The Duty Drawback Scheme (DBK) is a government initiative that provides a refund of customs and excise duties paid on inputs used in the manufacturing of exported goods. This scheme aims to promote exports by reducing production costs and enhancing the competitiveness of Indian goods in global markets.
IEC is a prerequisite for:
✅ Importing goods into India
✅ Exporting goods from India
✅ Availing export incentives, duty drawbacks, and benefits under Foreign Trade Policy (FTP)
✅ Complying with international trade regulations
✅ To encourage exports by reducing the financial burden of customs and excise duties
✅ To promote Make in India by making Indian products globally competitive
✅ To increase foreign exchange earnings by incentivizing exporters
✅ To ensure seamless refund of duties paid on imported or domestically sourced inputs
Types of Duty Drawback
1. All Industry Rate (AIR) Drawback
- Fixed percentage-based refund on FOB (Free on Board) value of exports
- Covers broad categories of products
- No need for individual cost verification
- Rates are pre-determined by the Directorate of Drawback, CBIC
2. Brand Rate Duty Drawback
- Applicable when AIR rates are not sufficient to cover the actual duty incidence
- Exporter must apply for a customized rate based on actual duty paid
- Requires submission of detailed cost and duty structure
Eligibility Criteria
The Duty Drawback Scheme is available to:
✔️ Manufacturers and exporters who have paid import duties on inputs
✔️ Merchant exporters who source goods from domestic manufacturers
✔️ E-commerce exporters exporting through recognized platforms
✔️ Businesses under FTAs/PTAs that require duty refunds
Goods Covered Under Duty Drawback
- Handicrafts & Textiles – Garments, carpets, home furnishings.
- Engineering Goods – Auto components, machine tools, hardware.
- Pharmaceuticals & Chemicals – API, specialty chemicals.
- Electronics & Electricals – Appliances, circuit boards, components.
- Agri & Processed Foods – Tea, coffee, spices, seafood exports
Key Benefits for Exporters
✅ Reduced Cost Burden – Refund of duties improves profitability.
✅ Better Cash Flow – Quick refunds ensure liquidity for businesses.
✅ Encourages Domestic Sourcing – Reduces dependency on imported components.
✅ Simplified Documentation – AIR scheme requires minimal compliance.
✅ Government Support – Recognized as a priority scheme for exporters
Documents Required for Duty Drawback Claim
To claim duty drawback, exporters must submit:
📌 Shipping Bill (mandatory for customs clearance)
📌 Export General Manifest (EGM) filed by the carrier
📌 Bank Realization Certificate (BRC) to confirm export proceeds
📌 Self-declaration stating non-availment of other export incentives
📌 Customs Declaration Forms and Tax Invoices
How is Duty Drawback Calculated?
Formula for Calculation
Duty Drawback Amount = FOB Value × Drawback Rate
For example:
- FOB Value = ₹10,00,000
- Drawback Rate = 2%
- Refund Amount = ₹20,000
Note: If the total tax paid is less than the drawback amount, the refund will be limited to the actual tax paid.
Timeframe for Claiming Duty Drawback
- The drawback claim must be filed within one year from the date of export.
- In certain cases, the period can be extended up to 18 months with proper justification.
Recent Updates & Amendments
- 🚀 CBIC Automation: Duty drawback processing is now fully automated through ICEGATE, ensuring faster refunds.
- 🚀 GST Impact: Exporters must ensure they have not availed Input Tax Credit (ITC) on duties to claim the DBK refund.
- 🚀 Higher Drawback for Specific Sectors: Industries like textiles, leather, and engineering goods enjoy higher drawback rates.
Common Issues Faced by Exporters
❌ Shipping Bill Mismatch – Errors in documentation can lead to rejection.
❌ Delay in Bank Realization – Non-receipt of payments within the time frame.
❌ Customs Verification – Drawback can be denied if proper duty payments are not verified.
❌ Claim Rejection – Incomplete filing or claiming other incentives like IGST refund alongside DBK.
Why Choose Pragati Exim Solution for Duty Drawback Assistance?
At Pragati Exim Solution, we specialize in hassle-free duty drawback claims to maximize your export benefits. Our team of experts ensures:
✅ Error-free filing and faster processing
✅ Customized solutions based on your business needs
✅ Assistance with documentation & compliance
✅ Real-time tracking of refund claims
📞 Need Help with Duty Drawback? Contact Pragati Exim Solution today and maximize your export refunds!
- 01 Is IEC mandatory for all imports and exports?
- Yes, IEC is mandatory for all businesses engaged in international trade, except for those exempted by DGFT.
- 02 Can an individual apply for IEC?
- Yes, individuals engaged in commercial imports/exports can apply for IEC using their PAN card.
- 03 How long is an IEC valid?
- IEC is valid for a lifetime unless canceled or surrendered. However, it must be updated annually.
- 04 Can one business have multiple IECs?
- No, one business entity can have only one IEC linked to its PAN.
- 05 What happens if I do not update my IEC annually?
- Non-updated IECs get deactivated by DGFT, restricting import/export operations.
- 06 Does IEC require renewal?
- No renewal is required, but annual updates must be done to keep it active.
- 07 Can I surrender my IEC?
- Yes, IEC can be voluntarily surrendered if the business stops international trade.
- 08 Can I modify my IEC details?
- Yes, business details like name, address, and contact details can be updated through DGFT.
- 09 Does IEC have any compliance burden?
- No, IEC does not require any monthly/annual compliance like GST.
- 10 Can IEC be used for services exports?
- Yes, service providers eligible under the SEIS scheme require an IEC.
- 11 Is IEC required for e-commerce exports?
- Yes, businesses selling internationally through platforms like Amazon, eBay, or Shopify need an IEC.
- 12 Is IEC linked with GST?
- IEC is linked to the business PAN, and GST registration is recommended but not mandatory.
- 13 What are the consequences of IEC suspension?
- Suspended IECs prevent businesses from importing/exporting, affecting trade operations.
- 14 Can IEC be transferred if the company changes ownership?
- No, a new IEC must be obtained for a new entity; modifications can be done for minor changes.
- 15 Who can help with IEC registration, modification, and reactivation?
- For expert assistance in IEC registration, modifications, and reactivation after suspension, contact Pragati Exim Solution today!
The Duty Drawback Scheme is a government program designed to encourage exports by offering a refund on the duties paid on imported raw materials and components used in the production of exported goods. This scheme helps exporters reduce costs, making their products more competitive in international markets.
At Pragati Exim Solution, we assist businesses in claiming Duty Drawback benefits by handling all aspects of the process, from documentation to compliance with regulatory requirements. Our team ensures that you receive the maximum refund allowed under the scheme, allowing you to reinvest in your export operations.
✅ Refund of Customs Duties – Exporters can claim a refund on import duties, excise duties, and sales tax paid on imported raw materials, components, and packaging materials.
✅ Eligibility Criteria – The scheme applies to goods exported directly or through deemed exports, provided they meet the required conditions.
✅ Types of Drawback – All Industry Rates (AIR) and Brand Rate (for specific export products) are available based on the type of goods and the duties paid.
✅ Application Process – Claims are processed through the Customs Department, and exporters must submit supporting documents, including shipping bills, invoices, and proof of payment.
✅ Reimbursement of Taxes – The scheme covers taxes and duties levied at the time of import, ensuring exporters are not burdened by taxes on materials used for export production.
✅ Timeframe for Refund – Duty drawback claims must be filed within three months of the export shipment, and refunds are processed accordingly.