The Government of India in its Questionnaire Response dated June 10, 2016 has stated the

following with regard to Duty Drawback Scheme (DDS) :

(a) A full description of the operation of this scheme during the RIP which should include, inter
alia, the following information:

Response:

Duty Drawback rebates duty or tax chargeable on any imported / excisable materials and
input services used in the manufacture of export goods. The duties and tax neutralized
under the scheme are (i) Customs and Union Excise Duties in respect of inputs and (ii)
Service Tax in respect of input services.

Duty Drawback is of two types: (i) All Industry Rate (AIR) and (ii) Brand Rate. (Provision
2 of the Customs Manual)

AIR
AIR are notified, generally every year, by the Government in the form of a Drawback
Schedule based on the average quantity and value of inputs and duties (both Excise &
Customs), and Service Tax on input services, borne by export products. AIR is essentially
average rates based on assessment of average incidence.

AIR are fixed after extensive discussions with stake holders like Export Promotion
Councils, Trade Associations, individual exporters so as to obtain relevant data, which
includes procurement prices of inputs, indigenous as well as imported, applicable duty
rates, consumption ratios and FOB values of export products. Data is also sought from
Central Excise and Customs field formations and information received from Ministries
taken into account.

The AIR may be fixed as a percentage of FOB price of export product or as specific rates.
The scrutiny, sanction and payment of Duty Drawback claims at EDI locations is carried
out with the aid of the EDI system which also facilitates payment directly to the exporters
bank account once the Export General Manifest (EGM) has been correctly filed by the
airlines / shipping lines, if other conditions are fulfilled.

Field formations are to monitor levels of EGM pendency to ensure trade facilitation. The
mismatch of declaration made in the shipping Bill (item details vis--vis drawback details)
should be verified to avoid the excess payment of drawback.

Brand Rates:

The Brand Rate of Duty Drawback may be fixed in cases where the export product does
not have the AIR of Duty Drawback or the AIR neutralizes less than 4/5th of the duties/tax
paid on materials/ input services used in the manufacture of export goods. Brand rate is
fixed by the Commissioners of Central Excise having jurisdiction over the manufacturing
unit.

An exporter, who has declared at the time of export on the shipping bill his intention to
claim the Brand Rate has to file an application for fixation of the brand rate within 3
months from the date of the Let Export Order which can be extended up to 12 months
subject to conditions and payment of requisite fee as provided in the Drawback Rules,
1995. This application has to be made before the Commissioner of Central Excise having
jurisdiction over the manufacturing unit.

The application is to include, inter alia, details of materials/ components/ input services
used in the manufacture of goods and the duties/taxes paid on such materials/components/
input services.

The exporter is compensated the incidence actually incurred in the export product based
on a verification of documents and proof of usage of actual quantity of inputs /services
utilized in the manufacture of export product and duties/tax paid thereon. There are
provisions for provisional drawback payment. Five categories of exporters can seek
provisional brand rate based on their declaration subject to post verification. Other
exporters who file application for fixation of Brand Rate under rule 7 of the Customs,
Central Excise Duties and Service Tax Drawback Rules, 1995 may provisionally seek
drawback equivalent to AIR pending verification. Time limits prescribed for fixation of
provisional brand rates and final brand rates should be adhered to. The work related to
fixation of brand rates should be daily monitored by the Commissioner.

Limitations on admissibility of Duty Drawback:

1. No duty drawback shall be allowed where the drawback due in respect of any goods
is less than Rs.50/- or in respect of any goods the market price of which is less than
the amount of drawback due thereon. No amount or rate of drawback shall be
determined in respect of any goods, the amount or rate of drawback of which would
be less than 1% of FOB value of export thereof except where the amount of
drawback per shipment exceeds Rs. 500/-.
2. No drawback is allowed where value of export goods is less than the value of
imported material used in their manufacture. In this regard, if necessary, certain
minimum value addition over the value of imported materials can also be prescribed
by the Government.
3. The drawback amount or rate determined under Rule 3 of Drawback Rules 1995
shall not exceed one-third of the market price of the export product.
4. In case the Central Government forms an opinion that there is likelihood of export
goods being smuggled back into India, the Government may not allow drawback or
allow it subject to specified conditions or limitations.
5. While prior repatriation of export proceeds is not a pre-requisite for grant of Duty
Drawback, the law prescribes that if sale proceeds are not received within the period
stipulated by the RBI, the Duty Drawback will be recovered as per procedure laid
down in the Drawback Rules, 1995. An exception is where non-realization of sale
proceeds is compensated by the Export Credit Guarantee Corporation of India Ltd.
under an insurance cover and the RBI writes off the requirement of realization of
 sale proceeds on merits and the exporter produces a certificate from the concerned
Foreign Mission of India about the fact of non-recovery of sale proceeds from the
buyer.

