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India : Reduction in Drawback is unjustified, TEXPROCIL (September 22, 10)

India : Reduction in Drawback is unjustified, TEXPROCIL

The Directorate of Drawback, Department of Revenue, Ministry of Finance, New Delhi has notified the revised All Industry Rate of Duty Drawback for the period 2010 2011 vide a circular No.35/2010-Cus dated 17.09.2010. This revised Drawback rates have been reduced across the board for all Textiles and Clothing items.

Expressing his disappointment at the reduction in Drawback rates and non-restoration of Drawback rate on export of Cotton Yarn, Shri Amit Ruparelia, Deputy Chairman, Texprocil (The Cotton Textiles Export Promotion Council) stated that at a time when the Industry is grappling with rising input costs like Cotton / Cotton Yarn and facing erratic supply of Power and burden of Service tax, reduction in the Drawback rates was unjustified.

At a time when the leading overseas market of USA and Europe are recovering slowly from the after effects of a severe recession, the industry needed the support of the government in terms of higher Duty Drawback rates to face the competition from Countries like China, Bangladesh, Pakistan which were seen to be benefiting not only from Tariff preferences but also hidden subsidies.

Further, the decision not to restore Drawback rates on Cotton Yarn was discriminatory as all exportable products were given the benefit of these rates which where basically aimed at reimbursing the incidence of Customs and Excise duties levied at the input stage. Non restoration of Duty Drawback rates on export of Cotton Yarn implied that the product did not suffer any incidence of either Customs and Excise duty or Service tax which is incorrect.

The Spinning Industry he recalled has made huge investments under TUF Scheme and has undergone modernization of its units aiming at higher exports. Most of the cotton yarn exporting Mills have also undertaken huge export obligations fixed under the EPCG, Advance Licensing Scheme and various other Schemes.

In view of the above, Shri Amit Ruparelia appealed to the Government to not only restore the drawback rate on export of Cotton fabrics and Made-ups but also enhance them to the level recommended by the Council i.e. 8.50% for Cotton Fabrics, 6.40% for Cotton Knitted Fabrics and 11% for Cotton Made-Ups ( Bed Linen, Table Linen, Toilet Linen, Kitchen Linen, Curtains etc.). He also requested with the Government to restore the Duty Drawback on export of Cotton Yarn (both Grey and Dyed) so that the concerned exporters can benefit from the Scheme.

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