Everything the Duty Drawback Scheme Explained for Individual & Small Sellers

The Duty Drawback Scheme can work wonders for everyone, especially for individuals and small scale businesses in India who want to export their products. It is a governmental incentive that allows exporters to recover specific customs charges by reimbursement.

Here, we help you understand what the Duty Drawback Scheme is, eligibility, how to claim it, and how it will aid in your journey to becoming an international trader.

What Is the Duty Drawback Scheme?

Duty Drawback Scheme is a refund system provided by the government where a drawback of import duty paid on raw materials, components or packaging material used for export production is made.

Implemented by the CBIC (Central Board of Indirect Taxes and Customs), the Current Policy is in line with the Customs Act of 1962.

There are two main parts:

• Section 74: Refund for goods that are imported and then re-exported without any change.
• Section 75: Refund for raw materials or parts used in the manufacturing of goods that are exported.

This scheme is especially helpful for individuals and small sellers, as it brings down the cost of production and improves cash flow.

Who Can Apply?

The scheme is open to:

• Individual exporters
• Small and medium businesses
• Online sellers
• Manufacturers using imported goods to make export products

You must have an Import Export Code (IEC) from DGFT to apply.

Benefits of Duty Drawback

Here’s how the Duty Drawback Scheme can help you:

• You save money by getting a refund of duties paid
• It lowers your total product cost
• You can offer competitive prices in international markets
• Helps increase your export profit margin
• Gives extra funds to invest in packaging, shipping, or ads

For small exporters, this can be a turning point in scaling globally.

Easy Steps to Claim Duty Drawback

Follow these steps if you want to claim duty drawback:

1. Get Registered as an Exporter
    Apply for an Import Export Code (IEC) from DGFT.
2. Import Raw Materials or Goods
    When importing, pay the customs duty. Keep all documents like the Bill of Entry and duty receipts.
3. Manufacture or Prepare Goods
    Use the imported materials to create the final products meant for export.
4. Export the Products
    File the Shipping Bill at the time of export. Clearly mention you are claiming duty drawback.
5. Submit the Documents
    After exporting, you need to submit:

• Bill of Entry
• Shipping Bill
• Export Invoice
• Bank Realisation Certificate (BRC)
• Packing List
• Declaration of usage of imported goods

1. Track the Refund
    If everything is in order, the customs department will approve your claim and transfer the refund to your account.

How Is the Refund Calculated?

There are two ways to get a refund in case things go as planned and you need to step back and reevaluate your application.

• All Industry Rate (AIR): These are standard rates fixed by the government for common products.
• Brand Rate: If your product doesn’t fall under AIR or if you want a custom rate based on your actual duty paid, you can apply for a brand rate with proof.

Example: If you paid ₹4,000 as duty to import packaging and later exported your product using that packaging, you might get a full or partial refund depending on the AIR or brand rate.

Important Things to Remember

• Always mention your claim in the shipping bill
• Use correct product and HS codes
• Keep all bills and receipts safely
• You must apply for a drawback within 1 year from the export date
• Refund is credited directly to your registered bank account

For New Exporters: Quick Start Guide

1. Register with DGFT and get IEC
2. Complete your KYC
3. Import raw materials if needed
4. Upload your products for export
5. Keep all import and export records
6. Apply for drawback during export
7. Track refund through the ICEGATE portal

What If You Use Fulfilment Services?

In case you don’t have the bandwidth and plan to use Fulfilment services for deliveries, the process of claiming duty drawbacks does not change. Even if your exports are managed through fulfilment services, you can still claim duty drawback. But to ensure that the refunds come to you and not get diverted to your shipping partners, there are some things you can do.X

• Your name appears as the exporter on all documents
• You keep the proof of import and export
• Shipping and export bills are correctly filed under your exporter ID

This way, the refund still goes to you and not to the fulfilment partner.

Why Does This Matters for Global Expansion?

Globalization is somewhat difficult to pull off for individual and small vendors because they are expensive. The Duty Drawback Scheme, however, eliminates one large portion of that cost, the import duties. This allows you to:

• Marketing without adding to the price of your product
• Spend money on faster delivery, improved packing or global publicity
• Compete with international sellers confidently

Conclusion

The Duty Drawback Scheme is an extraordinary yet very effective procedure for Indian exporters, particularly individuals and small traders. It means an ability to get the money back you spent on paying import taxes and the greater profit line that you get to expand. With the current scenario of expanding traffic across borders, duty drawbacks can be a breath of fresh air for many small and individual exporters.

In the case that you are to take your business overseas, then you should make good use of this scheme. It is one hundred percent legal, backed by the respective governments and extremely convenient if the procedure is fully comprehended.

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