No drawback shall be allowed (Rule 3(1) of the Duty Drawback Rules)

(i) if the said goods, except tea chests used as packing material for export of blended tea,
have been taken into use after manufacture;
(ii) if the said goods are produced or manufactured, using imported materials or
excisable materials or taxable services in respect of which duties or taxes have not been
paid; or;
(iii) on jute batching oil used in the manufacture of export goods, namely, jute
(including Bimlipatam jute or mesta fibre), yarn, twist, twine, thread, cords and ropes;
(iv) if the said goods, being packing materials have been used in or in relation to the
export of -
(1) jute yarn (including Bimlipatam jute or mesta fibre), twist, twine, thread and
ropes in which jute yarn predominates in weight;
(2) jute fabrics (including Bimlipatam jute or mesta fibre), in which jute
predominates in weight;
(3) jute manufactures not elsewhere specified (including Bimlipatam jute or
mesta fibre) in which jute predominates in weight.
(v) on any of the goods falling within Chapter 72 or heading 1006 or 2523 of the First
Schedule to the Customs Tariff Act, 1975 (51 of 1975).

Drawback primarily covers three elements namely customs duties, excise duties and
service tax. Accordingly, the statutory basis for granting drawback may be found in the
following provisions:
a) Section 75 of the Customs Act, 1962 regarding customs duties paid on the imported
inputs used in the manufacture of exported product (Customs Act can be accessed at ,
http://www.cbec.gov.in/htdocs-cbec/customs/cs-act/cs-act-ch10
b) Section 37(2) of the Central Excise Act, 1944 regarding the central excise duties paid
on the indigenously procured inputs used in the manufacture of the exported
product (Central Excise Act can be accessed at http://www.cbec.gov.in/htdocs-
cbec/excise/cx-act/cx-act-ch7and is annexed as Exhibit 9 and Section 93A and Section
94(2) of the Finance Act, 1994 regarding the service tax paid on the services consumed
in the manufacture, processing, removal or export of the exported product (can be
accessed athttp://www.cbec.gov.in/resources//htdocs-servicetax/st-act-ason24oct2013.pdf

Chapter 22 of the Customs Manual of Instructions issued by the CBEC in 2014. The
said manual can be accessed athttp://www.cbec.gov.in/resources//htdocs-
cbec/deptt_offcr/cs-manual2014.pdf

The customs, Excise Central Duties and service tax drawback (Amendment) Rules,
2006. The said rules can be accessed at http://www.cbec.gov.in/htdocs-cbec/customs/cs-
act/formatted-htmls/cs-rulee

What are the eligibility criteria for this scheme?

Please see the introduction

Please describe step-by-step the procedure the exporter has to respect to be eligible for
that scheme (i.e. export sales, payment, application, etc.). In case exports have been
made under the DDS, would it be possible for an exporter to apply for any other
scheme?

Please see the introduction

Is eligibility contingent upon export performance or on the use of domestic goods?

Response:
Eligibility of this program is contingent on export performance.

If not, is eligibility limited to certain sectors and/or regions?

Response:

It is not restricted to certain sectors or region. Please see the introduction for details.

If not, is eligibility limited in any way? If so, describe the criteria involved.

Response:

Please see introduction for details.

If not, can all firms which meet the eligibility criteria benefit from this scheme or does
the Government exercise discretion? Provide evidence to show on what basis
applications have been accepted and rejected during the RIP.

Response:

In case the company meets the eligibility criteria, the GOI does not exercise any
discretion.

Is there any time limit to apply for credit under the DDS or to use the license? Can that
time limit be extended?

