunds and Drawbacks Policy has been updated to include:
- Automotive Production Development Programme (APDP) Phase 2 – This introduces refund item 538.00/04.00, which requires specific supporting documents.
- Export Duty Refunds Alignment – The limitation date for claiming export duty refunds has been adjusted.
How to Claim a Refund Under APDP Phase 2?
To claim these refunds, importers must have a valid Production Rebate Certificate (PRC) and must be the beneficiary of the certificate.
For a detailed breakdown of customs refunds and how to navigate them, check out this comprehensive guide on customs duty refunds. 🚛📜
Refund of Customs Duty and VAT
When Can You Claim a Refund?
You may be eligible for a refund of Customs Duty and VAT in the following cases:
✔️ Returned Goods – If you send back a product you purchased.
✔️ Incorrect Import Declaration – If there was an error in Customs value or VAT rate.
How to Claim a Refund for an Import Declaration Error?
📌 Step 1: Contact the courier or postal service that handled your shipment.
📌 Step 2: Provide supporting documents (order confirmation, invoice, etc.).
📌 Step 3: The courier/postal operator will correct the declaration.
⚠️ Important: You can only claim a refund after Customs charges have been paid.
Can customs duty be reclaimed?
How to Claim a Refund for Returned Goods?
1️⃣ Confirm with the seller about their return policy and process.
2️⃣ If you paid import taxes to the seller, request a refund directly from them.
3️⃣ If you paid import taxes to a courier/postal service, seek a refund from them.
- They will need proof that the goods were exported outside the European Union (EU).
4️⃣ Refunds for returned goods must be processed within 90 days from the import date.
Proof & Process for Exported Returns
📌 If the original consignment value was €150+, an export declaration must be filed.
📌 The export declaration will generate a Master Reference Number (MRN).
📌 You need to request this MRN from your courier/postal operator.
📌 Provide the MRN to the seller as proof of export.
If the goods qualified for Low Value Consignment Relief, you don’t need an export declaration. However, you must keep proof of export (postal receipt or courier confirmation).
For more insights into customs clearance and refunds, check out this detailed guide on customs duty refunds and compliance. 🚛📦
Basic Customs Duty (BCD)
Levied on all imported goods based on assessable value.
Additional Customs Duty (ACD) / Countervailing Duty (CVD)
Education Cess & Secondary Higher Education Cess (SHEC)
Anti-Dumping Duty
Related Read: 
Tariff Classification – Goods must be classified under the right tariff heading.
Updated: July 26, 2024
By Kavita Chacko, Research Head, India – World Gold Council
Gold smuggling likely to decline as lower duties reduce illegal imports.
Jewelry demand expected to rise with cheaper gold, boosting production & employment.
Market Projections: The World Gold Council estimates a 50-ton demand boost in H2 2024 due to these changes.
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