Response:
 DDS is not a license. No time limit is there to apply for AIR drawback as the shipping
bill itself is treated as the claim.

Please describe the procedure to calculate DDS rates and provide the relevant DDS rates
for the RIP as well as for the five financial years preceding the RIP. Please provide also
details on any changes of the DDS rates after the RIP and until today.

Response:

The rates are determined following a specified procedure that is undertaken by an

independent committee appointed by the GOI. The committee makes its recommendations
after discussions with all stake holder including Export Promotion Councils, Trade
Associations, and individual exporters to solicit relevant data, which includes the data on
procurement prices of inputs, indigenous as well as imported , applicable duty rates,
consumption ratios and FOB values of exports products. Corroborating data is also
collected from Central Excise and Customs field formations. This data is analyzed and this
information is used to form the basis for the rate of Duty Drawback.

In terms of Rule 3(2) of the Drawback Rules 1995, in determining the amount of drawback,
the Central Government shall have regard to the following

a) The average quantity or value of each class or description of the materials from which
a particular class of goods is ordinarily produced or manufactured in India;

b) The average quantity or value of the imported materials or excisable materials used
for production or manufacture in India of a particular class of goods;

c) The average amount of duties paid on imported materials or excisable materials used
in the manufacture of semis, components and intermediate products which are used
in the manufacture of goods;
 d) The average amount of duties paid on materials wasted in the process of manufacture
and catalytic agents; (provided that if any such waste or catalytic agent is reused in
any process of manufacture or is sold, the average amount of duties on the waste or
catalytic agent re-used or sold shall also be deducted);

e) The average amount of duties paid on imported materials or excisable materials used
for containing or packing the export goods;

f) The average amount of tax paid on taxable services which are used as input services
for the manufacturing or processing or for containing or packing the export goods.

The rates of AIR Drawback for products under review are -

Period Tariff Description of Unit Drawback when Drawback when

Item goods Cenvat facility has Cenvat facility has
not been availed been availed

Drawbac Drawbac
k cap per Draw k cap per
Drawbac unit in back unit in
k Rate Rs. Rate Rs.

1.10.2011 to 7222 Other bars

9.10.2012 and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel

722201 Other bars MT

and rods of
stainless steel;
angles, shapes
and sections
of stainless
 steel (Having
Ni more than
8%)

722202 Other bars MT

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel (having
Ni more than
4% but less
than 8%)

722203 Other bars MT

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel(Chrome
Stainless
Steel)

7223 Wire of
stainless steel

722301 Wire of MT
stainless steel
(Having Ni
more than
8%)

722302 Wire of MT
stainless steel
(having Ni
more than 4%
but less than
 8%)

722303 Wire of MT
stainless
steel(Chrome
Stainless
Steel)

10.10.2012 to 7222 Other bars

20.9.2013 and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel

722201 Other bars

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel (Having
Ni more than
8%)

722202 Other bars

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel (having
Ni more than
4% but less
than 8%)

722203 Other bars

and rods of
stainless steel;
 angles, shapes
and sections
of stainless
steel(Chrome
Stainless
Steel)

7223 Wire of
stainless steel

722301 Wire of
stainless steel
(Having Ni
more than
8%)

722302 Wire of
stainless steel
(having Ni
more than 4%
but less than
8%)

722303 Wire of
stainless
steel(Chrome
Stainless
Steel)

21.09.2013 to 7222 Other bars

21.11.14 and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel

722201 Other bars Kg

and rods of
 stainless steel;
angles, shapes
and sections
of stainless
steel (Having
Ni more than
8%)

722202 Other bars Kg

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel (having
Ni more than
4% but less
than 8%)

722203 Other bars Kg

and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel(Chrome
Stainless
Steel)

7223 Wire of
stainless steel

722301 Wire of Kg
stainless steel
(Having Ni
more than
8%)

722302 Wire of Kg
stainless steel
 (having Ni
more than 4%
but less than
8%)

722303 Wire of Kg
stainless
steel(Chrome
Stainless
Steel)

22.11.2014 to 7222 Other bars

22.11.2015 and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel

7223 Wire of
stainless steel

23.11.2015 7222 Other bars MT

onwards and rods of
stainless steel;
angles, shapes
and sections
of stainless
steel

7223 Wire of MT
stainless steel

Are DDS licences transferable?

Response:
DDS is not a license but rebate of taxes paid in form of cash.

Can the DDS licences be used for any kinds of imported goods? If not, what are the
limitations?

Response:

DDS is not a license but rebate of taxes/duties.

Does material imported under the DDS necessarily have to be utilised in the production
of goods for export or can it be used for consumption on the domestic market as well?

Response:

There is no requirement of using DDS credit for imports only.

If the calculation for import quantities is based on SION, please describe the process to
calculate SION. How often are SION revised? Is it possible, that a company can
manufacture an output product more efficiently, i.e. with less input material, than
calculated on the basis of SION? How would the additional inputs be treated?

Response:

The calculation for import quantities is not based on SION.

(b) Copies of the laws, regulations or other governmental acts relevant for the operation of this
programme with subsequent amendments.

Response:
(a) Section 75 of the Customs Act, 1962 regarding customs duties paid on the imported
inputs used in the manufacture of exported product

(b) Section 37(2) of the Central Excise Act, 1944 regarding the central excise duties paid
on the indigenously procured inputs used in the manufacture of the exported product

(c) Section 93A and Section 94(2) of the Finance Act, 1994 regarding the service tax paid
on the services consumed in the manufacture, processing, removal or export of the
exported product

(d) The Customs, Central Excise and Service Tax Drawback Rules, 1995 (hereinafter
referred to as the Drawback Rules 1995)

(e) The rates of drawback applicable on various products are given in the form of a
Drawback Schedule and are notified. The relevant notifications for POI are as follows
-

Notification no. 68/2011-Customs (NT) dated 22.09.2011

Notification no. 92/2012-Customs (NT) dated 05.10.2012
Notification no. 98/2013-Customs (NT) dated 14.09.2013
Notification no. 110/2014-Customs (NT) dated 17.11.2014
Notification no. 110/2015-Customs (NT) dated 16.11.2015
Copies are available at www.cbec.gov.in

(c) A description of the practical implementation of the programme with the Customs
authorities. Describe all the documents which are kept by the national and local Customs
authorities.

Response:
The Duty Drawback on export goods is claimed at the time of export and with details filled
in the required format in the Shipping Bill/Bill of Export under Drawback. In case of
exports under electronic Shipping Bill, the Shipping Bill itself is treated as the claim for
Drawback. In case of manual shipping bill, triplicate copy of the Shipping Bill is treated as
the claim for Drawback. The claim is to be accompanied by specified documents as laid
down in the Drawback Rules 1995. If the requisite documents are not furnished or there is
any deficiency, the claim may be returned for furnishing requisite information/documents.

Once the Export General Manifest (EGM) has been filed by respective airlines / shipping
lines and the export is confirmed, the Drawback claim is automatically processed through
EDI system by the officers of Drawback Branch on first-come first-served basis. The status
of the Shipping Bills and sanction of Drawback claim can be ascertained from the query
counter set up at the Service Centre. If any query is raised or deficiency noticed, the
exporters are required to reply to such queries through the Service Centre. All the claims
sanctioned on a particular day are enumerated in a scroll and transferred to the Bank
through the system. The bank credits the drawback amount in the respective accounts of
the exporters.

In respect of EDI shipping bills, all record is available electronically in Central database.
The manual record is kept at individual Customs location. Details of records kept by
Companies may be obtained from them.

(d) The following information with regard to the company under investigation:
Name of the company.
Has the company used the DDS on a post-export basis during the RIP?
Through which Customs House(s) has the company used the DDS?
The total amount of DDS credit granted during the RIP to offset customs duties.
The total amount of DDS credit used during the RIP to offset customs duties.
Please provide a list of all licences granted to the company.
Has the company paid application fees? If so, provide the amounts

Response:
There is no license involved in DDS. This is rebate of duties/taxes extended directly in bank
account of exporter. Annexed here as Annexure 9 are details of AIR duty drawback claimed
by various companies (companies under investigation/mandatory respondents) under
investigation for exports under EDI shipping bills. Those exporters who do not appear in
the data attached appear to have not claimed AIR drawback under EDI shipping bills.